WAVESTONE (EPA:WAVE) Solid progress of H1 2023/24 results: EBIT margin of 13.3%
Transparency directive : regulatory news
At its meeting of December 4, 2023, Wavestone's Board approved the consolidated half-yearly accounts as at September 30, 2023, which are summarized below. These accounts have been subject to a limited review by the statutory auditors, who are in the process of issuing their report.
| Consolidated data (in €m) Limited review for data at 09/30 Audited data for the data at 03/31 |
H1 2023/24 (6 months) |
H1 2022/23 (6 months) |
Change | 2022/23 fiscal year (12 months) |
|
|---|---|---|---|---|---|
| Revenue | 276.7 | 237.1 | +17% | 532.3 | |
| EBIT EBIT margin |
36.8 13.3% |
29.7 12.5% |
+24% | 77.0 14.5% |
|
| Amortization of client relationships Other operating income and expenses Operating income |
(0.7) (2.8) 33.2 |
(0.7) (3.3) 25.7 |
+29% |
(1.5) (2.9) 72.7 |
|
| Cost of net financial debt Other financial income and expenses Tax charges |
(0.7) (0.3) (9.2) |
(0.4) (0.4) (6.9) |
(1.8) (2.3) (18.5) |
||
| Group share of net income Net margin |
23.0 8.3% |
17.9 7.6% |
+28% | 50.1 9.4% |
Half-year revenue up +17%; equivalent to +12% organic growth
At the end of H1 2023/24, Wavestone recorded a consolidated revenue of €276.7m – a solid increase of +17% over one year.
As a reminder, H1 2023/24 benefited from the contributions of PEN Partnership and Coeus Consulting, consolidated, respectively, since August 1, 2022, and October 1, 2022. At constant scope and exchange rates, half-yearly growth amounted to +12%, despite an unfavorable working day impact of -2.2%[1].
This solid progression in the half-yearly results at constant scope is the result of the intensification of business development activity over several quarters and of the headcount growth at the end of the 2022/23 fiscal year.
Stabilization of the staff turnover rate at 14%; recruitment pace still moderate
The staff turnover rate has continued to decline, stabilizing at 14% at September 30, 2023 (on a rolling-12-month basis); this compares with 16% for the whole of the previous fiscal year.
Given the uncertain economic environment and reduced staff turnover, Wavestone is maintaining a moderate rate of recruitment compared with the previous fiscal year. At September 30, 2023, Wavestone had 4,305 employees, compared with 4,406 at March 31.
Despite more moderate recruitment activity, the firm is targeting an increase in the workforce over the whole of the 2023/24 fiscal year.
Consultant utilization rate of 73% at the end of H1 and an increase in sales price of +1.1%
After the significant drop in its consultant utilization rate at the end of the 2022/23 fiscal year (71% in Q4 2022/23), the utilization rate had recovered to 73% at the end of H1 2023/24.
The average daily rate for the six months reached €900 – an increase of +1.1% compared with the average sales price for the whole of the 2022/23 fiscal year (€890). At constant exchange rates, the average daily rate stood at €902, up +1.3%.
+24% increase in EBIT – profitability of 13.3%
At the end of H1 2023/24, EBIT reached €36.8m, a solid growth of +24% compared with the same period a year before.
The EBIT margin stood at 13.3% at the end of H1, up compared with the first half of the previous fiscal year (12.5%), despite an unfavorable working day impact. With an economic environment in a period of slowdown, the firm was able to take advantage of its solid growth, a good sales-price-to-salary ratio and good control of its costs.
After taking into account the amortization of client relations, and other operating income and expenses, which comprise largely expenses related to the proposed combination with Q_PERIOR, operating income was €33.2m – showing robust growth of +29%.
Half-year net margin rises to 8.3%
Due to the rise in interest rates, the cost of net financial debt rose in H1 2023/24 to reach €0.7m, compared with €0.4m a year earlier.
The tax charge amounted to €9.2m, up +33% compared with H1 of the 2022/23 fiscal year.
The half-yearly group share of the net result amounted to €23.0m, a solid increase of +28%, compared with H1 2022/23. Net margin was 8.3% at the end of H1, compared with 7.6% a year earlier.
Increase of 31% in self-financing capacity to €39.4m
At September 30, 2023, Wavestone's self-financing capacity amounted to €39.4m, an increase of +31%, compared with the same period last year.
Changes in working capital requirements (WCR) consumed €20.3m in cash over the period. This change is mainly due to the usual decrease in social debts in the first half of the year (leave-taking, bonus payments and profit-sharing in France).
After taking into account the payment of taxes (€9.8m), the firm generated an operating cash flow of €9.3m, compared with -€7.5m in H1 2022/23.
Investment operations consumed €6.5m in H1 2023/24, including €5.3m dedicated to the payment of the first PEN Partnership earnout, and €1.1m in current investments.
Financing flows consumed €19.7m, including €7.6m in dividends paid to shareholders for the 2022/23 fiscal year, €6.0m in share buybacks to cover all free share allocation plans to employees, €2.8m in net repayments of financial loans, and €2.6m in lease liability repayments.
Available cash and cash equivalents of €13.3m at September 30, 2023
At September 30, 2023, Wavestone's equity had reached €311.9m.
The net cash position, excluding IFRS 16 lease liabilities, stood at €13.3m at the end of September 2023, compared with €27.1m six months earlier.
At the end of the 2023/24 fiscal year, as a result of typically higher cash generation in H2, the firm is targeting a positive net cash flow of between €55m and €60m, excluding the impact of the proposed combination with Q_PERIOR or any other new acquisition.
| Consolidated data (in €m) Limited review at 09/30 Audited data at 03/31 |
(09/30/2023) | (03/31/2023) | Consolidated data (in €m) Limited review at 09/30 Audited data at 03/31 |
(09/30/2023) | (03/31/2023) | |
|---|---|---|---|---|---|---|
| Non-current assets | 269.8 | 272.8 | Shareholders' equity | 311.9 | 299.1 | |
| of which goodwill | 237.8 | 235.4 | ||||
| including rights to use leased assets | 11.4 | 13.2 | Financial liabilities of which less than one year |
40.9 5.6 |
43.7 5.7 |
|
| Current assets | 193.5 | 193.1 | Lease liabilities | 13.5 | 15.9 | |
| of which trade receivables | 175.2 | 176.6 | ||||
| Cash and cash equivalents | 54.1 | 70.8 | Non-financial liabilities | 151.2 | 178.2 | |
| Total | 517.4 | 536.8 | Total | 517.4 | 536.8 |
Strong first half in 2023/24; caution maintained for the second half of the fiscal year
Wavestone saw a strong first half in 2023/24, both in terms of growth in its business activity and profitability, despite the hardening economic environment during the period.
Although this deterioration in the economic climate has significantly impacted demand in some business sectors (banking, retail, and the public sector), others, such as insurance, energy, the luxury sector, and transport remain better positioned to generate opportunities. In addition, in terms of aeras of expertise, the firm is seeing strong resilience in technological areas (cybersecurity, IT strategy, Data & AI), and a growing demand for projects around Generative AI.
At September 30, 2023, the order book stood at 3.6 months of work, compared with 4.0 months at March 31, 2023, which reflects the slowdown in order intake typical of the summer as well as the degradation of the business environment.
Wavestone is approaching the second half of the fiscal year cautiously and, in particular, the start to the 2024 calendar year, which will be marked by increased economic uncertainty.
Confirmation of the 2023/24 annual objectives
Wavestone confirms its financial objectives for 2023/24: to achieve organic growth at least equal to that of the 2022/23 fiscal year (+7%), despite an unfavorable working day impact (-1.6% over the whole of the fiscal year). This objective takes into account a less robust growth dynamic in H2 2023/24, due to the moderation in the pace of recruitment since the start of the fiscal year.
At full scope, integrating the effect of the full-year consolidation of PEN Partnership and Coeus Consulting, Wavestone is targeting revenue of over €580m, which represents total growth of +9% for an EBIT margin of about 15%.
These objectives are at constant exchange rates, and exclude the impact of the proposed combination with Q_PERIOR or any other new acquisition.
Combined General Meeting on December 5, 2023, with the aim of approving the proposed combination between Wavestone and Q_PERIOR
The Combined General Meeting required to decide on the combination and, in particular, on the contribution of Q_PERIOR shares remunerated in newly issued Wavestone shares, will be held tomorrow, Tuesday, December 5, 2023, at 10:00am, at Pavillon Gabriel, 5 avenue Gabriel, 75008 Paris.
The meeting will also be broadcast live for shareholders who are unable to attend in person, from a link accessible on Wavestone's website.
Next events: Combined General Meeting: Tuesday, December 5, 2023, at 10am; and the publication of Q3 2023/24 revenue: Tuesday, January 30, 2024, 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 organizations in their most critical transformations, with the ambition of a positive outcome for all stakeholders. This ambition is anchored in the firm's DNA and summarized in its signature approach –"The Positive Way."
Wavestone brings together more than 4,000 employees in Europe, the United States, and Asia.
Wavestone is listed on Euronext Paris and recognized as a Great Place to Work®.
| Wavestone Pascal Imbert CEO Tel.: +33 (0)1 49 03 20 00 Justine Brosset Financial Communication Tel.: +33 (0)1 49 03 20 00 |
Actus Mathieu Omnes Investor and Analyst Relations Tel.: +33 (0)1 53 67 36 92 Anne-Charlotte Dudicourt Press relations Tel.: +33 (0)1 53 67 36 35 |
[1] Taking into account the geographical distribution of Wavestone's workforce
| Appendix 1: Consolidated income statement at 9/30/2023 | |||
| In €m – limited review in progress– IFRS standards | 09/30/23 | 03/31/23 | 09/30/22 |
| Revenue | 276,689 | 532,264 | 237,113 |
| Purchases consumed | -13,298 | -21,753 | -8,037 |
| Personnel costs | -199,414 | -373,278 | -170,901 |
| External expenses | -20,855 | -46,594 | -22,705 |
| Levies and taxes | -3,392 | -8,044 | -3,137 |
| Net allocation for depreciation and provisions | -3,428 | -5,771 | -2,435 |
| Other operating income and expenses | 456 | 218 | -209 |
| EBIT | 36,758 | 77,042 | 29,689 |
| Amortization of client relationships | -747 | -1,493 | -747 |
| Other operating income and expenses | -2,809 | -2,864 | -3,289 |
| Operating income | 33,203 | 72,685 | 25,653 |
| Financial income | 314 | 10 | 9 |
| Cost of gross financial debt | -1,031 | -1,766 | -419 |
| Cost of net financial debt | -718 | -1,756 | -410 |
| Other financial income and expenses | -311 | -2,348 | -423 |
| Pre-tax income | 32,174 | 68,580 | 24,820 |
| Income tax expenses | -9,199 | -18,513 | -6,914 |
| Net income | 22,975 | 50,068 | 17,906 |
| Minority interests | 0 | 0 | 0 |
| Group share of net income | 22,975 | 50,068 | 17,906 |
| Group share of net income per share (€) (1) | 1.16 | 2.51 | 0.90 |
| Group share of diluted net income per share (€) | 1.16 | 2.51 | 0.90 |
(1) Number of shares weighted over the period.
| Appendix 2: Consolidated balance sheet at 9/30/2023 | ||
| In €m – limited review in progress– IFRS standards | 9/30/23 | 03/31/23 |
| Goodwill | 237,834 | 235,355 |
| Intangible assets | 1,897 | 2,644 |
| Tangible assets | 8,353 | 8,815 |
| Rights to use leased assets | 11,365 | 13,179 |
| Financial assets – more than one year | 1,713 | 1,790 |
| Other non-current assets | 8,645 | 11,038 |
| Non-current assets | 269,807 | 272,820 |
| Trade and related receivables | 175,194 | 176,595 |
| Other receivables | 18,286 | 16,549 |
| Cash and cash equivalents | 54,137 | 70,824 |
| Current assets | 247,616 | 263,968 |
| Total assets | 517,424 | 536,788 |
| Capital | 505 | 505 |
| Issue and merger premiums; additional paid-in capital | 11,218 | 11,218 |
| Consolidated reserves and earnings | 297,076 | 285,314 |
| Conversion-rate adjustment | 3,100 | 2,013 |
| Total shareholders' equity, group share | 311,899 | 299,050 |
| Minority interests | 0 | 0 |
| Total equity | 311,899 | 299,050 |
| Long-term provisions | 12,722 | 13,316 |
| Financial liabilities - more than one year | 35,313 | 38,047 |
| Lease liabilities – more than one year | 8,611 | 11,098 |
| Other non-current liabilities | 1,569 | 1,023 |
| Non-current liabilities | 58,214 | 63,485 |
| Short-term provisions | 4,075 | 4,755 |
| Financial liabilities - less than one year | 5,559 | 5,654 |
| Lease liabilities – less than one year | 4,881 | 4,754 |
| Trade payable | 15,117 | 14,731 |
| Tax and social security liabilities | 85,538 | 106,272 |
| Other current financial liabilities | 31,140 | 38,087 |
| Current liabilities | 147,310 | 174,254 |
| Total liabilities | 517,424 | 536,788 |
| Appendix 3: Consolidated cash flow statement at 9/30/2023 | |||
| In €m – limited review in progress– IFRS standards | 09/30/23 | 03/31/23 | 09/30/22 |
| Consolidated net income | 22,975 | 50,068 | 17,906 |
| Elimination of non-cash elements: | |||
| Net depreciation and provisions(1) | 4,886 | 9,907 | 4,104 |
| Charges/(income) related to share-based payments | 2,075 | 3,305 | 1,541 |
| Losses/(gains) on disposals, net of tax | -70 | -217 | -82 |
| Other calculated income and expenses | -467 | 256 | -771 |
| Cost of net financial debt (inc. interest on lease liabilities) | 798 | 1,933 | 503 |
| Tax charges/(income) | 9,199 | 18,513 | 6,914 |
| Self-financing capacity before net financial debt and tax costs | 39,396 | 83,764 | 30,115 |
| Tax paid | -9,792 | -21,052 | -12,242 |
| Change in WCR | -20,286 | -21,567 | -25,420 |
| Net cash flow from operations | 9,317 | 41,146 | -7,548 |
| Intangible and tangible fixed asset acquisitions | -1,069 | -3,705 | -891 |
| Asset disposals | 24 | 168 | 109 |
| Change in financial assets | -160 | 3 | -22,072 |
| Impact of changes in scope | -5,272 | -49,196 | -29,266 |
| Net cash flow from investments | -6,477 | -52,731 | -52,120 |
| Sales (acquisitions) by the company of its own shares(2) | -5,983 | -6,403 | -6,456 |
| Dividends paid to parent-company shareholders | -7,593 | -7,612 | -7,612 |
| Dividends paid to minority interests of consolidated companies | 0 | 0 | 0 |
| Loans received | 0 | 0 | 0 |
| Repayment of loans | -2,821 | -4,435 | -4,147 |
| Repayments of lease liabilities | -2,638 | -5,132 | -2,451 |
| Net financial interest paid | -587 | -2,078 | -300 |
| Net interest paid on lease liabilities | -84 | -181 | -98 |
| Other flows related to financing operations | 0 | -6 | -30 |
| Net cash flow from financing operations | -19,705 | -25,847 | -21,095 |
| Net change in cash and cash equivalents | -16,864 | -37,432 | -80,762 |
| Impact of translation differences | 295 | -136 | 453 |
| Opening cash position | 70,681 | 108,249 | 108,249 |
| Closing cash position | 54,112 | 70,681 | 27,939 |
| (1) Including €2,138k for the amortization of property usage rights (under IFRS 16) at 09/30/2023 and €2,694k at 09/30/2022. | |||
| (2) For information, the company has delivered treasury shares to a value of €769k over the course of H1. | |||
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Full and original press release in PDF: https://www.actusnews.com/news/83155-2023-09-503-sfaf-communique-rs-202324-en.pdf