Devoteam (Euronext Paris : DVT) reports revenues of €306.5 million in H1 2018 with an operating margin of 11.1% and announces the acquisition of Bold in Portugal. The Group has also been awarded Google Cloud EMEA Services Partner of the year, highlighting its leadership position in Digital Transformation.
Results for the first half of 2018
After analysis with Group auditors, the Group has revised its interpretation of IFRS 15, applicable since 1 January 2018. The revenue presented in the first quarter of 2018 has been corrected and is presented in the appendix of this press release. Thus, the revenue related to third-party licence resell and subscription rights to access SaaS plateforms on integration projects (mainly Google) is now recognised up to the margin done on this project. In order to keep a comparable level of information, 2017 accounts have also been restated following the same approach. The retrospective application of this new IFRS norm for 2017 leads to a reduction of the Group revenue for €12.7 million and 5% of the revenue in the first half of 2017, and for €27.4 million and 5.1% of the full year 2017 revenue. At the time of the May 2018 publication, the impact was estimated at €5 million, representing 1% of the full year 2017 revenue. This does not impact the amount in euros of operating margin, net result, earning per share and free cash-flow. Consequently, the operating margin rate of the first half 2017 goes from 9.9% to 10.4%, and the full year 2017 rate, from 10% to 10.5%.
After applying this restatement, revenue stands at €306.5 million for the first half of 2018, growing 18.4% compared to the first half of 2017 excluding the changes in scope and exchange rates.
On the second quarter alone, the Group achieves revenues of €152.8 million, growing 28.3% compared to the second quarter of 2017 in total, and 20.5% excluding the changes in scope and exchange rates.
The operating margin increases by 70 basis points in the first half of 2018. It stands at more than €34 million and 11.1% of the revenue.
Non recurring expenses include a strong decrease in restructuring costs (standing at €0.6 million) and a bit less than €3 million other exceptional costs, including almost €2 million related to a litigation and a risk over bank guarantee in Poland as well as €0.5 million loss on Moroccan assets.
The financial result stands at -€1.3 million and includes €0.4 million loss on foreign exchange.
Tax expenses amounts to €8.4 million. It represents 30% of the profit before tax of the continuing operations. Excluding the losses of disposals and the impairments, without tax effect, the tax rate would have been 31.4%.
Net income strongly increases by almost 43%, and drives a 41% growth of the net income attributable to the shareholders of Devoteam S.A.
On 30 June 2018, the net cash of the Group stands at €36.7 million and takes into account an increased working capital driven by the growth of the business and by a higher DSO level compared to last year, notably in France, in Benelux (negatively impacted by the entry of TMNS in the consolidation scope), and in the Middle East.
Headcount and utilization rate
On 30 June 2018, the Group employed 5 596 people. The headcount increased by almost 400 people on the first half of 2018, reflecting a very strong business activity as well as the success of Devoteam in recruitment.
The ratio of billable headcount to total headcount stands at 86.7% on 30 June 2018, improving by 90 basis points year on year.
On the first half of 2018, the Group shows a utilization rate of its own billable headcount of 85%, increasing more than one point compared to the first half of 2017
Changes in scope
On 23 August 2018, Devoteam acquired 58% of Bold International in Portugal. Headquartered in Lisbon, with offices in Aveiro and Porto, and powered by 630 professionals, Bold International’s core activities lie within Devoteam’s Agile IT strategic offer, with strong SMACS expertise on Devops and Cloud transformation. This acquisition will allow Devoteam to support the many international customers establishing technological excellence centers in Portugal, and benefit from expert, mobile and competitive teams. Bold International achieved revenues of €20 million in 2017. It will enter the consolidation scope of Devoteam as of 1 September 2018.
Moreover, the Group acquired two other niche players reinforcing its strategic offers, on Data with New Bic in Spain and on Security with Paradigmo in Belgium. These two acquisitions will be fully consolidated starting 1 July 2018. The Group has also finalised the disposal of Shift, which will be deconsolidated starting 1 September 2018.
Considering the strong level of organic growth over the first semester, changes in scope, and despite the new interpretation of IFRS 15, the Group revises upwards its annual revenue objective to €640 million, growing almost 25% compared to 2017. This objective reflects:
- An organic growth of about 15% (versus 12.5% on last press release);
- A negative impact of exchange rates of 0.7%;
- A contribution from the acquisitions (net from divestments) of about 10%.
The Group also revises upwards its operating margin objective to take into account the accretive effect of IFRS 15, now estimated at 50 basis point over the year, as well as the strong performance of the first semester. Therefore, the operating margin should represent a bit more than 11% of the revenue for 2018.
Press release by Devoteam