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01.09.2014 19:08:00
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Devoteam: Results for the First Half of 2014 in Line with Objectives
Regulatory News:
Devoteam (Paris:DVT):
| In million of euros (1) | 30.06.2014 | 30.06.2013 | Growth |
Organic |
Organic Growth (2)
excluding |
|||||
| Consolidated revenue | 216.2 | 237.3 | -8.9% | -0.3% | -1.5% | |||||
| Of which France | 90.5 | 106.6 | -15.1% | -1.0% | -1.0% | |||||
| Of which International | 125.7 | 130.7 | -3.8% | 1.4% | -2.0% | |||||
| Operating margin (4) | 7.1 | 6.3 | +12% | |||||||
| In % of the Revenues | 3.3% | 2.7% | +0.6 pts | |||||||
| Operating income | 6.0 | 10.5 | -43% | |||||||
| In % of the Revenues | 2.8% | 4.4% | -1.6 pts | |||||||
| Net income – Group share | 2.6 | 7.3 | -64% | |||||||
| Diluted earnings per share (5) | 0.35 € | 0.78 € | -0.43 € | |||||||
| Cash available at H1 closing (6) | 9.7 | 13.8 | -4.1 M€ | |||||||
(1) The financial statements presented in this press release have been
approved by the Supervisory Board on August 28th 2014 and are currently
being certified by the Group Auditors.
(2) At comparable
exchange rates and perimeter.
(3) "Between”, a subsidiary operating
in the Netherlands on the market of sourcing of IT professionals, has a
very volatile contribution to revenue since, depending on the terms and
conditions of the contract they sign with their subcontractors and their
client, revenue consolidated at group level may be based on the
contract’s gross margin or on the full amount invoiced to the final
customer. As a consequence, the group decided to isolate this subsidiary
when calculating the growth rate of consolidated revenues.
(4)
Defined as operating result before amortization of intangible assets
related to acquisitions and excluding the impact of stock-options.
(5)
Based on the weighted average number of shares for the year.
(6)
The cash available at the end of the year is defined as the cash and
cash equivalent plus other liquid financial assets minus bank overdrafts
and short-term credit lines.
The simplified consolidated accounts as of June 30th 2014 are available on our website: http://www.devoteam.com
Devoteam (NYSE Euronext Paris: DVT) announced revenues of € 216.2 million, slightly increasing at constant exchange rates and perimeter versus the 2013 first semester, and an operating margin of € 7.1 million for the first half of 2014. Compared to the first half of 2013, the operating margin has increased by 60 basis points.
The net income attributable to the shareholders of Devoteam S.A. amounted to € 2.6 million, versus € 7.3 million one year earlier (which included significant capital gains from the divestment of assets). Net income significantly improved compared to the first half of 2013, excluding profits on divested assets.
After a year of deep transformation in 2013, the figures for the first half of 2014 were in line with the group’s growth and profitability objectives.
Acquisitions
2014 therefore allowed an acceleration of the investments to support the strategic offers, with the ambition of positioning Devoteam as a European leader on Cloud services.
In July 2014, Devoteam acquired 70% of the share capital of gPartner, which operates as the main Google Enterprise partner in Europe (Global EMEA Google Enterprise Partner of the Year 2013, 2012 and 2011). gPartner delivers the full suite of Google Enterprise solutions to more than 700 customers: collaborative tools, mobility solutions, search engine, infrastructure and cloud applications.
The group also acquired a stake in Progis, a geographic information systems specialist (EMEA Google Maps Partner of the Year 2013). Using Google Maps, Progis integrates mapping with its clients’ business processes.
Lastly, Devoteam increased its stake in Axance, a specialist in the design of mobile services. Devoteam S.A. now owns 54.1% of the capital of Axance.
Sébastien Marotte, Vice-President of Google Enterprise International (EMEA & Asia Pacific) commented: "We welcome the merger of our best European partners. We see a great opportunity for our customers who will benefit from Devoteam Cloud Services’ expertise in the transformation of their IT. The creation of such an actor confirms the importance of Google Enterprise products on the European market.”
gPartner and Axance generate a total of about € 15 million per year of revenues, with a light earnings enhancing effect on the group operating margin. Axance (until now consolidated using the equity method) and gPartner have been fully consolidated since July 1st 2014. Progis is to be consolidated using the equity method as of September 2014. The purchase prices were not disclosed.
Results for the First Half of 2014
The consolidated revenue for the first half of 2014 amounted to € 216.2 million. The revenue recognition principle used for the broker business in the Netherlands (Between) is stable compared to 2013, which differs from the assumption taken when the group published its Q1 2014 revenues. Pro-forma information is presented in the Appendix of this press release.
During the second quarter of 2014, the Group reported revenues of € 107.2 million, a 2.5% decrease excluding exchange rate and perimeter effects, and excluding Between. The variation was notably explained by a negative effect of the number of working days. Adjusted for the working days effect, the growth rate for the second quarter is almost stable compared to the growth rate of the first quarter of this year.
The operating margin – defined as the operating result before amortization of intangible assets related to acquisitions and excluding the impact of stock options – significantly increased thanks to the improvement of the utilization rate. It reached € 7.1 million for the first half year of 2014, or 3.3% of the revenues.
The operating income stood at € 6.0 million against € 10.5 million a year earlier. It included € 0.4 million profits from disposals of subsidiaries versus € 12 million a year earlier. Non-current expenses significantly decreased to € 1.3 million for the first six months of 2014, against € 6.2 million for the first half of 2013. They are mainly composed of restructuring costs for France and Spain. For the semester, no goodwill impairment loss was recorded (against € 1.4 million in 2013 in Germany and Poland).
The financial result slightly improved to € -0.6 million (vs. € -1.1 million for the first half of 2013) mainly thanks to a favorable impact of exchange rates.
Tax expenses amounted to € 2.5 million, stable versus the first half of 2013. They represent 47% of earnings before taxes (versus 25% a year earlier). The high tax rate is explained by the effect of some local taxes (CVAE in France and IRAP in Italy) for € 1.3 million (versus € 1.5 million as of June 30th 2013) and the impact of the corporate tax on subsidiaries making profits.
The net income reached € 2.9 million (against € 7.1 million a year earlier), of which € 0.2 million attributable to the minority shareholders of the controlled companies and € 2.6 million attributable to the shareholders of Devoteam S.A. The diluted earnings per share amounted to € 0.35 (vs. € 0.78 as of June 30th 2013).
Available cash (including capitalization contracts appearing in other current financial assets and adjusted for the € 12.9 million of bank overdrafts and short term credit lines) reduced by € 33.2 million over the first six months of 2014 and to reach € 9.7 million. Main variances include:
- A cash flow from operating activities of € -11.3 million, resulting from the seasonal increase of the working capital during the first part of the year.
- A € 2.4 million positive cash flow from investing activities, mainly explained by the divestment of Devoteam AuSystems Italy.
- A € -20.7 million cash flow from financing activities, including the payment (€ 19.8 million) of the shares bought back within the framework of the public offer closed by Devoteam S.A. on its own shares in January 2014.
The detail of the net financial debt is presented in the appendices of this press release.
Analysis by region
The region "New Mediterranean” includes, under a unique managerial line, the "professional services” activities in France (Devoteam Expertise, Devoteam Consulting and Devoteam Solutions), as well as the North African business units. The region improved its operating margin by 170 basis points during the first half year of 2014, driven by the good trend of the Consulting activity in France and the rationalization effort that started at the end of 2013 on integration activities. However, this effort has had a negative impact on the revenue growth.
The region "Northern Europe” (United Kingdom and Scandinavia) strongly improved its operating margin during the first half of 2014 compared to the same period last year. This improvement was mainly due to a good commercial dynamic in the United Kingdom and around the ServiceNow solutions. On the opposite, a tense labor market in the Consulting sector in Norway and Denmark, and a negative impact in terms of number of billable days during the second quarter of 2014, drove the utilization rate up but penalized the growth.
The region "Central Europe” gathers operations in Germany, Switzerland, Austria, Poland and Czech Republic. The improvement of the profitability observed during the first half year followed the commercial successes of the end of last year in Germany and Czech Republic. The offer "Network Transformation” allowed to regain market shares with the group’s main Telecom customers in Germany whereas the offer "private Cloud” has seen a successful development, particularly in the automotive industry. These improvements in Germany enabled to counterbalance a persistently difficult situation in Poland and an unfavorable day effect during the second quarter.
The revenue and operating margin of the "Single entities” (Spain, the Netherlands, and now the activities in Belux) for the first half of 2014 were impacted by a tense public market in the Netherlands and a downward pressure on the Telecom activities in Spain. On the contrary, the Belgian subsidiary, which took over a R&D center of NSN a few years ago, has successfully diversified its activity thanks to the development of the Cloud and IT Service Excellence offers, especially in the utilities sector.
With revenues of € 4.9 million for the second quarter of 2014, the region "Middle East & Turkey” grew 9.9% at constant perimeter and exchange rates. As announced at the end of 2013, the region came back to growth in the first half of 2014, enabling a significant improvement of the operating margin.
The region "Others” combines all the other investments of the Group ("Venture and New business models”) as well as non reallocated corporate expenses.
All divested activities are gathered in the "Divestments” reporting line.
Headcount and utilization rate
As of June 2014, Devoteam employed a workforce of 3.545 people compared to 3.900 at the end of 2013. This decrease is mainly explained by the effect of the divestments in subsidiaries (262 employees). For the remaining perimeter, this decrease has enabled the Group to improve its utilization rate.
| Utilization rate of internal resources, excluding divestments* | ||||||||||||
| Q1 2013 | Q2 2013 | Q3 2013 | Q4 2013 | FY 2013 | Q1 2014 | Q2 2014 | ||||||
| 79.6% | 81.8% | 82.3% | 84.2% | 81.9% | 82.7% | 83.9% | ||||||
* In 2014, Divestments includes the subsidiary AuSystems Italy. In 2013, it also included the T&M activity sold to Ericsson and Teligent Russia
As of 30th June 2014, the ratio of billable headcount to total staff stood at 85.0 %, a slight decrease in comparison with the situation at the end of last year.
In the first half year of 2014, the group showed an improvement in its utilization rate of internal resources1 excluding divestment, at 83.3% compared to 80.6% in the same period in 2013.
2014 Outlook
Taking into account a first half of the year in line with the objectives, the integration of two new entities in the consolidation perimeter, and a stable revenue recognition methodology between 2013 and 2014 for Between, the group has increased its 2014 revenue target. Revenues for 2014 should be over € 425 million. The positive effect on the percentage of operating margin of the newly consolidated companies should not fully compensate the dilutive effect of the extra revenues to be recognized on Between. The 2014 operating margin should be close to 4.5% of the revenue.
Dividend
On January 21st 2014, the Executive Board cancelled the shares bought back through the public offer closed on January 21st 2014. Consequently, the share capital amounted to € 1,237,391.93 divided into 8 161 587 shares.
As of June 30th 2014, taking into account the above operation and the exercise of options during the period, the share capital of Devoteam S.A. amounted to € 1,238,317 divided into 8,167,757 shares. As of June 30th 2014, Devoteam S.A. owned 663.584 of its own shares, representing 8.12% of the total number of shares.
During the Shareholders’ meeting, the Executive Board proposed a dividend amounting to 25 cents per share for the fiscal year 2013. Dividend payment was realized on July 2nd 2014.
Financial calendar and press releases
|
Press release after market closed |
||
| Q3 2014 Revenue | Q4 Revenue and FY 2014 results | |
| November 6th 2014 | March 2nd 2015 | |
Appendix
Activity evolution by region – Revenues by quarter
| In million of euros | Q1 2014 | Q1 2013 | Q2 2014 | Q2 2013 | H1 2014 | H1 2013 | ||||||
| France | 45.4 | 60.7 | 45.1 | 45.9 | 90.5 | 106.6 | ||||||
| Growth rate | -25.2% | -1.7% | -15.1% | |||||||||
| L-f-l growth(1) | -1.1% | -0.9% | -1.0% | |||||||||
| International | 63.6 | 64.6 | 62.0 | 66.1 | 125.7 | 130.7 | ||||||
| Growth rate | -1.5% | -6.1% | -3.8% | |||||||||
| L-f-l growth(1) | 2.2% | 0.6% | 1.4% | |||||||||
| L-f-l growth excluding Between | -0.4% | -3.7% | -2.0% | |||||||||
| Total | 109.0 | 125.3 | 107.2 | 112.0 | 216.2 | 237.3 | ||||||
| Growth rate | -13.0% | -4.3% | -8.9% | |||||||||
| L-f-l growth(1) | 0.6% | -0.0% | 0.3% | |||||||||
| L-f-l growth excluding Between | -0.7% | -2.5% | -1.5% |
(1) At constant perimeter and exchange rates
| In million of euros | Q1 2014 | Q1 2013 | Q2 2014 | Q2 2013 | H1 2014 | H1 2013 | ||||||
| New Mediterranean | 37.6 | 38.0 | 37.3 | 38.3 | 74.9 | 76.4 | ||||||
| Growth rate | -1.0% | -2.8% | -2.0% | |||||||||
| L-f-l growth(1) | -1.0% | -2.8% | -1.9% | |||||||||
| Northern Europe | 14.6 | 15.6 | 13.8 | 15.7 | 28.4 | 31.2 | ||||||
| Growth rate | -6.3% | -12.1% | -9.2% | |||||||||
| L-f-l growth(1) | -3.0% | -10.8% | -6.9% | |||||||||
| Central Europe | 11.7 | 11.6 | 11.8 | 11.9 | 23.5 | 23.5 | ||||||
| Growth rate | 0.9% | -0.9% | -0.0% | |||||||||
| L-f-l growth(1) | 1.1% | -0.9% | 0.1% | |||||||||
| Middle East & Turkey | 4.9 | 4.5 | 4.9 | 4.9 | 9.8 | 9.4 | ||||||
| Growth rate | 9.4% | 1.4% | 5.2% | |||||||||
| L-f-l growth(1) | 18.3% | 9.9% | 14.0% | |||||||||
| Single entities | 14.2 | 15.5 | 14.5 | 15.6 | 28.7 | 31.1 | ||||||
| Growth rate | -8.5% | -7.1% | -7.8% | |||||||||
| L-f-l growth(1) | -8.5% | -7.1% | -7.8% | |||||||||
| Others | 21.9 | 20.1 | 23.7 | 20.6 | 45.6 | 40.7 | ||||||
| Growth rate | 9.2% | 15.2% | 12.2% | |||||||||
| L-f-l growth(1) | 11.3% | 16.7% | 14.0% | |||||||||
| L-f-l growth excluding Between | 4.4% | 5.6% | 5.0% | |||||||||
| Divestments(2) | 4.0 | 20.0 | 1.2 | 5.0 | 5.2 | 25.0 | ||||||
| Growth rate | -79.8% | -76.3% | -79.1% | |||||||||
| L-f-l growth(1) | -1.5% | 0.6% | -1.1% | |||||||||
| Total | 109.0 | 125.3 | 107.2 | 112.0 | 216.2 | 237.3 | ||||||
| Growth rate | -13.0% | -4.3% | -8.9% | |||||||||
| L-f-l growth(1) | 0.6% | -0.0% | 0.3% | |||||||||
| L-f-l growth excluding Between | -0.7% | -2.5% | -1.5% |
(1)
At constant perimeter and exchange rates
(2)
For H1 2014, the region Divestments included the subsidiary AuSystems
Italy. For H1 2013, it also included T&M and Teligent Russia.
Activity evolution by region – H1 Revenues and Operating margin
| In million of euros |
Group |
Operating |
In % of Group |
Group |
Operating |
In % of Group |
||||||
| France | 90.5 | 3.9 | 4.3% | 106.6 | 5.3 | 5.0% | ||||||
| Growth rate | -15.1% | -25.6% | ||||||||||
| L-f-l growth(1) | -1.0% | |||||||||||
| International | 125.7 | 3.1 | 2.5% | 130.7 | 1.0 | 0.8% | ||||||
| Growth rate | -3.8% | 210.3% | ||||||||||
| L-f-l growth(1) | 1.4% | |||||||||||
| L-f-l growth excluding Between | -2.0% | |||||||||||
| Total | 216.2 | 7.1 | 3.3% | 237.3 | 6.3 | 2.7% | ||||||
| Growth rate | -8.9% | 12.3% | ||||||||||
| L-f-l growth(1) | 0.3% | |||||||||||
| L-f-l growth excluding Between | -1.5% |
(1) At constant perimeter and exchange rates
| In million of euros |
Group |
Operating |
In % of Group |
Group |
Operating |
In % of Group |
||||||
| New Mediterranean | 74.9 | 4.1 | 5.5% | 76.4 | 2.9 | 3.8% | ||||||
| Growth rate | -2.0% | 41.6% | ||||||||||
| L-f-l growth(1) | -1.9% | |||||||||||
| Northern Europe | 28.4 | 0.7 | 2.6% | 31.2 | 0.1 | 0.4% | ||||||
| Growth rate | -9.2% | 445.6% | ||||||||||
| L-f-l growth(1) | -6.9% | |||||||||||
| Central Europe | 23.5 | (0.0) | -0.1% | 23.5 | (1.3) | -5.7% | ||||||
| Growth rate | -0.0% | -97.6% | ||||||||||
| L-f-l growth(1) | 0.1% | |||||||||||
| Middle East & Turkey | 9.8 | 0.7 | 6.9% | 9.4 | 0.4 | 4.3% | ||||||
| Growth rate | 5.2% | 68.4% | ||||||||||
| L-f-l growth(1) | 14.0% | |||||||||||
| Single entities | 28.7 | 0.5 | 1.6% | 31.1 | 0.8 | 2.7% | ||||||
| Growth rate | -7.8% | -46.3% | ||||||||||
| L-f-l growth(1) | -7.8% | |||||||||||
| Others | 45.6 | 1.2 | 2.6% | 40.7 | 2.7 | 6.6% | ||||||
| Growth rate | 12.2% | -55.9% | ||||||||||
| L-f-l growth(1) | 14.0% | |||||||||||
| L-f-l growth excluding Between | 5.0% | |||||||||||
| Divestments(2) | 5.2 | (0.0) | -0.6% | 25.0 | 0.7 | 2.8% | ||||||
| Growth rate | -79.1% | -104.4% | ||||||||||
| L-f-l growth(1) | -1.1% | |||||||||||
| Total | 216.2 | 7.1 | 3.3% | 237.3 | 6.3 | 2.7% | ||||||
| Growth rate | -8.9% | 12.3% | ||||||||||
| L-f-l growth(1) | 0.3% | |||||||||||
| L-f-l growth excluding Between | -1.5% |
(1)
At constant perimeter and exchange rates
(2)
For H1 2014, the region Divestments included the subsidiary AuSystems
Italy. For H1 2013, it also included T&M and Teligent Russia.
Net debt
| In million of euros | 30.06.2014 | 31.12.2013 | 30.06.2013 | |||
|
Financial investments (included in "Other current financial
assets” in balance |
0.3 | 0.3 | 0.3 | |||
| Cash and cash equivalents * | 22.3 | 77.2** | 29.9 | |||
|
Bank overdrafts and credit Revolving (included in current "Loans,
borrowings |
(12.9) | (34.7) | (16.3) | |||
| Cash Balance | 9.7 | 42.9 | 13.8 | |||
|
Current financial debts (excluding bank overdrafts, which are
already |
(2.8) | (2.2) | (2.3) | |||
| Non-current financial debts | (4.1) | (4.3) | (4.9) | |||
| Cash net of financial debt | 2.9 | 36.4 | 6.6 | |||
| Total consolidated equity | 108.0 | 126.5 | 131.8 | |||
| Net debt-to-equity ratio | -2.7% | -28.8% | -5.0% |
*
Including a positive impact from factoring contract of €
12.1million as of June 30th 2014 (vs. € 13.5
million as of Dec. 31st 2013)
**
FY 2013: including € 26.1 million for pledging of the tender offer. €
20.2 million were finally cashed out in January 2014
Pro forma information on revenue
| In million of euros |
H1 2013
pro-forma* |
H1 2013
published** |
||
| New Mediterranean | 76.4 | 91.2 | ||
| Single entities | 31.1 | 15.3 | ||
| Others | 40.7 | 41.7 |
* Reclassification of Devoteam Belgium and Devoteam Luxembourg from
"New Mediterranean" region to " Single Entities " region & of Devoteam
Morocco from "Others" region to "New Mediterranean" region
**
In the FY 2013 results press release
| In million of euros | Q1 2014 pro-forma* | Q1 2014 published** | ||
| Consolidated revenues | 109.0 | 104.1 | ||
| Of which France | 45.4 | 45.4 | ||
| Of which International | 63.6 | 58.7 |
| In million of euros | Q1 2014 pro-forma* | Q1 2014 published** | ||
| New Mediterranean | 37.6 | 37.6 | ||
| Northern Europe | 14.6 | 14.6 | ||
| Central Europe | 11.7 | 11.7 | ||
| Middle East & Turkey | 4.9 | 4.9 | ||
| Single entities | 14.2 | 14.2 | ||
| Others | 21.9 | 17.0 | ||
| Divestments | 4.1 | 4.1 | ||
| Consolidated revenues | 109,0 | 104.1 |
* Following an extensive analysis, during the second quarter of 2014,
of the new terms and conditions applied by Between in the Netherlands,
the Group reached the conclusion that the revenue recognition method for
this subsidiary was not to be modified in comparison to last
year. Therefore, consolidated revenue for Q1 2014 increased by €4.9
million compared to the figure initially published in the Q1 2014
revenue press release
** In the Q1 2014 revenue press release
Pro forma information on operating margin
| In million of euros |
H1 2013
pro-forma* |
H1 2013
published** |
||
| New Mediterranean | 2.9 | 3.1 | ||
| Single entities | 0.8 | 0.6 | ||
| Others | 2.7 | 2.7 |
* Reclassification of Devoteam Belgium and Devoteam Luxembourg from
"New Mediterranean" region to "Single Entities" region & of Devoteam
Morocco from "Others" region to "New Mediterranean" region
**
In the FY 2013 results press release
About Devoteam
Devoteam (ISIN: FR 0000073793. Reuters: DVTM.PA. Bloomberg: DEVO FP) is an IT consulting group created in 1995. Combining consulting know-how and technical expertise enables Devoteam to provide its customers with independent advice delivering innovative and industrialized end-to-end solutions.
In 2013, Devoteam achieved revenues of € 453 million and an operating margin of 3.7%. The Group has a workforce of 3 600 employees in 21 countries across Europe North Africa and Middle East.
ISIN : FR 0000073793, Reuters : DVTM.PA, Bloomberg : DEVO FP
http://www.devoteam.com
1 Utilization rate measures the percentage of working hours (excluding paid holidays) of billable employees that were billed to a client
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