TIDMSQS
RNS Number : 8142J
SQS Software Quality Systems AG
03 July 2017
3 July 2017
SQS Software Quality Systems AG
("SQS" or "the Company")
Trading update
SQS Software Quality Systems AG (AIM: SQS), the leading global
provider of quality assurance services for digital business
processes, provides an update on trading for the six months ended
30 June 2017.
Trading for the first half has been in line with management's
expectations and the Company continues to successfully evolve its
business to support the increasing digitalisation of business
processes across all its clients' industries. SQS continues to grow
its consulting capacity and has established some market-leading
efficiency and automation solutions which we anticipate will
deliver improved EBIT margins over the medium term.
H1 2017 Trading
In the six months to 30 June 2017, the Company's adjusted EBIT
margin increased to 7.5% (H1 2016: 6.9%), driven by increasingly
automated and efficient ways of delivering our services, alongside
a continued focus on cost management. Adjusted EBIT is expected to
be approximately EUR12.0m in H1 2017, an increase of 4.8% on the
same period last year (H1 2016: EUR11.45m; H2 2016: EUR11.15m) and
reversing the downward trend in H2 2016.
Revenues for the period are expected to be at the same level as
H2 2016 at approximately EUR160.4m, and slightly lower than the
comparative period (H1 2016: EUR166.6m; H2 2016: EUR160.5m) as we
absorb the last effects of one banking client loss of EUR7.0m.
Outlook and Medium-Term Strategy
Looking ahead, SQS expects H2 2017 revenues to be slightly above
H1 with a number of known business wins starting later in the
year.
The Company currently has a stronger pipeline than in 2016 and
is well placed to benefit from a range of emerging growth
opportunities in what is a very exciting market.
Companies are increasingly dependent on software, data and
digital systems to stay competitive through more efficient,
automated and smarter processes for implementing and testing
software.
SQS continues to execute on its strategy to position itself at
the heart of digital transformation by offering a comprehensive
services portfolio. The Company is increasingly able to support
clients with all aspects of their digital transformation, chiefly
in:
-- assessing their digital readiness;
-- shaping their digital strategy and ensuring its effective
deployment;
-- aligning software quality with business strategy;
-- ensuring the continuous quality and integrity of the software
once deployed.
SQS is helping make customers more agile to the challenge by
increasing the speed of new technology deployment, adding greater
process automation, ultimately helping to create new revenue
opportunities and recognise better returns on investment. It is
this growing operational agility and intelligence that SQS, mainly
through its Management Consulting (MC), Managed Services (MS) and
supported by Professional Services (PS) capabilities, is offering
to customers across all end-markets.
As such, our focus is on increased profitability from operations
and in the medium term SQS expects to be able to deliver
organically an adjusted EBIT margin of at least 9% and
corresponding operating cash flow improvements - the two key
metrics management we use to measure successful progress.
Dik Vos, Chief Executive Officer of SQS, commented:
"It has been a period of progress across the business as we see
increasing demand for our digital change offerings. As the quality
assurance market continues to evolve and seeks a more
industrialised automated approach, SQS is in a sweet-spot of the
evolving market dynamics. We are delighted to have added additional
blue-chip brands to our customer base this year, indicating
increased presence and credentials to support medium-term growth.
This is across our key verticals, but is especially evident in the
technology and automotive sectors.
We have been focussed on and investing in IP based
industrialisation and automation for some time now and believe our
agile, digitised approach has made us a key partner to a growing
number of businesses across multiple sectors. We have consequently
adapted our key performance indicators towards organic growth in
operating profit and cash flow."
Enquiries:
SQS Software Quality Systems AG Tel. +49 (0) 2203 91 54 0
Diederik Vos, Chief Executive Officer
Rene Gawron, Chief Financial Officer
Numis Securities - Nomad and Joint Broker Tel +44 (0) 20 7260 1000
Simon Willis / Jamie Lillywhite / Mark Lander
Stockdale Securities - Joint Broker Tel. +44 (0) 20 7601 6100
Robert Finlay / Antonio Bossi / Fiona Conroy
FTI Consulting - Financial Media and Investor Relations Tel. +44 (0)20 3727 1000
Matt Dixon / Dwight Burden / Nicola Krafft sqs@fticonsulting.com
About SQS
SQS is the leading global provider of quality assurance services
for digital business processes. This position stems from over 30
years of successful consultancy operations. SQS consultants provide
solutions for all aspects of quality throughout the whole software
product lifecycle driven by a standardised methodology,
industrialised automation processes and deep domain knowledge in
various industries. Headquartered in Cologne, Germany, the company
now employs approximately 4,400 staff. SQS has offices in Germany,
UK, US, Australia, Austria, Egypt, Finland, France, India, Ireland,
Italy, Malaysia, the Netherlands, Norway, Singapore, South Africa,
Sweden, Switzerland and UAE. In addition, SQS maintains a minority
stake in a company in Portugal. In 2016, SQS generated revenues of
EUR327.1 million.
SQS is the first German company to have a primary listing on
AIM, a market operated by the London Stock Exchange. In addition,
SQS shares are also traded on the German Stock Exchange in
Frankfurt am Main.
With over 10,000 completed projects under its belt, SQS has a
strong client base, including half of the DAX 30, nearly a third of
the EURO STOXX 50 and 20 per cent of the FTSE 100 companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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