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2013 fy-preliminary-results
- 1. SQS – the world’s leading specialist in software quality the world’s leading specialist in software quality sqs.com Please copy a slide with a suitable picture from the file „Title Slides_EN.pptx“ (change to presentation mode to download) and paste it here. If necessary, apply the correct formatting by right‐clicking and choosing “Layout Title Slide“. SQS 2013 Full Year Results 5 March 2014 Diederik Vos – CEO René Gawron – CFO
- 3. Global Delivery With the acquisition of Thinksoft SQS has become a truly global company. SQS Locations • Australia • Austria • Belgium • Egypt • • • • Finland France Germany India • • • • Ireland Malaysia Netherlands Norway • • • • Portugal Singapore South Africa Sweden • • • • Switzerland UAE UK USA Partnership • Spain © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 3
- 5. Targets 2014 Focus on Managed Services and Thinksoft integration. Operational Targets 2014 • Grow Managed Services to 45% of total revenues • Successful integration of Thinksoft acquisition (consolidated from 1 Jan 2014 onwards) • Expand share of test automation and output based pricing • Increase share of test centre delivery to more than 30% of revenue and keep it above 60% of total billable headcount • Improve performance in Nordic region • Further improve cash position and profitability © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 5
- 7. Financial Highlights 2013 Profitability, Cash Flow and Net Debt all improved in €m 2013 2012 Change Main developments Revenue 225.8 210.1 7.5% All organic, focus on profitable clients, less on growth Gross Margin (%) 32.0% 31.2% 0.8% Mainly driven by gross margin improvements in MS and RTS Adj. EBIT 13.2 10.6 24.7% Improvement driven by higher gross margin Adj. PBT 12.4 9.2 34.5% Incl. €0.6m lower finance costs than 2012 helped by forex Operating cash flow +22.8 + 14.1 +8.7m Further improvement, 119% EBITDA to OpCash conversion Investment cash flow ‐23.4 ‐ 4.4 ‐19.0m ‐2.9 ‐ 7.9 +5.0m Net debt Incl. Thinksoft € ‐17.8m; and India test centre investment phase II of €m ‐1.3 Without Thinksoft ‐€5m we would have ended at net cash of €2.1m © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 7
- 9. Revenue Split 91% of SQS’s revenue is generated from the six focus verticals. YE 2013 Revenue: € 225.8 m (+7.5 YoY) Revenue by geographies Revenue by industries Rest of Europe Other Healthcare 3% & Food 2% Government & Public 4% Energy & Utilities USA / Rest of World Banking & Financial Services Nordic 29% (+1%*) 6% Ireland 5% 3% Germany 7% 37% 6% (‐4%*) Telecom‐ munication Manufacturing 12% Insurance 18% Switzerland (‐1%*) Retail & Logistics Focus verticals 10% (+4%*) 12% (+1%*) Austria 19% 7% (+1%*) 21% UK * Change to YE 2012 © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 9
- 10. Dividend We propose to pay a dividend of €0.09 per share Dividend • SQS proposes to pay a dividend of €0.09 per share for its 2013 financial year (€0.07 for 2012) • German companies pay dividends once a year • SQS dividend will be paid following the AGM resolution on dividends, on 30 May • In the future SQS proposes to continue to pay a dividend of 30% of adj. PAT © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 10
- 11. To introduce a new chapter, please copy a slide with a suitable picture from the file „Dividing Slides.pptx“ (change to presentation mode to download) and paste it here. If necessary, apply the correct formatting by right‐clicking and choosing “Layout Dividing Slide“. Markets and Outlook © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 11
- 12. Software Testing Services Market Testing Services market growth rates expected to continue to improve in 2014. Market split by services World market testing services Specialist testing contracted stand alone North America Total: 34,500 m$ 5,500 (49%) Consultancy + Other Non‐functional testing 7% ERP/BI/ Datawarehouse Highest growth potential (36% of total by 2026) 2013, in $m Total: 11,300 4,500 (40%) 1,300 (11%) 5% 12% 76% Rest of World Europe Change per year 2013 2014 2015 North America + 9% + 12% + 12% Europe + 5% + 7% + 8% Rest of World + 7% + 9% + 10% Functional Testing Highest growth rates expected in Financial Services, Energy & Utilities, Retail & Logistics Source: Nelson Hall 2013 © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 12
- 14. Outlook 2014 Healthy current trading and confident in delivering continued growth in the year ahead. Continue to focus on higher margin business and increased visibility • Managed Services is to account for up to 50% of total revenues within two years • Focus on larger clients with revenue per client continuing to grow Extend new businesses • Successful integration of Thinksoft • Further build out our domain and technology expertise Target six core industries • Focus on the six industry verticals in which we have the deepest expertise We are confident of delivering continued growth in the year ahead. © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 14
- 16. Profit & Loss Statement Operating profit (adj. PBT) has grown by 34.5%. in €’000 YE 2013 YE 2012 in % of sales Revenue 225,830 Change in % of sales 210,111 2013/2012 7.5% Adj. Gross Profit 72,301 32.0% 65,631 31.2% 10.2% G&A S&M R&D 38,524 17,344 3,228 17.1% 7.7% 1.4% 35,613 15,879 3,549 16.9% 7.6% 1.7% 8.2% 9.2% ‐9.0% EBITDA Depreciation 19,235 6,029 8.5% 16,794 6,204 8.0% 14.5% ‐2.8% Adj. EBIT 13,205 5.8% 10,590 5.0% 24.7% Net interest financial Exchange rate gain/loss ‐1,054 201 Adj. PBT 12,353 IFRS regular amortisation on acquisitions & other IFRS Goodwill write off Nordic IFRS pro forma interest on pensions & other ‐843 ‐2,638 ‐320 PBT 8,551 Taxes ‐3,376 Profit after taxes 5,175 ‐ 1,160 ‐ 246 5.5% 9,184 ‐9.2% ‐181.7% 4.4% 34.5% 3.7% 9.6% ‐1,376 ‐5 3.8% 7,803 ‐1,922 2.3% 5,881 75.7% 2.8% ‐12.0% 2012 IFRS adjustments contain a minor change in valuation of Swiss pension assets required under IAS 19 due to changes in regulations during 2013 © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 16
- 19. Earnings per Share (EPS) 2013 Adj. EPS up by 25%. in €’000 YE 2013 PBT reported 8,551 Weighted average number of shares undiluted 843 320 2,638 ‐ 3,840 ‐ 2,521 6,663 28,201,084 27,893,289 0.24 Change 1,376 5 0.30 Profit after tax adjusted 7,803 8,512 IFRS regular amortisation on acquisitions & other IFRS pro forma interest on pensions & other IFRS Goodwill write off Nordic Taxes on income of operations local GAAP/minority interests EPS adjusted in € YE 2012 9.6% 27.8% 25.0% 2012 contains a minor change in valuation of Swiss pension assets required under IAS 19 due to changes in regulations during 2013 © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 19
- 20. Number of Client Engagements According to strategy the number of client engagements has further come down in 2013. 551 523 486 424 424 2011 (full year) 2012 (full year) 2013 (full year) 335 Number of clients* * ** Average revenue / client** Clients excl. training / conferences clients in k€ p.a. © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 20
- 21. Billable Staff Billable test centres staff share (47% of total) has moved up from 41% during the last 12 months. Permanent Billable Employees Onshore/Offshore Split Consultants 2400 100% 9% 90% 2000 848 22% 26% 31% 80% 32% 30% 36% 47%* 5% 6% 70% 1600 256 1200 7% 10% 60% 11% 11% 50% 91% 40% 800 1,264 72% 30% 68% 62% 58% 59% 2011 2012 53% 20% 400 10% 0% 0 2007 2008 2009 Onsite Consultants 2010 2011 2012 Offshore Consultants Nearshore test centres (Goerlitz and Belfast) YE data 2013 2007 2008 2009 Onsite Consultants 2010 2013 Offshore Consultants Nearshore test centres (Goerlitz and Belfast) * incl. all test centres © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 21
- 23. Shareholders Our largest institutional shareholders hold more than 60% of SQS’ issued shares. Major Institutional Shareholders > 0.5% Legal & General Investment Mgt Octopus Investments Miton Capital Partners Herald Investment Mgt JO Hambro Capital Mgt Investec Asset Mgt Charles Stanley British Airways Pension Investment Mgt BlackRock Investment Mgt Hargreave Hale Standard Life Investments Killik Asset Mgt Hargreaves Lansdown Asset Mgt GLG Partners Barclays Wealth Rathbone Investment Mgt South Yorkshire Pensions Authority Adam & Co TD Direct Investing Unicorn Asset Mgt AXA Investment Mgrs Sub‐Total Individual Shareholders 10.8% 8.4% 8.1% 6.2% 4.2% 3.9% 2.4% 2.1% 2.1% 2.0% 1.9% 1.7% 1.5% 1.4% 1.3% 1.0% 0.7% 0.5% 0.5% 0.5% 0.5% 61.8% Founders (van Megen/Bons) Earn Out Shareholders/Employees Sub‐Total 25.6% 1.3% 26.9% Source: Equiniti Investor Analytics 01/2014 © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 23
- 25. To introduce a new chapter, please copy a slide with a suitable picture from the file „Dividing Slides.pptx“ (change to presentation mode to download) and paste it here. If necessary, apply the correct formatting by right‐clicking and choosing “Layout Dividing Slide“. Thank you for your attention © SQS Software Quality Systems AG | Results for the 12 months ended 31 December 2013 | March 2014 | 25