Upload
hacong
View
213
Download
0
Embed Size (px)
Citation preview
SQS Software Quality Systems AG
SQS Software Quality Systems AGPreliminary results for the 12 months ended December 31st, 2008
Rudolf van Megen – Chief Executive OfficerRené Gawron – Chief Financial OfficerDavid Cotterell – Chief Sales Officer
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 2
SQS Group and StrategySQS Group – an overview Offerings & ServicesStrategic priorities for 2008 – a reminder
FinancialsProfit & Loss statementBalance sheetCash flow statementEmployee numbersDividend policy
SQS in the marketClientsMarketCompetitors
Strategic summary and outlook
Agenda
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 3
SQS is the global leader in independent software testing and quality management services.
SQS Group at a glance
SQS is listed on the AIM London
South Africa Egypt IndiaUSA
AustriaFinland GermanyIreland Netherlands Norway Portugal Sweden
SwitzerlandUnited Kingdom
Spain(Partnership)
IndependenceMarket Leader in Independent Software Testing & Quality Management services.
ExperienceOver 27 years testing experience. Experience database with more than 5,000 projects.
PeopleTeam of over 1,450 trained quality professionals
Combined Onsite/OffsiteMultilanguage offshore testing centres in South Africa, Egypt, India
InnovationActive knowledge transfer between Innovation Groups and client projects.
ClientsWe operate across 27 client verticals for leading brands and organizations.
Innovative – Growing – Diverse Industries –Profitable - Cash Generative – Debt Free
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 4
SQS provides the full range of independent qualityofferings to many business critical IT projects.
SQS Business Model
«It seems that independent testing is shaping as a separate market segment.
Frank J.H. Ridder, Research Director IT Sourcing, Gartner
»«
Much of the recent growth in outsourced application services has been fueled by customers engaging independent testing services where the development provider is separate from the provider performing the testing.
Bill Martorelli, Forrester Research
»
BusinessDemand
Specification
Rollout
Testing
Design
Acceptance
Process Consulting - Independent Quality Assurance Testing –
Application Intelligence – Documentation – Business Management
Service
Management Consulting for Business
Coding
Requirements
Independent SQS quality services
= Independent from the software
design and engineering side
Run
SQS Engagement Models
Providing Experts
Taking responsibility for testing projectfull/partial project
ownership
Outsourced test / quality Center on
SLA basis
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 5
We have bundled our services to offerings to map ontoclient‘s needs for IT projects and maintenance.
Offerings & Services
Services(35)
Offerings(10+)
Client’sNeeds
Expertise in widest range of quality services
Offerings supportbusiness needsto generateClient‘s Benefit(ROI).
Reduce costs and time to
market in SW Development
Reduce implementation time in business
process optimisation
Ensure business continuity at
reduced system costs in an IT
merger
Early errordetection
(EED)
Rapid testing for SAP
implementations & upgrades
Risk and costreduced mergerof IT operations
Req
uire
men
tsEn
gine
erin
g
Func
tiona
lTe
stin
g
Secu
rity
Test
ing
Sust
aina
bilit
yTe
stin
g
Perf
orm
ance
Test
ing
Usa
bilit
yTe
stin
g
Test
Man
agem
ent
Test
Aut
omat
ion
…
…
…
SQS
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 6
Pay an enhanced dividend Dividend of 0,11 € proposed
SQS strategic priorities for 2008 – a reminder
SQS has achieved all strategic goals for FY 2008.
Improve operating cash flow
Continue to improve profits
Target clients for long term out-sourcing and offshoring contracts
Expand market verticals
Strengthen market position
Investment to support growth Invested in two additional offshore centres (India and Egypt)
Operating cash flow converted 127% of adj. PBT
Adj. PBT up 26%, again outpacing revenue growth
Long term contracts share of revenue increased from 11% to 14%
We have won 175 new clients across 27 market verticals
75 strategic clients / two thirds of total revenue
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 7
85% of SQS revenues are billable days by its permanent consultants.
SQS Business Model
Revenue FY 2008: € 142.9 m
187 billable days perconsultant
Prices:€ 550 – 1,800 per day onshore
Prices:€ 100 – 170 per day offshore
Average: 1,044 permanent consultants
Onshore: average 861
Offshore:average 183
Tools (1.2%)Training & Conferences (3%)Services with contractors (13%)Services with permanent consultants (incl. training)(85%)
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 8
We have achieved further improvements in revenue and profit margins despite a downturn in the economy.
Profit & Loss statement FY 2008 (IFRS)
in % of sales
6.5%5.6%
8.0%
8.6%
8.7%
11.7%
15.7%7.1%3.0%
34.5%
6.7%4.7%
7.6%
9.2%
9.4%
12.1%
15.7%7.4%2.2%
34.7%
in % of sales
ChangePrev YearActual
- 241-561
- 1,140- 733- 428
IFRS regular amortisation on acquisitionsIFRS pro forma interest (mainly on deferred consideration)Exceptionals: start up costs Egypt
25.6%10,46713,143Adj. PBT
12.2%9,66610,842PBT
18.0%121,059142,903Revenue
FY 2007FY 2008in € ‘000
9,6286,696
- 4,146
- 31913,462
17,3283,866
22,50610,5153,126
49,609
- 46Net interest financial
Adjust. profit after actual tax rate/interestProfit after taxes -0.6%6,734Taxes - 2,932
Adj. EBIT 28.1%10,513
EBITDADepreciation and amortisation
G&AS&MR&D
Gross Profit
21.6%7,917
22.7%14,1243,613
19,0048,6213,614
18.8%41,752
At 2007 exchange rates, 2008 revenue would have been at €150.1m - a growth rate of 24%
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 9
We ended the year with a net cash position of €5.1m and a record low of 55 debtor days.
Balance Sheet FY 2008 (IFRS)
102,98062,956
1754,3056,515
10,995
4584,2734,771
13,0976,430
29,029102,980
5,75326,1612,736
34,650
52,65210,7404,938
68,330YE 2008
49,018Equity/Net Assets
1054,1165,118
Bank loansLong term liabilities from acquisitionsOther non current liabilities
Total equity and liabilities
Non current liabilities
Bank loans & overdraftsTrade creditorsShort term liabilities from acquisitionsOther short term liabilitiesTax accruals and liabilities
Current liabilitiesTotal assets
CashTrade receivablesOther receivables
Current assets
GoodwillIntangible assetsOther assets (e.g. fixed assets)
Non current assetsin € ,000
33,930Equity and Liabilities
9,339
1913,547
11,86112,9185,413
92,287
Assets
92,287
7,22027,1731,296
35,689
45,9775,9994,622
56,598YE 2007
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 10
Due to rigid debtor collection we have converted 127% of adj. PBT to operating cash flow – a record in SQS history.
Cash Flow statement FY 2008 (IFRS)
5,7537,220
- 4,273
- 4,1800
-469858
-482
- 9,368
- 6,0240
- 3,41066
12,582
- 192- 3,919
16,693FY 2008
Net cash flow fromin € ,000
4,817- 100
- 5,4970
- 391
Increase in share capital / dividend paymentsCosts of floatation / secondariesRedemption of finance loansIncrease of finance loansRedemption / termination of leasing contracts
Cash at endCash at beginning 2,565
Financing activities - 1,171
Investment activities - 5,528
Acquisition and capitalization of tangible / intangible assetsPurchase of marketable securitiesAcquisition / disposal of subsidiariesForeign currency result / interest received
Current business activities
Interest payments / exchange rate movementsTax payments
Operating activities
7,220
- 2,9300
- 3,088490
11,354
- 746- 1,440
13,540FY 2007
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 11
In the last 4 years SQS has developed from a mainly German based company to an international onsite/offshore business.
Development of employee numbers in SQS Group
Many newpositionsand careeropportunitieshave openedupImprovedKnowledgeSharingthrough moreclient projectsand inter-national Innovation Groups
Number of Employees
NetherlandsAustriaSwitzerland
Germany
UK
EgyptIndia
Nordic
0
300
600
900
1.200
1.500
2004 2005 2006 2007 2008
Ireland
South Africa
1.450
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 12
We propose to pay a dividend for 2008.Dividend policy
SQS proposes to pay a dividend of € 0.11 per share for its 2008 financial yearThe 2008 dividend will be paid following the AGM on May 20, 2009SQS proposes to continue to operate a dividend policy in line with earnings
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 13
New Wins by Industry – to end 2008 175 (Vs 155 in 2007) **
Verticals FY 2008 *
We have followed a strategy to develop the smaller verticalsof our client base.
Diversification of market verticals
* Percentage of total SQS Group revenue; 2008 FY: €142.9m revenue
23%
17%
8%
8%
7%
4%4%
3%7%
5%
14%Telco
Finance
PublicInsurance
Auto/Aero/Defence
Legal & Media
Fund Mgt.Other
Electron./Technology
Utilities/Energy
Retail, Logistics & Services
11%:Banks
7%:Industrial General
11%:Insurance
6%:Automobiles & Parts
11%:Tech –Software & Services
5%:Government & Public SectorPharmaceuticals & BiotechRetailersSupport ServicesTelecommunicationsTravel & Leisure
3%:Financial GeneralFood & BeveragesHealthcareEquipment & ServicesInvestment Banks
2%:GeneralIndustrial Transportation
1%:Aerospace & DefenceCharityElectronics & Electrical EquipmentLegalManufacturing
Media & InternetOil & GasReal EstateTransportation GeneralUtilities
** Percentage of total by client numbers from 175 total
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 14
79% acknowledge that software testing is essential in IT product development.
Relevant SQS market
Sources: EITO/IDC/Gartner 2009 for overall market; PAC:International Market Analysis „Software Testing“, 2008 for Testing/QM
50%
IT Services Europe (CAGR: 1.5 % p.a.) € 159b
SW App.Developm./Syst. Int.
SW App. Developm./ Syst. Int. € 79.5bn
Testing/QM
Testing/QM€ 13.9bn
External ServiceProviders
External ServiceProviders € 1.7bn
Systemsintegrators
Test Specialists
This share is expected to go to 20% in the next 4 years
SQS has an approx.8 % market share
17.5%
€ 1,320m
€ 380m12%
Strong growth potential for SQS due to an increase in testing outsourced to external service providers.
«International study by PAC
»
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 15
Competitive landscape SQS markets and worldwide
Pure Play Test Specialists
Source: SQS, based on estimated or published 2008 revenue figures
20 30 40(€m) 60 80 100 120
Vision IT/Optium
Infosys
(€m)
System Integrators (testing part only)
Wipro
0 10System Integrator/IT Services Group, not independent
Independent Testing/QM Provider
Logica
Applabs/IS Integration
Capita
Cognizant
SOGETI
SQSTCS
Satyam
40TescomSQS
143
Tesnet 20
Q-LABS 20
Quality House 9
ps-testware 9
13FHG/IESE
MTP 11
SDLC 11
Thinksoft 10
RTTS 7
13Imbus
Plan IT
T-Systems
Lionbridge/GDT
ALTRAN/MAP
16
SQS strengthens its position as market leader and seeks to continue further market consolidation.
Acial 10
150
Accenture
Hexaware
Test&Data 4
Squerist 6
Assurity 5
Genilogix 7
Immune 5
21
226
0 100 200
45
30
20
16
160
180
143130
50
60
45
300
386
60
30
400
HP/EDS 50
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 16
Organic growth enhanced by selective acquisitions.Strategic summary
OrganicBuild on position as global leader in independent software testing services
Target new and existing clients for long-term blended onshore/offshore service contracts
Continue to invest in Sales & Marketing resources
Focus on the sale of bundled service packages to address specific client needs
Maintain focus on the European market whilst expanding offshore capacity
AcquisitionSuccessful track record of targeting and integrating appropriate acquisitions
Strengthen foothold in Europe
Continue to expand SQS’s offshore facilities, increasing capacity and coverage of time-zones and languages – currently exploring opportunities in Asia/Oceanic region
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 17
Confident outlook.
Continuing strong demand for our services in first quarter of 2009
Recent well-timed acquisitions have considerably expanded our offshore capabilities and our market-leading presence in Europe
Improving visibility driven by growing demand for long-term blended on-site/offshore contracts
Independent software testing now recognised as distinct sector by industry analysts including Gartner and Forrester
Exposure to specific verticals reducing
We look to the future with confidence
Looking forward
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 18
Appendix
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 19
The SQS strategy is built on five strategic goals.Strategic goals
Global goals of SQS Group Strategy
Extend leadership in independent quality management and testing by delivering added value to our customers in order to achieve their goals
Grow the business significantly above the market growth rate for IT services
Further develop to be the financially strongest independent global quality service company
Extend and retain a strong base of highly motivated, skilled and best performing employees
Trendsetter for quality aspects in business/IT: Anticipate major trends and use this for clients’benefits
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 20
Market studies prove the need for independentsoftware testing.
Why independent software testing is necessary
An international study by PAC1) showed:79 per cent of survey respondents think that poor testing has a significant impact on the company in terms of costs 33 per cent see testing as essential investment in the product 65 per cent agree that software testing should be independent from development34 per cent state they do not have a consistent approach to testing68 per cent agree that they will have to adapt their testing to compliance and regulatory requirements Only 20 per cent have no problems in the first few months after the go-live of the product
Global study on success rate of IT projects2)
(in per cent)
1) Independent study commissioned by SQS; carried out in 2008 with 1,030 companies in 13 countries2) Standish Group Study 1994–2006
Our advice: Detect errors earlier
FailedChallengedSucceeded
1627 26 28 34 29 35
53 3346 49
51 53 46
31 4028 23 15 18 19
1994 1996 1998 2000 2002 2004 2006
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 21
SQS’s diverse offshore centres suit our client’s needsSQS Offshore
Language
Customer situation International customers
National customers (Germany, Austria, Switzerland)
Internationalcustomers, US customers
Testing in Germany required
South Africa Egypt GermanyIndia
Pune
Durban
Cairo
Görlitz
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 22
Initial Training Training on the job
SQS Initial Training
3-6 Weeks
SQS Trainingon the job
Training & Certification
Continuous staff training ensures highest service qualityComprehensive training concept
35 Innovation Groups
Continuous LearningISTQB® Certified Tester
Foundation LevelAdvanced LevelExpert Level
IREB®CertifiedProfessionalfor Requirements EngineeringPMI® Project ManagementProfessional (PMP®)QUAMP® – Quality Assurance Management Professional
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 23
In constant exchange rates revenue would have been €150.1m and adj. PBT at €13.6mDespite negative foreign exchange effects from translating UK business contribution to consolidated numbers in Euros we further improved adj. Earnings per Share by 5% and met market expectations
Financial results summary
Revenue up 18% (by €21.8 m)
Adj. PBT up 26% (by €2.6 m)
Adj. EPS up 5% (by €2-cent)
142.954.7 78.9
121.1
2005 2006 2007 2008
13.13.7 5.3
10.5
2005 2006 2007 2008
SQS has almost tripled in size since we floated on AIM more than three years ago.
41.028.022.043.0
2005 2006 2007 2008
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 24
Due to strong market demand profits improved in theGerman and the „Other Countries“ segments.
Geographical segmental analysis 2008 (IFRS)
8.5%
121,059-
10,2728.3%
142,903-
11,893
Revenue1)
ConsolidationEBIT incl. IFRS effects
Total
8.2%4,113
3379.2%13,950
1,283Revenue1)
EBITOther countries(Nordic, Austria, NL, Egypt)
6.6%12,534
8224.4%14,138
629Revenue1)
EBITSwitzerland
11.5%48,704
5,5807.7%46,076
3,555Revenue1)
EBITUK/Irl/RSA/India
6.3%55,708
3,5339.3%68,739
6,426Revenue1)
EBITGermany and Group costs
in % of sales2007
in % of sales2008in € ,000
1) external consolidated revenue without intercompany
Year ended December 31
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 25
EPS up 5%Earnings per share
4.9%0.410.43EPS adjusted in €
9,9%9,66510,842PBT reported
ChangeFY 2007FY 2008in € ,000
22,287,098
9,628
1,140733428
- 3,515
19,089,779Weighted average number of shares undiluted
Profit after taxes adjusted
IFRS regular amortisation on acquisitions IFRS pro forma interest (mainly on deferred consideration)Exceptional start up costs Egypt Taxes on income for operations local GAAP
7,917
241 561
0-2,550
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 26
Development of number of shares from pending earn outs (I)The considerations payable in shares for acquisitions are paid when profit related earn out targets are met.
21.55m 22.82m1)25.22m 26.19m 27.17m
0.12m 0.87m0.97m2.40m1.22mAdd nb. of shares issued for acquisition
in case full earnout targets are met
1) incl. 0.053m shares increase from convertible bonds in 02/2008
Crestafinal earn-out
Tritonearn-out (I)
Validateacquisition
FC Validate earn-out (I)
26.31m
FC Tritonearn-out (II)
Est. weighted number of shares:2008: 22.287m shares2009: 26.340m shares2010: 27.540m shares
12/2007 08/2008 11/2008 12/2008 08/2009 11/2009
Actual
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 27
Development of number of shares from pending earn outs (II)The considerations payable in shares for acquisitions are paid when profit related earn out targets are met.
27.17m
0.499m0.250m0.884mAdd nb. of shares to be issued for acquisition
FC Tritonearn-out (II)
08/2010 08/2010 08/201011/2009
28.06m
FC Validate earn-out (II)
28.31m
FC Verisoftearn-out (I)
28.81m
FC Validate earn-out (III)
Additional stock options:Granted YE 2008:0.795mPotentially exercisable from onwards
10/2009: 0.529m shares (3.06€ exercise price = 273p*)10/2010: 0.266m shares (3.95€ exercise price = 353p*)*at 4 March 2009 Sterling/EUR exchange rate
No warrants or convertibles are outstanding
© SQS Software Quality Systems AG | Preliminary Results for the 12 months ended December 31th, 2008 | March 2009 | Page 28
Our customers are of high value for the business.Customer Quotes
Mike Stacey, CTO Vodafone Ireland
The release was not only the largest deployment but was also delivered to an exceptional level. Several days after the deployment there are no significant operational issues in the performance of the system deployed.
Tim Allen, Change and Execution Director Egg Bank
They were innovative and offered a service-based delivery — structured around Test Points and using the Cresta TestStrategist software application to provide visibility and predictability.
Dominic Shine, CIO Beazley
SQS have made a major contribution to helping us raise the bar on the quality of our application. They have had a significant impact on helping us increase the quality of our application in a fast-paced and dynamic environment whilst also helping us to deliver a quality application on time.
»
»
»
«
«
«
SQS Software Quality Systems AG
Stollwerckstraße 11 | 51149 Köln, GermanyPhone: +49 22 03 91 54-0 | Fax: +49 22 03 91 54-15E-Mail: [email protected]: www.sqs.de | Internet: www.sqs-group.com
Thank you for your attention