SQS makes progress

Not only did SQS win a "considerable" number of new clients in the period, but management is also making progress with upgrading its existing regular testing clients to higher-margin managed service contracts. To encourage companies to switch, SQS has introduced a minimum contract value for new regular testing business and will only take on new clients if they are likely to move swiftly to the managed services side. Accordingly, managed service revenue rose to €72.2m in 2012, representing 34 per cent of group revenue - up from €42.2m, or just 22 per cent of revenues. Moreover, during the period, the group signed its largest ever contact - worth €25m over three years - and its largest ever contract extension, worth €24m over two years. And while exporters in central Europe, and particularly in Germany, currently comprise the group's major market, it's also eyeing the US market, with software support from India.

In January, SQS warned that two large European bank customers had suspended work, but the impact hasn't been as dramatic as expected. Broker Canaccord Genuity expects adjusted pre-tax profit of €12m, giving adjusted EPS of 30¢ (from 24¢ in 2012).