Half-year results from Cologne-based software testing specialist SQS Software (SQS) revealed solid progress. Indeed, adjusted pre-tax profit jumped 36 per cent year-on-year to €4.5m (£38m), average revenue per client jumped 15 per cent, and net debt fell 28 per cent to €10.3m.
SGS is benefiting from a focus on large clients with big contracts. This has helped boost profit margins, as overhead costs have fallen, reflecting fewer sales staff and the better utilisation of high-level consultants. True, this has slowed growth in the lower-margin regular testing services division, which saw flat revenues year-on-year. But growth at the key managed services business has been robust. Indeed. revenue here grew 23.8 per cent in the period to €41.2m and the unit now generates 39 per cent of group sales. Order visibility improved dramatically, too, with order intake having risen 61 per cent in the period to €49m. What's more, chief executive officer Diederik Vos, who took the helm a year ago, says the company has made a strong start to the second half - he's "confident of meeting full-year market expectations".
Broker Canaccord Genuity expects full-year adjusted pre-tax profit of €12.1m, giving adjusted EPS of 30¢ (from €9.2m and 24¢ in 2012), rising to 38¢ in 2014.
SQS SOFTWARE QUALITY SYSTEMS (SQS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 386p | MARKET VALUE: | £108m | |
| TOUCH: | 383-388p | 12-MONTH HIGH: | 386p | LOW: 218p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 260¢* | NET DEBT: | 14% | |
| Half-year to 30 Jun | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 103 | 2.54 | 7.00 | nil |
| 2013 | 108 | 4.13 | 10.0 | nil |
| % change | +5 | +63 | +43 | - |
*Includes intangible assets of €54.4m, or 195¢ a share £1=€1.18 | ||||
