5th Mar 2014 10:21
LONDON (Alliance News) - SQS Software Quality Systems AG Wednesday raised its full-year dividend as pretax profit rose in 2013, and reiterated its target of approaching EUR500 million in revenues by 2017.
The software testing and quality management services company proposed a full-year dividend of 9 euro cents, up from 7 euro cents in the previous year.
SQS posted a pretax profit of EUR8.6 million, up from EUR7.8 million in the previous year, as revenue rose to EUR225.8 million from EUR210.1 million. Profit was damped by a EUR2.6 million amortisation of goodwill relating to SQS Nordic.
Revenues in the company's Managed Services division rose 24% to EUR91.1 million from EUR73.4 million. The company has been shifting its focus to derive more revenue from this segment, and Managed Services accounted for 41% of total revenues in 2013, up from 35% in 2012.
However, revenues from Regular Testing Services declined 2.8% to EUR77.0 million from EUR79.3 million, as the company shifted away from the typically smaller contracts in this segment.
Specialist Consultancy Services revenues rose 0.7% to EUR36.7 million from EUR36.4 million, as declines in the first half reversed in the second half of the year.
Gross margin improved 0.8 percentage point to 32.0%, as the company focused on larger high-value contracts and terminated lower margin contracts where profitability could not be sufficiently improved. Although the company reduced its total client numbers to 424 from 486 during the year, average revenue per client rose, leading to higher revenues overall.
The company has a target of approaching EUR500 million in revenues by 2017. The company said that it expects progress on this target to be helped by its acquisition of Thinksoft, which will begin contributing to revenues in full from 2014.
The company acquired a majority stake of 52.9% in Thinksoft Global Services for up to EUR17.5 million in November.
SQS noted that, as around 58% of its revenues are generated in euros, the general strengthening of the euro had caused a hit of EUR89,000 to its earnings for the period.
The company said it had seen solid trading during the first quarter of 2014, and this combined with its progress in 2013 gave it confidence for continued growth in the year.
Shares in SQS were trading up 2.7% at 562.00 pence Wednesday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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