10th May 2006 07:01
SQS Software Quality Systems AG10 May 2006 Embargoed for 7.00am 10 May 2006 SQS Software Quality Systems AG Acquisition of Cresta Group Limited SQS Software Quality Systems AG (AIM: SQS.L) the AIM listed leading supplier of independent software testing and quality management services, today announces that it has agreed to acquire 100% of the shares of Cresta Group Limited("Cresta") for a consideration of up to £18m. After several successful acquisitions in the past, this is the first acquisition the company has made since its IPO in September 2005 and management expects it to be earnings enhancing in the current financial year. SQS will merge its UK operation with Cresta, to create the largest independent pureplay software testing and quality management consulting practice in the UK. David Cotterell, head of Cresta will become the CEO of SQS-Cresta in the UK while Bob Bartlett, current head of SQS UK will, become COO of the combined operations. Cresta has 200 employees and is headquartered in Central London, with subsidiaries in Ireland and an office in South Africa. For the year ending 31 December 2005, Cresta recorded turnover of £12.9m (2004: £8.4m) and profit before tax of £0.72m (2004: £0.53m). The net assets being acquired in this transaction had a book value of £1.4m as at 31 December 2005. The consideration for the acquisition will comprise SQS shares up to a maximum of 78% of the deal value with the remainder in cash. The initial consideration of £6m (£3m in cash and £3m by the issue of 1,427,743 new ordinary shares in SQS) will be paid upon completion, with the balance to be paid depending on the achievement of specific earn out targets over the next two years, up to an additional maximum of £12m. SQS will apply to AIM for admission of the 1,427,743 initial consideration shares on completion, which is expected to become effective on 3 July 2006. The new shares will rank parri passu with the existing ordinary shares. The acquisition is conditional, inter alia, upon all necessary registrations in Germany of the increase in share capital which is required to issue the new ordinary shares on completion. It is expected that completion will take place after 1 July 2006. The acquisition creates new opportunities for SQS in the UK, both by increasing its customer base and extending its reach into new vertical markets. Cresta has 30 concurrent customers at anyone time, including 5 of the top 10 FTSE 100 companies spread across the banking, utility, telecoms, e-commerce and energy sectors. The UK operation will initially be branded SQS-Cresta. The combined SQS-Cresta operation in the UK will be three times bigger than SQS's current UK operation. The combined operation is expected to increase SQS's UK revenues from approximately 20% to 40% of total Group turnover at an enhanced margin as overhead economies are achieved. The Board is pleased to report that trading conditions in SQS's major marketscontinue to be encouraging and that revenue in the first three months of 2006 isup by approximately 20% year on year, in line with the Board's expectations. Afurther update on current trading will be made at the AGM on 2 June 2005. Rudolf van Megen, Chief Executive Officer of SQS, commenting on the acquisition, said: "I am delighted by this acquisition as it secures SQS's position as the largest independent software testing and quality management company in the UK. We look forward to integrating the two businesses and exploiting the market opportunities that are now available to SQS." David Cotterell, Chief Executive Officer of Cresta in UK, said: "This transaction, puts us ahead by two years and accelerates opportunities for both our clients and staff - as well as ensuring our growth continues strongly. The resulting organisation positions SQS-Cresta as the clear market leader in our field whilst remaining focused as a pureplay testing consultancy and allowing us to further invest in products and services to the benefit of our markets and clients." For further information please contact:SQS Software Quality Systems AG www.sqs.deRudolf van Megen (CEO)/Rene Gawron (CFO) +49 (2203) 91 54 0 SQS-Cresta www.cresta.netDavid Cotterell (CEO) +44 7971 804537 Evolution Securities Limited 020 7071 4300Jeremy Ellis/Mike Read Smithfield 020 7360 4900Sara Musgrave/Tania WildPrint resolution images are available for the media to view and download fromwww.vismedia.co.uk Notes to EditorsSQS is the leading independent pan-European provider of quality management andtesting services for software development. SQS consultants design and overseequality management processes during software and systems development, and testthe resulting products for errors and omissions. Headquartered in Cologne, Germany, SQS now has operations across Europe withoffices in seven countries and has over 470 employees. SQS has a strong presencein Germany (Cologne, Munich, Frankfurt, Stuttgart and Hamburg) with subsidiariesin the UK, Netherlands, Switzerland and Austria. SQS also has a minor stake inan operation in Portugal and a partnership operation in Spain. With over 3,000 completed projects under its belt, SQS has a strong customerbase including half of the DAX 30 companies and 30% of the STOXX-50. Theyinclude names like Dresdner Bank, Lloyds TSB, Deutsche Telekom, Vodafone,Daimler Chrysler, and Airbus. SQS is the first German company to have a primary listing on AIM, completing itsIPO on 20 September 2005 raising £10.8m before expenses at an issue price of190p. SQS is included in the Software and Computer Services sector (9530) withinthe Computer Services subsector (9533) and has a RIC code of SQS.L. SQScompleted a secondary listing on the Entry Standard of the Frankfurt StockExchange on 2nd December 2005. For further information, please visitwww.sqs-uk.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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