Regulatory Announcement
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20 August 2007
SQS Software Quality Systems AG (“SQS” or “the Company”)
Acquisition of Triton
SQS Software Quality Systems AG (AIM: SQS), the world’s largest pure-play provider of independent software testing and quality management services, is pleased to announce the acquisition of Triton Unternehmensberatung, a private Austrian company specialising in IT consultancy services to the insurance industry, for a total maximum consideration of €15.5 million.
Trading since 1997, Triton provides IT consultancy services to insurance companies improving the automation of their back office processes. Working within Germany, Austria and Switzerland, Triton’s specialist independent consultants help insurance companies to define the claims and policy processing requirements of their back office processes and then best employ the leading commercial software solutions on the market to maximise processing efficiency. Triton is a vendor agnostic IT business consultancy - it does not produce its own software.
The acquisition of Triton immediately enhances the ‘Management Consulting’ practice launched by SQS last year. The Management Consulting practice expands the Company’s traditional quality management and software testing offering into additional IT project management and consulting services, mainly helping business departments to improve the success rate of their IT projects. The acquisition also provides SQS with valuable cross selling opportunities into its software testing division.
In the year to 31 December 2006, Triton made an adjusted profit before tax of €1.4 million on turnover of €4.8 million, representing a net margin of 29%. The value of the net operating assets to be acquired is approximately €0.5 million. Triton has approximately 35 permanent employees, is based in Vienna, Austria and has one of the world’s leading insurance companies, headquartered in Germany, as its predominant client.
The acquisition comprises an initial consideration of €4.4 million in cash, and deferred consideration of up to €11.1 million in total, to be paid in a combination of cash and shares (49% cash/51% stock). The deferred consideration is subject to Triton meeting specific earnout targets over the next two years, including profit after tax and revenue with additional customers. Triton has committed to an aggressive growth forecast in order to achieve the earnout targets. In addition, there is a provision for the sellers to agree, at their discretion, to a third year earnout with higher targets.
During the earnout period, Triton will stand as a separate business, retaining the Triton name. Its three founders will continue to run the business.
The acquisition is expected to be immediately earnings enhancing.
Rudolf van Megen, Chief Executive of SQS commented:
‘Triton is a highly profitable IT business consultancy that will enhance the newly launched Management Consulting practice of SQS, mainly helping business departments to improve the success rates of their IT projects. The acquisition also supports the Company’s strategy of strengthening its position in a number of key European markets through acquisition and organic growth.’
Notes to editors
SQS is the world’s largest independent provider of software testing and quality
management services. SQS consultants design and oversee quality management
processes during software and IT systems development, and test the resulting
products for errors and omissions.
Headquartered in Cologne, Germany, SQS now has 860 employees across Europe and in South Africa. The Group has a strong presence in Germany (Cologne, Munich, Frankfurt, Stuttgart and Hamburg) and in the UK (London, Woking, Birmingham, Manchester, Belfast), Ireland, Netherlands, Switzerland, Austria and South Africa. SQS also has a minor stake in an operation in Portugal and a partnership operation in Spain.
With more than 4,000 completed projects under its belt, SQS has a strong customer base including 36 FTSE-100 companies, half of the DAX 30 and nearly a third of the STOXX-50. It supports clients in a wide range of industries, including major corporations such as Lloyds TSB, Deutsche Telekom, Barclays, BP, Credit Suisse, Volkswagen, and Airbus.
| For further information please contact | ||
| SQS Software Quality Systems AG | +49 22 03 91 54 0 | |
| Rudolf van Megen, CEO | ||
| Rene Gawron, CFO | ||
| Altium | +44 (0)20 7484 4040 | |
| Nick Tulloch | ||
| College Hill Associates Ltd | +44 (0) 20 7457 2020 | |
| Sara Musgrave | ||
| Carl Franklin | ||
| Ben Way | ||
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