SQS takes over insurance and IT specialists Triton

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Corporate acquisition

Cologne, 20 August 2007

SQS Software Quality Systems AG (AIM: SQS, Open Market: ISIN DE0005493514), the globally leading independent provider of software quality management and testing services, has taken over Triton Unternehmensberatung GmbH for 15.5 million euros. Triton is a service provider specialising in IT consultancy in the insurance field.

Triton has been optimising the automation of internal business processes in the insurance sector since 1997. The independent specialist consultants assist insurance companies in Germany, Austria and Switzerland to define their business requirements in respect of claims management and contract signing. They also analyse what commercially available software is best placed to boost each particular customer’s process efficiency. Triton itself is not dependent on any provider as the company does not produce its own software.
The takeover of Triton principally strengthens the SQS management consulting service business that it introduced last year. It goes beyond the traditional field of software quality management and testing by also including the management of IT projects, as well as helping technical departments to raise the success rate of their IT projects.
In the 2006 financial year Triton achieved adjusted profits before tax of 1.4 million euros on sales of 4.8 million euros. This means a net profit ratio of 29 per cent. Its equity capital is worth some 0.5 million euros. Triton has about 35 employees on its books, and is based in Vienna, Austria. Its biggest customer is registered in Germany, and is one of the leading insurance service providers worldwide.
“Triton is a highly profitable consultancy company which will enable us to expand our new management consulting division in particular”, says Rudolf van Megen, Chief Executive Officer of SQS AG. “Through our consulting services we are able to help companies to improve the success rate of their IT projects. Over and above that, the takeover is part of our corporate strategy to consolidate market leadership in the key European markets through both external and organic growth.” The takeover is expected to bring about an immediate boost to SQS’s profits.
The purchase of Triton is taking place within the framework of an initial payment of 4.4 million euros in cash and instalments totalling up to 11.1 million euros, partly in cash (49 per cent) and partly in shares (51 per cent). The two companies agreed on an earn-out for the instalment payments. This includes a set target for Triton to increase both after-tax profits and the number of new customers within the coming two years. Triton has committed itself to following a strong growth strategy. Furthermore, the sellers have the option of agreeing to a third earn-out year with higher objectives. During the earn-out Triton will continue to operate as an independent company, under the management of the three founders of the company and under its current name.

• SQS Software Quality Systems
  SQS is the leading independent provider of software quality management and testing services in Europe. Based in Cologne, Germany, SQS currently employs more than 850 people in its branches in Europe—including the United Kingdom, the Netherlands, Switzerland, Austria and Ireland—and South Africa. SQS also has a minor stake in an operation in Portugal and a cooperative agreement with a company in Spain.
  SQS is the first German company to have a primary listing on AIM (Alternative Investment Market) in London. SQS completed a secondary listing on the Entry Standard of the Deutsche Börse (German Stock Exchange) in Frankfurt am Main on 2 December 2005.
  With over 4,000 successfully completed projects behind it, SQS has a strong customer base including half of the DAX 30 companies and 30 per cent of the companies in the STOXX 50. They include names like Dresdner Bank, Barclays, Deutsche Telekom, BP, DaimlerChrysler and Airbus, and various other enterprises from all business sectors.