Software Quality Systems (SQS), a European provider of software testing and quality management services, has caught the eye of Gall & Eke, which argues Austrian IT consultancy acquisition Triton has created opportunities to cross-sell core software testing services and increase the client base.

Says Gall & Eke, ‘SQS aims to transform IT into real business value by ensuring the highest-quality software and systems can be achieved throughout the life cycle, providing an independent and unbiased view of current test processes and recommending the tools, technologies and utilities best suited to achieve each business’ aims.’

Essential testing required
The broker points out that, with global spend on software increasing to nearly $300 billion (£145 billion) per annum, an effective software testing process is essential. SQS’ success has been highly influenced by its current management team, Rudolf van Megen and Heinz Bons, the developers of a revolutionary approach to software testing that they have expanded over the past 25 years.

Pointing out that 2006 acquisition Cresta has increased SQS’ presence in the UK, the broker notes that staff numbers have risen from 127 to 860 and that the majority are consultants. This normally results in a negative impact on margins, but these costs have been offset against pricing power.

The interim figures to June revealed 25 per cent organic growth and a 147 per cent increase in operating profits. A dividend payment is set for year-end 2007. Trading on a price-to-earnings ratio of 15 times, compared to the market sector average of 30 times, ‘we rate SQS a buy’, declares Gall & Eke.

SQS Software Quality Systems	AIM	£46.21m	202.50p	0.00p
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