SQS India BFSI Investors Presentation

Transcription

1 SQS the world s leading specialist in software quality sqs.com Please copy a slide with a suitable picture from the file Title Slides_EN.pptx (change to presentation mode to download) and paste it here. If necessary, apply the correct formatting by rightclicking and choosing Layout Title Slide. SQS India BFSI Investors Presentation Dr. Martin Müller Managing Director & CEO September 2014

2 About SQS Group SQS is the world s leading specialist in independent software quality services. Founded more than 30 years ago, we have established ourselves as the leading specialist for smart quality solutions, serving North America, EMEA and APAC. The SQS mission is to shape and drive the most critical and challenging software change initiatives. We support our clients through our deep industry know how and global delivery capability. Driven by our standardised methodology PractiQ, industrialisation & automation processes. SQS India BFSI Limited Investors Presentation September

3 About SQS India BFSI SQS India BFSI is the Global Specialist in Financial Services Testing. 100% Financial Services focus 16+ Years in Business SQS India BFSI 200+ client base across 23 countries 80+ Active Clients Offices in key Financial Centers: New York, London, Frankfurt, Singapore, Brussels, Dubai, Hong Kong, Mumbai and Sydney Strong multicountry experience 800+ People, 25% from Financial Industry Over 14m person hours of track record in Financial services testing Is now part of the SQS Group, world s leading specialist in independent software testing with approx people strengthening the industry coverage and focusing on BFSI Benefits SQS India BFSI offer local presence with strong experience in banking, global delivery and multicountry project experience. SQS India BFSI Limited Investors Presentation September

4 Our assets Alignment to be a PARTNER of CHOICE for Business Assurance Testing. Banking Cards & Payments Insurance Treasury & Capital Markets Repository Assets: 35,000+ Test Cases Repository Assets: 30,000+ Test Cases Repository Assets: 10,500 Test Cases Repository Assets: 10,000+ Test Cases 6,000,000+ person hours of testing 7,000,000+ person hours of testing 230,000+ person hours of testing 980,000+ person hours of testing NonFunctional Testing Team SQS India BFSI Limited Investors Presentation September

5 Services Phase Objective Our Services Our offerings cover the entire Application Development Life Cycle. Comprehensive BR Documents Seamless translation of BR to FS Bridging Domain Gap, Establish Func. Coverage Requirements Led Testing End to End Business Process Focus Quick Transition to Productive Use Support Business as Usual Envision Plan Construct Test Accept Roll Out Business As Usual Envision Plan Construct Test Accept Roll Out Business as usual Business Process Mapping Process flow Documentation Business Requirements documentation & review Parameter setup & Review Functional Specification Preparation Review of FS/ Customization Documents Fit for Purpose Testing BRFS Gap Analysis Review of Unit test plans System Testing Integration Testing Data Migration testing Interface testing (Standalone) User Acceptance Testing Automated Testing Non Functional Testing (Performance, Security, Disaster Recovery, Failover) Network/ Scheme Certification Support (for Cards) User Training User Manual Preparation Rollout Support Functional Help Desk Automated Regression Test Packs BAU testing Release testing Project Testing Compliance Testing SQS India BFSI Limited Investors Presentation September

6 Key Highlights FY 2014 Net Revenue went up 20% YoY. Compared with FY 2013 Growth + 8% in $ terms (+ 20% in INR terms), revenues up in Cards & Payments PBT PBT increased by 59%, driven by revenues from Europe Net Cash Position Cash balance increased to INR 502 m from INR 387 m EPS Improved to INR per share from INR per share SQS India BFSI Limited Investors Presentation September

7 Key Highlights Q Substantial progress in profitability by 190% achieved. Compared with Q414 Growth + 6% in $ terms (+3% in INR terms), revenues up in Cards PBT PBT increased by 190%, driven by revenues from Europe Net Cash Position Cash balance increased to INR 527 m from INR 502 m EPS Improved to INR 6.09 per share from INR 2.17 per share SQS India BFSI Limited Investors Presentation September

8 Portfolio/Market trends Meeting market trends through offering the leading services portfolio in software quality. Digital Transformation Dev/Ops integration Managed Services Product Testing Product Vendor Vendor Release Integration Testing Product Customer Customer Release Operation Product Customer Proven Product & Industry Assets Automation Assets Industrialisation SQS Certification Big data testing strategy Domain Expertise Telematics & Cloud solutions Mobility SQS India BFSI Limited Investors Presentation September

9 Achievements & Strategies Thinksoft was renamed as SQS India BFSI limited. Achievements FY 2015 Thinksoft renamed as SQS India BFSI Limited and fully integrated. Revenue growth driven by Cards and Payments vertical and healthy demand from North America and Europe Regions. Investment in billable resources, positioning for growth. Strategies FY 2015 Continue to focus on BFSI verticals in which we have greatest domain and technology expertise. Strategy is for business in Core Banking Testing and large migration in Cards * BFSI: banking, financial services, insurance SQS India BFSI Limited Investors Presentation September

10 To introduce a new chapter, please copy a slide with a suitable picture from the file Dividing Slides.pptx (change to presentation mode to download) and paste it here. If necessary, apply the correct formatting by rightclicking and choosing Layout Dividing Slide. Financial Details SQS India BFSI Limited Investors Presentation September

11 Financial Highlights FY 2014 Profitability, Cash Flow and Net Cash all improved. in INR m Change Main developments Revenue % Gross Margin (%) 48.3% 47.7% 0.6 % Adj. EBIT % Adj. PBT % Driven by Europe Region, and cards and Payments assignments Maintained due to better realization in Europe Consolidation of facilities and movement to owned delivery centres Higher Margins and better exchange rate yield Operating cash flow m Improvements in EBIDTA Investment cash flow m Net Cash Position m 2013investment in owned premises 2014Assets replacement & Tools development Realized income less Repayment of Term loans SQS India BFSI Limited Investors Presentation September

12 Financial Highlights Q EBIT improved by 71 %. in INR m Q12015 Q42014 Change Main developments Revenue % Driven by Europe Region, and cards and Payments assignments Gross Margin (%) 44.8% 46.6% 1.8 % Adj. EBIT % Adj. PBT % Reflecting investments in billable staff to prepare for growth in future quarters Q4 Severance pay INR 50 m; higher onsite mix and increase head count from 833 to 851 Higher Margins and better exchange rate yield Net Book debts m Increase by 10 days sales to 110 days SQS India BFSI Limited Investors Presentation September

13 Key Metrics The deployment of our strategy is evidenced by our key metrics. Gross Margin (overall) (in % of revenue) FY % FY % 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% Number of clients / Average revenue Net Book Debt FY m 23.5 m 23.1 m FY m INR m SQS India BFSI Limited Investors Presentation September

14 Revenue Split Europe Revenue contribution increased to 49 %. FY 2014 Revenue Revenue by practice Revenue by geographies Insurance (3% FY13) Banking (2% FY13) ASIA (+3% FY13) ANZ (0% FY13) 3% Americas (8% FY13) Payments (+9% FY13) 9% 3% 46% MENA (7% FY13) 13% 9% 20% Cards (+2% FY13) 27% 3% Capital Market (0% FY13) 12% Treasury (6 % FY13) India (1 % FY13) 6% 49% Europe (+13% FY13) SQS India BFSI Limited Investors Presentation September

15 Revenue Split Europe Revenue contribution increased to 50%. Q Revenue Revenue by practice Revenue by geographies Insurance (+1% Q4 FY14) Payments (0% Q4 FY14) 9% 4% 47% Banking (3% Q4 FY14) MENA (+1% Q4 FY14) ANZ ASIA (1% Q4 FY14) (3% Q4 FY14) 12% 7% 2% 22% Americas (+2% Q4 FY14) India (1 % Q4 FY14) 7% 24% Cards (+1% Q4 FY14) 3% Capital Market (0% Q4 FY14) 13% Treasury (+1% Q4 FY14) 50% Europe (+2% Q4 FY14) SQS India BFSI Limited Investors Presentation September

16 To introduce a new chapter, please copy a slide with a suitable picture from the file Dividing Slides.pptx (change to presentation mode to download) and paste it here. If necessary, apply the correct formatting by rightclicking and choosing Layout Dividing Slide. Markets and Outlook SQS India BFSI Limited Investors Presentation September

17 Software Testing Services Market Testing Services market growth rates at c. 7 % in SQS s largest regional markets. World market testing services Total: 34,500 m$ 5,500 (49%) Rest of World Specialist testing contracted stand alone 1,300 (11%) 2013, in $m Total: 11,300 North America 4,500 (40%) Europe Change per year North America + 9% + 12% + 12% Europe + 5% + 7% + 8% Rest of World + 7% + 9% + 10% Market split by services ERP/BI/ Datawarehouse Highest growth potential (36% of total by 2026) Nonfunctional testing 12% 7% 5% Consultancy + Other 76% Highest growth rates expected in Financial Services, Energy & Utilities, Retail & Logistics Functional Testing Source: Nelson Hall 2013 SQS India BFSI Limited Investors Presentation September

18 Competitor Landscape SQS is the world s largest testing services specialist by revenue and no. 11 among system integrators. Pure Play Test Specialists System Integrators (testing part only) SQS + Thinksoft Qualitest IBM 980 TACT 38 MTP 26 Cognizant 960 Plan IT 22 Inspearit 22 Accenture 750 Cigniti Maverick TCS 666 Avnet 17 Imbus 15 Cap Gemini 630 RTTS 15 FHG/IESE 13 Infosys 630 UTest 13 Acial 12 Wipro 520 Amsphere 12 Tesnet 12 CSC 440 QA Infotech Qualitykiosk CGI 370 Eclipse IT 10 Logi Gear 10 HCL 300 Allied Testing 10 Quality House 9 SQS + Thinksoft 250 Assioma 9 Keytorc 7 Tech Mahindra 225 ( m) ( m) Source: Nelson Hall Report/Gartner Report, 2013; SQS, based on estimated or published 2013revenue figures SQS India BFSI Limited Investors Presentation September

19 Outlook 2015 BFSI has strong growth potential, resulting from being part of SQS group. Continue to focus on higher margin business and increased visibility Strategy is for acquiring Core banking Testing and large migration in Cards Focus on larger clients with higher revenue per client Extend new businesses Build out our domain and Technology expertise Cards & Payments segment and also in Insurance. Focus on Continue to focus on BFSI verticals in which we have greatest domain and technology expertise Ongoing concentration in Europe and US Markets We expect general positive market environment as supported by market studies. Most recent GDP projections indicate positive momentum towards meeting strategic goals. SQS India BFSI Limited Investors Presentation September

20 To introduce a new chapter, please copy a slide with a suitable picture from the file Dividing Slides.pptx (change to presentation mode to download) and paste it here. If necessary, apply the correct formatting by rightclicking and choosing Layout Dividing Slide. Appendix SQS India BFSI Limited Investors Presentation September

21 Profit & Loss Statement PBT has grown by 60%. in INR m FY 2014 FY 2013 Change in % of sales in % of sales 2014/2013 Revenue % Adj. Gross Profit % % 22.1% G&A S&M R&D % 9.7% % 10.4% (14.2%) (11.3%) EBITDA Depreciation % 2.9% % 2.9% 36.0% 21.8% Adj. EBIT % % 38.6% Net interest financial Exchange rate loss/gain (9.34) (0.5%) 4.0% (5.20) (0.3%) 0.9% 79.6% 433.2% PBT % % 59.5% Taxes % Profit after taxes % % 54.5% SQS India BFSI Limited Investors Presentation September

22 Profit & Loss Statement Revenue has grown by 19%. in INR m Q1/2015 Q1/2014 Change FY 2014 in % of sales in % of sales Q1 2015/2014 in % of sales Revenue % Adj. Gross Profit % % 6.3% % G&A S&M R&D % 9.9% % 9.6% (15.9%) (22.6%) % 9.7% EBITDA Depreciation % 2.6% % 3.3% (6.0%) 7.2% % 2.9% Adj. EBIT % % (5.8%) % Net interest financial Exchange rate loss/gain % 1.1% (2.12) (0.5%) 12.2% 115.7% (89.2%) (9.34) (0.5%) 4.0% PBT % % (34.6%) % Taxes % Profit after taxes % % (38.9%) % SQS India BFSI Limited Investors Presentation September

23 Profit & Loss Statement Adj. EBITDA went up by 53% YoY. in INR m Q1/2015 Q4/2014 Change FY 2014 in % of sales in % of sales Q / Q in % of sales Revenue % Adj. Gross Profit % % (1.4%) % G&A S&M R&D % 9.9% % 10.9% 30.3% 7.5% % 9.7% EBITDA Depreciation % 2.6% % 2.9% 53.1% 8.5% % 2.9% Adj. EBIT % % 70.5% % Net interest financial Exchange rate loss/gain % 1.1% (1.83) (17.31) (0.4%) (3.5%) 118.2% (132.7%) (9.34) (0.5%) 4.0% PBT % % 190.1% % Taxes (206.7%) Profit after taxes % % 182.6% % SQS India BFSI Limited Investors Presentation September

24 Profit & Loss Statement Adj. EBITDA went up by 53% YoY. in INR m Q1/2015 Q1/2014 Change Q4/2014 Change FY 2014 in % of sales in % of sales Q1 2015/ 2014 in % of sales Q / Q in % of sales Revenue % % Adj. Gross Profit % % 6.3% % (1.4%) % G&A S&M R&D EBITDA Depreciation % 9.9% 19.7% 2.6% % 9.6% 25.0% 3.3% (15.9%) (22.6%) (6.0%) 7.2% % 10.9% 13.2% 2.9% 30.3% 7.5% 53.1% 8.5% Adj. EBIT % % (5.8%) % 70.5% % Net interest financial Exchange rate loss/gain % 1.1% (2.12) (0.5%) 12.2% 115.7% (89.2%) (1.83) (17.31) (0.4%) (3.5%) 118.2% 132.7% Adj. PBT % % (34.6%) % 190.1% % PBT % % (34.6%) % 190.1% % Taxes % % (9.34) % 9.7% 21.1% 2.9% (0.5%) 4.0% Profit after taxes % % (38.9%) % 182.6% % SQS India BFSI Limited Investors Presentation September

25 Balance Sheet SQS India BFSI Cash and Bank Balance increased by INR 52 m. in INR Mn Q1 FY 2015 Q1 FY 2014 FY 2014 Assets Non current assets Tangible assets Intangible assets Intangible Assets under Development/ CWIP Other Non Current Assets Current assets 1, , Trade receivable Cash and bank balances Other Current Assets Total assets 1, , , Equity and Liabilities Current liabilities Trade Payable Other current Liabilities ShortTerm Provisions Non current liabilities (Term Loan) Equity & Reserves 1, , Total liabilities 1, , , SQS India BFSI Limited Investors Presentation September

26 Cash Flow Statement SQS India BFSI Net increase in Cash/equivalents INR 26 m. In INR m Q1 FY 15 Q1 FY 14 FY Net cash flow from Operating Activities Net profit/(loss) before taxation Depreciation/amortisation Loss/(profit) on sale of fixed assets (0.36) Unrealised forex exchange loss/(gain), net (28.72) (9.70) Interest income (4.76) (3.13) (11.41) Interest expense Provision for bad and doubtful debts (4.02) (13.02) (Increase)/Decrease in Current assets (46.66) (37.48) (111.79) Increase/(Decrease) in current liabilities and provisions Direct taxes paid (net of refunds) (21.12) (11.52) (142.07) Investing activities (31.43) (74.36) (27.49) Purchase of fixed assets (13.58) (5.47) (25.29) Proceeds from sale of fixed assets 0.38 Interest received Fixed deposits matured/(invested) during the year (22.22) (72.01) (13.36) Financing activities (5.89) (10.94) (129.03) Increase in Share Capital Repayment of Borrowings (5.77) (6.39) (23.70) Interest paid (4.03) (4.74) (18.01) Dividends paid (81.24) Tax on dividend paid (0.02) (13.79) Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of changes in exchange rate on cash and cash equivalents (22.66) Cash and cash equivalents at the end of the year SQS India BFSI Limited Investors Presentation September

27 Earnings per Share (EPS) SQS India BFSI EPS Diluted at INR 5.91/share. Q1/2015 Q1/2014 Change FY 2014 FY 2013 Profit after taxes adjusted (in INR m) (38.8%) Weighted average number of shares undiluted 10,607,492 10,261,288 10,480,675 10,217,295 EPS Diluted in INR (41.0%) SQS India BFSI Limited Investors Presentation September

28 Balance Sheet Other short term liabilities & Provisions, 30 June In INR m 30Jun14 31Mar14 31Mar13 Other current liabilities Advance received from customers Employee benefits payable Liabilities for other expenses Unearned Revenue Unpaid application money due for refund Unpaid dividend Statutory Liabilities Current maturities of long term borrowings Subtotal Short term Provisions for Leave salary for gratuity Proven for tax on proposed interim equity dividend 0.02 Proposed equity dividend Provision for tax on proposed equity dividend Provision for taxation (Net of prepaid taxes) Subtotal Total SQS India BFSI Limited Investors Presentation September

29 Billable Staff Employee strength increased marginally in Q1. Permanent Billable Employees (Period Average) Onshore/Offshore Split Consultants % % % % 60% 71% 70% 71% % 40% % FY 13 FY 14 Q1 FY 15 20% 10% 0% 29% 30% 29% FY 13 FY 14 Q1 FY 14 Onsite Consultants Offshore Consultants Onsite Consultants Offshore Consultants SQS India BFSI Limited Investors Presentation September

30 To introduce a new chapter, please copy a slide with a suitable picture from the file Dividing Slides.pptx (change to presentation mode to download) and paste it here. If necessary, apply the correct formatting by rightclicking and choosing Layout Dividing Slide. Thank you for your attention SQS India BFSI Limited Investors Presentation September