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30 March 2011 2010 results: first signs of recovery

3.5% current operating margin in second half

The SQLI Group today announced its results for 2010. The first signs of recovery are now visible in the second half accounts, with the current operating margin coming out at 3.5% over six months, compared with an operating loss of €0.3 million in the first half of the year.

The SQLI Group today announced its results for 2010. The first signs of recovery are now visible in the second half accounts, with the current operating margin coming out at 3.5% over six months, compared with an operating loss of €0.3 million in the first half of the year.
SQLI benefited from strong sales throughout the year, with turnover up 10%, to €170.1 million, including 8.4% of organic growth. This is higher than the average for the Software Engineering houses listed on NYSE Euronext in Paris. This performance, combined with strict management of resources (tight control over administrative expenses, increased activity rate), resulted in a month-on-month improvement in profitability.
The year’s operating income figure comes out at €0.3 million. This includes large non-current charges linked to the non-compete clause for former Chairman (€1.0 million), a €0.7 million capital loss on the sale of the Poitiers branch, and a €0.3 million adjustment to the value of the Luxembourg subsidiary.
After allowing for €0.8 million of interest charges and taxes (including a €1.6 million levy on Corporate Added Value (Cotisation sur la Valeur Ajoutée des Entreprises), SQLI made a net loss of €1.8 million, a sharp improvement over twelve months.

Financial situation: €55.1 million in shareholders’ equity and gearing of just 2%
As at 31 December 2010, the SQLI Group’s shareholders’ equity stood at €55.1 million, or €1.51 / share. Net cash and equivalent generated during the second half helped to cut net debt to €1.1 million or 2% of equity.


New ambitions out to 2014
In the medium term, SQLI’s objective is to become a sector benchmark once more for the benefit of its customers, its workforce and its shareholders. To achieve this, the Group has launched its 2010/2014 strategic plan based on three powerful performance drivers, namely the rationalisation of the corporate footprint, company reorganisation, and development of the high value added product and service offering.
The plan in underpinned by the Group’s fundamentals (ie, innovation, mastery of the technology, and service quality) and by a continuation of the transformation of its offering launched during the previous business cycle. This includes developing Consultancy and software publishing activities to supplement the Group’s legacy Integration and Web Agency business activities. The aim is to accelerate repositioning by strengthening skills, notably via targeted acquisition-led growth initiatives, as already seen in the case of the Wax! Interactive acquisition announced in early March.
The OBSAAR bond issue launched on 28 March will give the Group the financial resources it needs to drive the momentum and federate shareholders, financial partners and managers on the strength of the issue’s net proceeds of €16.5 million and potential €13.6 million capital increase if all the BSAAR warrants are exercised.


2011: Year 1 of the re-conquest
FY 2011 is set to be fully aligned on the medium term strategic plan. Further strong sales performance combined with a more offensive recruitment policy (over 400 new hires are planned during the year) should help the Group sustain a higher than market average rate of growth.
In parallel, thanks to energetic rationalisation measures and to the continuous improvement in its KPIs, SQLI can confirm its ambition of steadily improving its current operating margin.


Corporate Governance: gentle transition
As announced earlier, non-Executive Chairman Yahya El Mir stepped down at the 29 March meeting of the Board of Directors, considering that his transitional period at the helm of the Group was now ended. Dominique Chambas, an SQLI Board member since 2002, was appointed to take his place, and Fabienne Conte, Chief Financial Officer at the Institut Curie (oncological research and treatment – 3,000 staff – €300 million annual budget), was co-opted as a new Director. At the same Board meeting, Julien Mériaudeau was confirmed in his position as Chief Executive Officer.
To adopt best practice in terms of good governance, SQLI has decided that at the next General Meeting of Shareholders that it will propose to create a structure with a Supervisory Board and a Management Board. This new structure will ensure an improved distribution of powers between the Group management (via the Management Board) and the oversight body (the Supervisory Board).
SQLI will publish its first quarter 2011 turnover figure on 12 May 2011 after close of trading.

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