Acquisition of Remaining Shares

9 May 2016

SQS Software Quality Systems AG

("SQS", the "Company" or the "Group")

Acquisition of Remaining Shares of SQS India Infosystems Private Limited ("SQS-India")

SQS Software Quality Systems AG (AIM: SQS.L), the world's largest specialist supplier of software quality services, announces that it has on 9 May 2016 agreed to acquire the remaining 25% of the issued share capital of SQS India Infosystems (the "Remaining Shares"), subject to statutory Indian approvals. SQS announced the acquisition of 75% of the issued share capital of SQS-India, formerly named Verisoft Infosystems Private Limited, on 16 June 2008 (the "Acquisition"). It is consolidated into the Group's results and is SQS' subsidiary in Pune, India.

The Acquisition was effected by a sale & purchase agreement (the "SPA") which provided an option, exercisable by either SQS or the vendors, for SQS to acquire the Remaining Shares for a consideration determined by SQS-India's profit after tax and SQS' price/earnings ratio. The Remaining Shares are to be acquired, following the exercise by SQS of its option under the terms of the SPA, from Gireendra Kasmalkar and his wife, Snigdha Kasmalkar, from whom the initial 75% of the issued share capital was acquired. The consideration for the Remaining Shares is INR 785 million (approximately €10.5 million), paid in cash. In the year ended 31 December 2015 SQS-India made profits after tax of approximately €3.1 million. Following the completion of the acquisition of the Remaining Shares SQS will own the entire issued share capital of SQS-India.

The acquisition of the Remaining Shares falls to be treated as a related party transaction under the AIM Rules by virtue of the fact that Gireendra Kasmalkar continued as managing director of SQS-India until 31 March 2016, following which date he has continued as a non-executive director. SQS' directors consider, having consulted with its nominated adviser, Numis Securities, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.

Diederik Vos, CEO, commented:

"SQS has invested considerably in India over the past decade to ensure the Company can meet the growing service demands of our global clients, while seeking to drive more efficiency and output from our employee base. Therefore, today's announcement is in line with that stated strategy."

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About SQS

SQS is the world's leading specialist in software quality services. This position stems from over 30 years of successful consultancy operations. SQS consultants provide solutions for all aspects of quality throughout the whole software product lifecycle driven by a standardised methodology, offshore automation processes and deep domain knowledge in various industries. Headquartered in Cologne, Germany, the company now employs approximately 4,600 staff. SQS has offices in Germany, UK, US, Australia, Austria, Egypt, Finland, France, India, Ireland, Italy, Malaysia, the Netherlands, Norway, Singapore, South Africa, Sweden, Switzerland and UAE. In addition, SQS maintains a minority stake in a company in Portugal. In 2015, SQS has generated revenues of €320.7 million.

SQS is the first German company to have a primary listing on AIM, a market operated by the London Stock Exchange. In addition, SQS shares are also traded on the German Stock Exchange in Frankfurt am Main.

With over 10,000 completed projects under its belt, SQS has a strong client base, including half of the DAX 30, nearly a third of the STOXX 50 and 20 per cent of the FTSE 100 companies. These include, among others, Allianz, BP, Commerzbank, Daimler, Deutsche Post, Generali, Meteor, UBS and Volkswagen as well as other companies from the six key industries on which SQS is focused.

For more information, see www.sqs.com