AGM Statement and Trading Update

SQS Software Quality Systems AG

("SQS" or the "Company")

AGM Statement and Trading Update

SQS Software Quality Systems AG (AIM: SQS.L), the world's largest supplier of independent software testing and quality management services, is pleased to provide an update on trading ahead of its annual general meeting to be held at 10 a.m. (CET) today at the Company's headquarters, Stollwerckstraße 11, 51149 Cologne,Germany.

In line with our stated strategy, we continue to focus on increasing the value of contracts with our clients whilst reducing the number of lower margin assignments. This strategy has already proved successful with the contribution of managed services continuing to increase as a percentage of our overall revenue and the continued improvement in gross margin as existing managed service contracts mature.

We have a substantial pipeline of new business and continue to push further into existing sectors as well as the relatively new manufacturing sector. To further expand into the manufacturing sector, we have recently signed a global partnership agreement with Siemens to provide software testing services to their manufacturing clients using the Siemens Teamcenter software product. This partnership was announced at the Product Lifecycle Management World conference in Las Vegas this month and has subsequently led to a number of smaller initial contract wins in this field. This partnership allows Siemens' clients to use our proven, industrialised and unique software testing capability to their full benefit. In addition to the test factory approach, SQS brings a wealth of software testing experience which will allow Siemens and its clients to benefit.

Overheads remain firmly under control whilst we continue to grow our execution capability. We have recently appointed Chris Bean as Group Technology Officer with responsibility for strategic research, services, tool development and IT infrastructure which is expected to lead to positive leverage of delivery capacity across the group.

Rudolf van Megen, CEO of SQS, commented:

"Our strategy of focusing on larger engagements means the projects we undertake will have greater revenue potential and lower maintenance costs. This, coupled with our promising pipeline of new business, provides us with confidence that we will meet full year market expectations.

"I am particularly delighted about the signed global partnership agreement with Siemens as this will significantly strengthen our position in this strategic sector. We expect this to lead to additional managed services contracts for Test Asset Optimisation and Test Automation for Siemens as well as the large organisations associated with it."

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About SQS

SQS is the world's leading specialist in software quality. This position stems from 30 years of successful consultancy operation. SQS consultants provide solutions for all aspects of quality throughout the whole software product lifecycle driven by a standardised methodology and deep experience in various industries. Headquartered in Cologne, Germany, the company employs approximately 2,100 staff. Along with a strong presence in Germany and the UK, SQS has further subsidiaries in Egypt, Finland, France, India, Ireland, the Netherlands, Norway, Austria, Sweden, Switzerland, South Africa and the US. In addition, SQS maintains a minority stake in a company in Portugal. In 2011, SQS generated revenues of 189.1 million Euros.

SQS is the first German company to have a primary listing on the AIM (Alternative Investment Market) in London. In addition, SQS are also traded on the open market of the German Stock Exchange in Frankfurt am Main.

With over 5,000 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, Beazley, BP, Centrica, Daimler, Deutsche Post, Generali, JP Morgan, Meteor, Reuters and Volkswagen as well as companies from every other conceivable industry.

For more information, see www.sqs.com.