AGM Statement

26 May 2010

SQS Software Quality Systems AG 

("SQS" or "the Company")

AGM Statement

SQS Software Quality Systems AG (AIM:SQS.L), the world's largest pure play supplier of independent software testing and quality management services, will hold its AGM at 10.00am (CET) today, 26 May 2010, at the Company's headquarters in Cologne, Federal Republic of Germany.

At the AGM, the Company will provide the following update on trading:

As the current year has progressed, we have witnessed improving conditions in our markets and are pleased to report a return to growth across the Company's key geographies of the UK, Germany and the Nordic region. Trading in the year to date has been in line with expectations with staff utilisation rates having fully recovered. However, pricing pressure has not diminished and prices are still below pre-recession levels.

In response to the improving market outlook, SQS has been investing in increasing its consultant base to support its ongoing growth plans. In the year to date the Company has hired an additional 170 consultants, the majority of which will be deployed in its offshore centres. These additional consultants are expected to be fully effective from June 2010. The cost of this investment will be borne in the first half of the current year, with the full benefit expected to come through during the course of the second half.

The Company has made good progress in its strategy to increase the proportion of revenue earned from managed services with an order intake in the year to date of approximately €15m, of which approximately €7m is expected to be recognised as revenue in the current year. Significant contract wins include providing a global leader in electronics with outsourced software testing, fully executed in India, for products involved in the client's product lifecycle management application.

SQS has also maintained the rate of expansion of its off-shore business and expects to have more than 30% of its consultants based off-shore by the end of the current financial year.

Rudolf van Megen, Chief Executive Officer of SQS commented,

"We are delighted to be able to report that the market outlook continues to improve and that SQS is growing once again. New client wins and project extensions both in our traditional project consulting and in the new field of managed services provide evidence of this and justify the resumption of our investment in new personnel.

"We are aware that challenges remain in our markets and pricing pressures still persist although we are seeing early signs of improvement. However, we are well positioned to tackle these challenges and are focused on driving improvements in rates during the second half of the year."

Enquiries:

About SQS

SQS is the world's largest pure play supplier of independent software testing and quality management services. SQS consultants design and oversee quality management processes during the software and IT systems life cycle and test the resulting products for errors and omissions.

Headquartered in Cologne, Germany, SQS has approximately 1,500 employees across Europe, Asia, North America and Africa. The Group has a strong presence in Germany (Cologne, Munich, Frankfurt, Stuttgart, Goerlitz and Hamburg) and in the UK (London, Woking, Birmingham, Manchester, Belfast), Ireland, the Netherlands, Switzerland, Austria, Sweden, Norway, Finland, India, Egypt, the United States and South Africa. SQS also has a minor stake in an operation in Portugal and a partnership operation in Spain.

With more than 5,000 completed projects, SQS has a strong customer base including 20 FTSE-100 companies, half of the DAX 30 and nearly a third of the STOXX-50. It supports clients in a wide range of industries, including major corporations such as Allianz, Beazley, BP, Centrica, Commerzbank, Daimler, Deutsche Post, Generali, JP Morgan, Meteor, Reuters and Volkswagen.

www.sqs-group.com