Business Update

SQS Software Quality Systems AG

("SQS" or the "Company")

Business Update

Software Quality Systems AG (AIM: SQS.L), the world's largest specialist supplier of software quality services, announces an update on new business wins and on its most recent acquisitions in the US and Italy.

Global Expansion

The acquisitions of Bitmedia (now SQS Italy), Trissential LLC ("Trissential") and Galmont Consulting LLC ("Galmont") completed in February, June and September 2015 respectively have now all been successfully integrated into the Company and complete a major strategic expansion across all the Company's target markets for this year.

The acquisitions of Galmont and Trissential have significantly enhanced the Company's revenue and delivery footprint in the US. Trissential approximately quadrupled the Company's onsite delivery in the US. Following the highly complementary acquisition of Galmont, the Company is now well placed to reach its stated target of $100m of annualised revenue in the US without any further acquisitions.

New Business

The new client wins in the US include the first engagement with a major US healthcare and pharmaceutical company, a two year MS deal with a major computer software re-seller, a long-term software testing engagement with a large financial services company, a global delivery engagement for the energy division of one of the world's largest industrial conglomerates and added offshore delivery to its leading US hospitality chain client.

In Europe, the Company engaged with an electronics client working in the defence sector on a long-term engagement and won another "Internet of Things" ("IoT") engagement with a leading lighting supplier to test its innovative IoT solutions. The Company also started a new global delivery engagement with a leading retail bank operating across the Spanish speaking world.

Current Trading

Organic revenue growth and contributions from Bitmedia, Trissential and Galmont have resulted in Managed Services and Specialist Consulting revenues, particularly in the US, increasing significantly during the period. Central European revenues from the automotive and manufacturing sector remain stable and in-line with estimates.

Diederik Vos, Chief Executive Officer of SQS, commented: "We have continued to build on the momentum achieved in the first half of the current financial year and successfully addressed the margin pressures through targeted customer acquisition and continued cost control.

"All the acquisitions completed during the year have now been fully integrated into the Company with cost synergies and customer retention rates all in-line with our expectations. We therefore believe SQS is now positioned to take advantage of global opportunities across our major target markets and industry verticals as software becomes increasing complex and intrinsic to our daily lives."

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About SQS

SQS is the world's leading specialist in software quality. 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 2014, SQS has generated revenues of €268.5 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 8,000 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