Contract wins and business update

SQS Software Quality Systems AG

("SQS" or the "Company")

Contract wins and business update

SQS Software Quality Systems AG (AIM: SQS.L), the world's leading specialist in software quality services, announces several contract wins and a business update.

The previously announced preferred partnership with Siemens, for the provision of testing services to its manufacturing, predominantly automotive clients, has led to further contract wins. These include three in Europe, one in Japan (which represents a new territory in which SQS is now delivering services) and two in the US. The US is a region of particular strategic focus for SQS given that it is the world's largest software testing services market where there are significant opportunities in high margin software product testing as well as in the automotive sector.

These new contract wins are evidence that the Company's stated strategy of expansion into new territories and increased focus on the manufacturing market, where the Company has deep domain knowledge and technical expertise, is already gaining traction.

Outside of the manufacturing sector, SQS has also won a significant multi-year contract with a major transport infrastructure provider in Switzerland, and a global insurance provider, a multinational consumer goods company and a tier-one bank in the UK.  In total these new contracts represent business worth approx. €10 million over two years.

The Company has also won a considerable number of contract extensions and contract expansion orders since 30 June 2012 within the Managed Services business. On an annualised basis, Managed Services now accounts for approximately 35% of total revenue, up from 33% as reported at the 30 June 2012, and in-line with the stated target of 40% by 2014.

The Company also continues to generate significant cashflow which is reducing net debt in line with management expectations. The net debt position is now significantly lower than at this time last year and lower than at 30 June 2012.

Diederik Vos, the Chief Executive Officer of SQS, commented,"My first few months as CEO of SQS have proved highly rewarding. We have made significant progress on all fronts of the strategic plan outlined at the interim results and we have signed a number of strategically important contracts that further validate the initiatives towards more Managed Services and Specialty Consultancy services that we have put in place."

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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