Trading Update

SQS Software Quality Systems AG

("SQS" or "the Company")

Trading Update

14th January 2016

SQS Software Quality Systems AG (AIM: SQS), the world's largest specialist supplier of software quality services, is pleased to provide an update on trading for the year ended 31 December 2015. 

SQS continued to experience solid top line growth of 18% in 2015, notably in North America where growth was driven by two acquisitions during the period. Results for the year are expected to be in line with the Board's expectations with revenues of circa €317m.

The Company ended the period with a net debt position of circa €(7m), a substantial improvement from the net debt position of €(26.5m) at the end of the first half. This was despite an additional investment of €5m during the second half for completing the acquisition of Galmont Consulting LLC and doubling the test-centre capacity in Pune, India.

SQS continued to execute successfully on the stated strategy of increasing revenues from Managed Services and Specialist Consulting, as well as on growing the contribution from the US, all underpinned by recent business wins and extensions. During H2 2015 we have further reduced the proportion of our business arising from lower margin Regular Testing Services engagements.

Following the year end, SQS has been awarded a major new multi-million dollar contract with an existing industrial client in the US.

We are pleased to report that all three acquisitions made during 2015 (Bitmedia in Italy, Trissential and Galmont in the US) have been successfully integrated and delivered positive contributions to the Group's profitability in the past year, as well as the expected strategic benefits.

Diederik Vos, CEO of SQS, commented: "The Group has performed well in 2015 and I am pleased to end the financial year in a considerably stronger position than we started. The Company continues to effectively manage the challenges evident in Regular Testing Services, and we have shown that the stated strategy of focussing on Managed Services, Specialist Consulting and increasing our efforts in the US have delivered the expected outcome. Looking ahead, we believe there are significant geographic and vertical market opportunities to be captured across our divisions and we remain confident of continued progress in 2016."

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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 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