Trading Update

15/01/2014

SQS Software Quality Systems AG("SQS" or the "Company")

Trading Update

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 2014.

SQS continues to experience solid growth. Results for the year are expected to be in line with the Board's expectations with turnover of circa €268m. A lower than expected tax rate of 22.5% is expected to result in earnings per share ahead of the Board's expectations. The lower tax rate is a consequence of a geographically more favourable spread of profits.

The Company had a net cash position of €7m at 31 December 2014. This is an increase of €9.9m over the net debt position at 31 December 2013 and was achieved despite investment of €2.5m during the year into extending the test-centre building in Pune, India, and the purchase of an additional €1.8m worth of SQS India BFSI (formerly Thinksoft) shares in December 2014.

Managed Services continues to grow in line with our strategy and now represents 45% of total revenues, up from 41% for FY 2013. Recent client wins and extensions for Managed Services during the period include contract extensions from all large managed services clients and a new client win with a European government agency worth at least €5m per annum.

The US remains SQS' region with the fastest growth and revenues have more than doubled during 2014. Most recent client wins in the region include a tier one bank, a payment processing company, an asset management institution and various other manufacturing and technology companies.

Diederik Vos, CEO of SQS, commented: "2014 has been a year of substantial progress for SQS with the successful integration of SQS India BFSI greatly increasing our size, global delivery capabilities and geographic reach. In addition, we have continued to invest in our offshore and nearshore resources to facilitate the ongoing success of our Managed Services business.

"We are pleased to report that we have continued to experience solid growth across the Company as a whole and our greatly improved net cash position at year end demonstrates strong cash conversion. Progress in our US business during the year has been particularly encouraging and will we therefore aim to increase our US market presence going forward. We enter 2015 in an ever stronger position within the markets in which we operate and, while we remain aware of the unpredictable nature of macroeconomic conditions, we are confident of further progress in the year ahead."

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About SQS Software Quality Systems

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 3,900 staff. SQS has offices in Germany, the UK, Australia, Egypt, Finland, France, India, Ireland, Malaysia, the Netherlands, Norway, Austria, Singapore, Sweden, Switzerland, South Africa, the UAE and the US. In addition, SQS maintains a minority stake in a company in Portugal. In 2013, SQS generated revenues of €225.8 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 7,000 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, Commerzbank, Daimler, Deutsche Post, Generali, JP Morgan, Meteor, Reuters, UBS and Volkswagen as well as other companies from the six key industries on which SQS is focussed.

For more information, see www.sqs.com