Year End Trading Update

16 January 2017

SQS Software Quality Systems AG

("SQS" or "the Company")

Year End Trading Update

SQS Software Quality Systems AG (AIM: SQS), the leading global specialist in end-to-end software and business process quality solutions, is pleased to provide an update on trading for the year ended 31 December 2016. 

Profitability for the period was in line with the Board's expectations, with another year of both financial and strategic progress. SQS has continued to focus on higher margin client engagements and those with the strongest potential, particularly in the Managed Services ("MS") and Management Consulting ("MC") divisions, which, together with some adverse currency impact through the weaker sterling has had some impact on revenues for the period.

The digital economy continues to open up new opportunities for SQS as it positions itself as the end-to-end quality solutions partner of choice across our key end market verticals.

In recent weeks, SQS has secured some substantial order intakes on digital transformation programmes across a range of sectors and geographies to be delivered over the next three years, including:

- A €30m engagement with a major global car manufacturer;

- Significant new orders and extensions from public institutions in Europe totalling €20m;

- A managed service contract with an insurance business worth €10m;

- Various multi-million US dollar orders from well known US companies across major industries.

The Company ended the period with another year of strong profit to cash conversion resulting in a net debt position of circa €12m. This was in line with expectations and demonstrates continued good performance in this area.

Diederik Vos, CEO of SQS, commented: "2016 has been a year of further progress for SQS as our consulting-led sales approach and focus on higher margin business have enabled us to improve the performance of our business. The US continues to open up some visible opportunities for the business and the digital economy is hugely exciting. As digital transformation plays an integral role in every business, SQS' intellectual property and technology-based solutions can be applicable to any company's strategy.

"SQS enters 2017 with confidence as we are buoyed by recent sales wins whilst remaining focussed on making further inroads in strategically important markets."

Ends

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About SQS

SQS is the leading global specialist in in end-to-end software and business process quality solutions. This position stems from over 35 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 2015, SQS generated revenues of €320.7 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.

For more information, see www.sqs.com