SQS Software Quality Systems AG Regulatory News (SQS)

25 May 2016

SQS Software Quality Systems AG

("SQS" or "the Company")

AGM Statement and Trading Update

SQS Software Quality Systems AG (AIM:SQS.L), the world's largest specialist supplier of software quality services, is pleased to provide an update on trading ahead of its annual general meeting ("AGM") to be held at the Company's headquarters, Stollwerckstraße 11, 51149 Cologne, Germany at 10 a.m. (CET) / 9 a.m. (BST) today.

Current Trading

The Company is trading in line with its expectations, anticipating another year of consistent progress through the continued execution of its strategy to diversify its global footprint, broaden its specialist services portfolio, industrialise quality assurance services and successfully integrate its recent acquisitions.

New Business

As more enterprises address the need for digitisation and agile approaches like DevOps for business models, a key trend in IT now and for the future, the need for SQS' services as a trusted facilitator in this key area is expected to keep growing. This is reflected in stronger client spend and recent client wins, with corporate reputations more dependent than ever on effective and reliable end-to-end processes, rather than software applications in isolation.

Much of the new business growth continues to be driven from our core Managed Services ("MS") and Specialist Consultancy Services ("SCS") lines of business, with notable wins in the automotive sector during the period. In this area, the Company has recently secured a €9m MS contract extension from a leading automotive producer supporting its connected car solutions. SQS also won a significant specialist consulting contract for end-to-end quality assurance on electric and autonomous drive software from another blue-chip car producer.

Global Expansion

We maintain our strong position in Europe, whilst gaining momentum in territories with the highest growth potential. The huge addressable market in North America has made this a major focus for SQS and the two US acquisitions completed during 2015 marked a significant step forward for its expansion into the US market. The US business now contributes about one fifth of our global revenues and opens up further growth and cross-selling opportunities. Our regions in which we made acquisitions last year, Italy and the US, are performing as expected.

Services Portfolio

We are successfully building out our position as the leading end-to-end quality assurance services provider for software based business processes. As a consequence we are continuing to invest in our business analyst and IT programme management services and capabilities, both in the US and Europe.

Market Outlook

According to recently published data by market research firm Nelson Hall, the global quality assurance market grows at a healthy rate of 8% p.a. SQS expects to keep benefitting from its excellent positioning as a leading specialist provider to clients increasing their investment in digital transformation and DevOps. Demand for Managed Services and Specialist Consultancy Services in particular is expected to remain high, as enterprises become ever more dependent on the integrity of their IT infrastructure, irrespective of industry or geography, to protect their financial and reputational standing.

Investor/analyst event

SQS will hold a teach-in for investors and analysts in London on Thursday 30 June 2016, with a guest presentation from a client, to explore in more detail some of the drivers of the Company's strategy and markets.

Diederik Vos, Chief Executive Officer of SQS, commented: "On the back of investment in our industry practices, as well as recent acquisitions, we are further capitalising on the increased demand for our business critical solutions across all our markets. This year has started well and we are pleased to have made good progress in expanding our international footprint, particularly in the strategically important US market."

Ends

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About SQS

SQS is the world's leading specialist in software quality services. 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 2015, SQS has 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