SQS Software Quality Systems AG Regulatory News (SQS)

25 Jun 2009 07:00



25 June 2009

SQS Software Quality Systems AG

("SQS" or "the Company")

Trading Update

SQS Software Quality Systems AG (AIM:SQS.L), the world's largest supplier in independent software testing and quality management services, is today providing a further update on trading for the half year ending 30 June 2009.

Trading since the previous update announced on 14 May 2009 has been in line with management expectations. Our management consulting and core businesses in Austria and Switzerland continue to perform well and although our markets in the German, UK and Nordic regions remain affected by the economic downturn they do appear to have stabilised. We have also seen the recommencement of several large Financial Services IT projects, showing signs of a growing confidence in the sector and boding well for the future.

We are pleased to report a number of recent new contract wins, including a major agreement secured with a leading German bank, a large insurance provider in the UK and a UK based telecommunications company. New client wins have also been secured in a variety of additional sectors, including utilities and gaming.

As previously highlighted, SQS management have been undertaking a number of cost cutting initiatives in the half, including initiating a process to reduce the average cost of sales per consultant by growing the offshore and near-shore test centres and by adjusting our onshore cost structure to better suit the current market. We are pleased to report that all intended cost cutting measures have now been fully implemented and that our capacity is now more optimally aligned with current market conditions.

In addition, we are aided in increasing the flexibility of our cost base by the German Government's "Short Work" initiative. This enables employers to temporarily send home unutilised employees on a reduced salary, majority funded by the German government. This is particularly relevant for SQS as it allows the Company to retain non-billing employees for delayed projects (as opposed to cancellations) whilst saving on costs. 

Rudolf van Megen, Chief Executive Officer of SQS commented, "Our core markets remain difficult to predict. However, we have been encouraged by the number of significant contracts we have closed in recent weeks and continue to see strong growth in Austria and Switzerland. The cost reduction measures we have been implementing throughout the first half are all now in effect, and should reduce the pressure on Group margins. We believe that the Company remains on course to meet current market expectations for 2009 and that it will be able to react quickly to any further market changes. SQS continues to be cash generative and debt free." 

SQS will be announcing its results for the six months ending 30 June 2009 on 8 September 2009.

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About SQS

SQS is the world's largest supplier in independent software testing and quality management services. SQS consultants design and oversee quality management processes during software and IT systems development and test the resulting products for errors and omissions.

Headquartered in Cologne, Germany, SQS has approximately 1,400 employees across Europe, Asia, North America and Africa. The Group has a strong presence in Germany (Cologne, Munich, Frankfurt, Stuttgart, Goerlitz and Hamburg) and in the UK (London, Woking, Birmingham, Manchester, Belfast), Ireland, the Netherlands, Switzerland, Austria, Sweden, Norway, Finland, India, Egypt, the United States and South Africa. SQS also has a minor stake in an operation in Portugal and a partnership operation in Spain.

With more than 5,000 completed projects, SQS has a strong customer base including 36 FTSE-100 companies, half of the DAX 30 and nearly a third of the STOXX-50. It supports clients in a wide range of industries, including major corporations such as Deutsche Bank, Deutsche Telekom, Deutsche Post, Barclays, Allianz, Meteor, BP, JP Morgan, Volkswagen, and Daimler.

www.sqs-group.com