SQS Software Quality Systems AG Regulatory News (SQS)

18 December 2013

SQS Software Quality Systems AG

("SQS" or the "Company")

Trading Update

SQS Software Quality Systems AG (AIM: SQS), the world's largest supplier of independent software testing and quality management services, is pleased to provide an update on trading and to announce a number of contract wins and extensions.

SQS is currently trading in line with management's expectations and is experiencing growth in the majority of the geographies in which it is present. Preparation for the integration of our recent acquisition, Thinksoft (the "Acquisition"), is progressing in line with our plans and SQS remains confident that it will benefit significantly from the increased global scale and global delivery capabilities that the combined businesses will be able to offer. It is anticipated that the first closing of the Acquisition, whereby SQS will replace the founders of Thinksoft as "Promoters" (as the term is understood under Indian securities regulations), will occur within 2 weeks and that the tender offer for the remaining Thinksoft shares to be acquired will commence on 31 December 2013.

Managed Services

SQS has been awarded several significant Managed Services contracts and contract extensions worth a combined total of €63.5 million, plus further contract wins in the US and other geographies. In the Banking sector, SQS has agreed a contract extension until 2014 with a tier-1 Swiss bank worth a further CHF 10.5m (€8.5m). The Company has also signed a contract with a global German bank utilising over 100 consultants both onsite and within its near-shore operations and, with another global German banking client, it has extended a contract for a further three years. The Managed Services order intake for the current year now stands at € 112.5 million.

In Germany, the Company has also engaged in a three year contract with an international automobile designer and manufacturer to provide mobile online services testing / connected car application testing and blended onsite and offshore Managed Services.

Further progress in North America

In the US, at present SQS' region with the highest revenue growth rates, the Company has contracted for the first time with a global US automotive company and a leading car parts manufacturer to provide Test Automation Services. Both of these contracts have a high potential to develop into future Managed Services engagements.

Also in the US, in the High Tech sector, SQS has signed a contract with a leading semiconductor and flat panel display manufacturer. This is to provide onsite services and an offshore Test Automation Factory and, in the Gaming & Gambling sector, the Company has signed a contract to provide offshore computer games testing services to a global media organisation headquartered in the US.

Other

In other regions and verticals, SQS has engaged with one of the UK's leading retail companies to provide testing across its online and mobile platforms. It has also engaged in a Test Data Management contract for the e-commerce and mobile platform for one of the world's largest furniture and home furnishings retailers.

Diederik Vos, CEO of SQS, commented: "2013 has been a year of significant progress for SQS. The proposed acquisition of Thinksoft will increase our scale and significantly strengthen our offshore capabilities and the plans for integration of Thinksoft are progressing smoothly.

"In addition, we are very pleased to report that we continue to trade in line with management expectations. Recent contract wins and contract extensions clearly demonstrate our success in delivering against our stated strategy of focusing on larger contract engagements within the six key verticals in which we have most expertise, particularly in Managed Services. We are currently experiencing growth in the majority of geographies in which we operate and our rapidly increasing penetration of the mobile applications market and substantial US market is particularly encouraging. As we continue to build scale, we see greater potential to compete for larger contracts and we are confident of continued success going forward."

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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, high offshore automation processes and deep domain knowledge in various industries. Headquartered in Cologne, Germany, the company employs approximately 2,800 staff. SQS has offices in Germany, the UK, Egypt, Finland, France, India, Ireland, the Netherlands, Norway, Austria, Sweden, Switzerland, South Africa and the US. In addition, SQS maintains a minority stake in a company in Portugal. In 2012, SQS generated revenues of 210.1 million Euros.

SQS is the first German company to have a primary listing on the AIM (Alternative Investment Market) in London. 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 of SQS.

For more information, see www.sqs.com.