analyst conference 29. feb 2016

QSC AG

THE DIGITISER OF THE GERMAN MITTELSTAND

Analyst Conference Cologne, 29 February 2016

QSC AG

Disclaimer

2

This presentation contains forward-looking statements based on management estimates and reflects

the current views of QSC AG's ("QSC") management board with respect to future events. These forward-

looking statements correspond to the situation at the time this presentation was prepared. Such

statements are subject to risks and uncertainties, which often fall outside the sphere of influence of

QSC. These risks and uncertainties are covered in detail within the Risk Report section in our financial

statements.

Although the forward-looking statements are made with great care, their correctness cannot be

guaranteed. Therefore the actual results may deviate from the expected results described herein.

QSC does not intend to update or adjust any forward-looking statements after the publication of

the presentation.

QSC AG

11:00 a.m. – 11:10 a.m. Words of welcome Jürgen Hermann

11:10 a.m. – 11:35 a.m. Preliminary figures for 2015 & outlook 2016 Stefan A. Baustert

11.35 a.m. – 12.05 p.m. Strategy: How QSC is returning to

growth course Jürgen Hermann

12.05 p.m. – 12.30 p.m. Pure Enterprise Cloud: The entire

ICT portfolio from the Cloud Felix Höger

Agenda

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QSC AG

Preliminary figures for 2015 & outlook 2016

Stefan A. Baustert, CFO

QSC AG

1. Financial development in 2015

QSC AG

QSC surpassed its ambitious targets

6

QSC AG

Significant rise in profitability

7

QSC AG

Significant rise in earnings despite revenue decline

Revenues

Two-track development:

Growth in the Cloud and

Consulting segments; decreases

in TC and Outsourcing business

Earnings

Cost-cutting programme

impacting positively

8

QSC AG

Cost reductions are working faster than planned

9

Sustainable cost reduction

Merging of locations

Insurance, telecommunication and

other services

Reduction in the workforce

Personnel

QSC AG

Staff reductions faster than planned

Main measures

Termination of fixed-term

contracts

Natural staff attrition

Socially responsible staff

reduction

> ~70% of planned volume

has already been achieved

10

QSC AG

Improved EBITDA margin

11

Successes in cost-cutting contribute to an

increase in EBITDA

Focus on business fields with higher margins

EBITDA margin

QSC AG

Regular depreciation at a stable level in 2015

12

Regular depreciation was

€ 12-13 million per quarter

in 2015

Special depreciation at end

of year will relieve pressure

in coming years

Significant reduction in regular

depreciation in 2016

QSC AG

Significantly improved EBIT in 2015

13

Cost-cutting programme is paying off

Lower depreciation enables further

improvement in EBIT in 2016

EBIT margin

QSC AG

Cloud: Revenues virtually doubled

Cloud business still in its early stages

Growing demand for Cloud-based services

such as Cloud-based telephony

Scalability of the business model enables

significantly improved gross profits

The Cloud segment has been generating

positive gross profits since Q3 2015

Gross margin

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QSC AG

Consulting: Growth in revenues and earnings

High demand for SAP consulting

Growing demand for Cloud expertise

(SAP HANA)

Higher share of external service providers

(targeted increase in SAP employees planned)

Microsoft

SAP

Microsoft and SAP

Gross margin

15

QSC AG

Outsourcing: Marked rise in gross margin

Focus on SME customers and strong

margin revenues

Existing customers are loyal to QSC:

Order intake increases to € 223.2 million

(2014: € 177.4 million)

Ongoing industrialisation and virtualisation

Increase in gross profit is based on

reorganisation and cost-cutting programme

Gross margin

16

QSC AG

Telecoms: Stable revenues with business customers

Stricter regulation is burdening the TC business

Business with resellers additionally impaired

by fierce price competition

Despite stricter regulation, revenues with

business customers remain stable

Improved revenues mix leads to higher

gross margin

TC revenues with resellers

TC revenues with business customers

TC revenues (total)

Gross margin

17

QSC AG

Moderate CAPEX in 2015

18

Focus

Infrastructure

Development of Pure Enterprise Cloud

Customer projects

Share of CAPEX in revenues as a percentage

QSC AG

Significantly improved free cash flow

FCF of € 7.1 million exceeds raised

forecast of € 5 million

Positive FCF enables QSC to pay out a

dividend for 2015

Management Board proposes a dividend

of 3 cents per share

19

QSC AG

Equity ratio at a solid 35%

Shareholders‘ equity and long-

term liabilities cover over

100% of long-term assets with

matching maturities

High cash and cash equivalents

of € 74.0 million

20

QSC AG

2. Financial outlook 2016

QSC AG

2016: The first year of the Pure Enterprise Cloud

In the current year, QSC is concentrating on

Developing the Cloud business

Marketing the Pure Enterprise Cloud

Completing the cost-cutting programme

For the current year QSC is planning

Revenues of € 380 – 390 million

EBITDA of € 34 – 38 million

A positive free cash flow

22

QSC AG

QSC hires further Cloud experts

23

Two-track development in 2016

Hiring of Cloud experts for

sales and operation of the

Pure Enterprise Cloud

Necessary staff custs in order

to achieve the target of 1,350

employees by the end of 2016

Staff reorganisation leads to

one-off costs in the mid

single-digit million range

QSC AG

Staff reorganisation impacting EBITDA 2016

24

QSC AG

Rising Cloud and Consulting revenues in 2016

25

QSC AG

Strategy: How QSC is returning to growth course

Jürgen Hermann, CEO

QSC AG

QSC is ready to digitise the SME sector

27

New positioning: Focus on the digital transition in the German SME sector

New management team with proven track record

2 We are selectively targeting our sales efforts on the German SME sector

3 We have drastically reduced costs and increased profitability

1 We are radically industrialising IT and standardising the portfolio

QSC AG

Positioning greatly sharpened

28

With decades of experience and expertise

in the areas of Cloud, Consulting, Outsourcing, and

Telecommunications, QSC accompanies its

customers securely into the digital age.

QSC AG is the digitiser for the

German Mittelstand.

Secure.

Innovative.

At your side.

QSC AG

All companies in the SME sector are faced with huge challenges!

Digitisation is revolutionising the SME sector

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Digitisation is …

entering the core processes of every company,

affecting all industries and the German SME sector,

fundamentally changing existing business models,

compelling companies to act and adapt to the new conditions.

QSC AG

Specific challenges at a glance

Wachstum Kunden

Technologie Geschäftsprozesse

Innovation Sicherheit

Generate more revenue from new business models,

market access and sales channels!

Meet (new) expectations regarding offer individuality

and pricing, reachability and service!

Secure compatibility with digital ecosystems and added

value chains of tomorrow!

Enhance flexibility, efficiency and speed through

digitisation and automation!

Modern IT, cloud computing and the Internet of Things

are complex topics – and at the same time drive and

provide the foundation for every digital transition!

Security is essential in the digital age – and an

enormous challenge in the SME sector!

Growth Customers

Technology Business processes

Innovation Security

30

QSC AG

Top 5 key digital technologies*

31

* Sources: Bitkom, Crisp Research, IDC, own research

CLOUD BIG DATA SECURITY IOT ALL-IP

QSC AG

Digital

QSC portfolio SAP-HANA

Platform

SAP S/4HANA

IoT Cloud

platform

“Solucon” for

a large

number of IoT

and Industry

4.0 scenarios

Managed

Security

Services

Certified

German data

centres

All-IP voice

and data

services

Corporate

Network

Services

Workplace

Services

Application

Services

Communi-

cation as a

service

Key digital

technologies

QSC portfolio covers the key digital technologies

32

IOT ALL-IP BIG DATA CLOUD SECURITY

QSC AG

Excellent position in the competitive environment

33

Comparison of

competition in the

German SME sector

QSC AG

DTAG/T-Systems

Cancom

Bechtle

All for One Steeb


QSC AG

Digital solutions already in use

34

Key QSC digital

technologies

Customers

Fressnapf/

Tchibo

Novoferm

tormatic

URBANA


QSC AG

Key QSC digital

technologies

Customers

Fressnapf/

Tchibo

Digital

solutions

Digital solutions already in use: Fressnapf & Tchibo

35

SAP

landscape on

HANA

IT operation by

certified

German QSC

data centres

All-IP

network (e.g.

Corporate

Network

Services)

Infrastruc-

ture as a

service

Communi-

cation as a

service

Omni-channel challenge (integration of stationary trade and e-commerce)


QSC AG

Digital solutions already in use: Novoferm tormatic

36

Key QSC digital

technologies

Customer

Novoferm

tormatic

Digital solutions

Solucon

Gateway

Mobility

Module

Encryption

Secure

operation in

certified

German QSC

data centres

IoT Cloud

platform

Solucon


Novoferm tormatic is an international provider in the area of gate automation

Challenge: digitisation of value creation

QSC AG

Key QSC digital

technologies

Digital solutions already in use: URBANA

37

Customer

URBANA

Digital

solutions

Intelligent

networking of

energy

consumption

meters

Encryption

Secure

operation in

certified

German QSC

data centres

IoT-Cloud

platform

Solucon

Analysis of

external

factors

(e.g. weather)

as part of

energy

management

URBANA is an energy provider for the residential industry, trade and industry

Challenge: digitisation of energy consumption data


QSC AG

End-to-end quality!

QSC is the only SME full-service provider to offer proprietary TÜV- and ISO-certified

data centres in Germany, proprietary Cloud/ICT solutions and a proprietary voice-

data network.

Proprietary data

centres

Proprietary voice /

data network

Proprietary Cloud/

ICT solutions

Strengths and competitive advantages at a glance

38

2

3

1

Respected partner at eye level with the SME sector

Real end-to-end quality

30,000 satisifed business customers

QSC AG

Sales process

Provision

& operation

Digital, highly efficient business model

39

German SME

sector

Target company

size:

200-5,000 IT seats

Standardised

service catalogue

PURE ENTERPRISE CLOUD MORE REVENUES HIGHER MARGIN

Simpler

Faster

Qualitatively better

More price competitive

QSC AG

Sales focus on new service catalogue

Target group: 200-5,000 IT seats, no new customers in traditional 1:1 outsourcing

Discontinuation of industry-specific sales and development of a Pure-Enterprise-Cloud sales

(new and experienced team)

New and process-oriented sales approach (from lead generation to closing a deal)

New go-to-market Q-loud/Solucon:

Development and expansion of the partner eco system (e.g. integrators from the automation

environment)

Digital business model consulting (“from advice through to implementation“)

Focus on digital marketing:

Increased digital visibility to support future sales successes

Positioning in the relevant digitisation and cloud topics (Content Marketing, SEM, SEO)

Sales alignment follows new business model

40

QSC AG

Back to growth course by 2017

41

2015

2016

2017

Declining business areas Growth areas Revenue

development ∑

Outsourcing

Telecommunication B2B2C (cannot be migrated to PEC)

Outsourcing


Outsourcing


Cloud

Consulting

Telecommunication B2B2B

Cloud

Consulting


Cloud

Consulting


QSC AG

Pure Enterprise Cloud: The entire ICT portfolio from the Cloud

Felix Höger, COO

QSC AG

QSC as central part of the future Cloud Economy

43 QSC AG

Use market opportunities Digital visibility

Paradigm shift in how ICT services are addressed, sold and operated!

Focus on sales

! Industrialisation

QSC AG

Pure Enterprise Cloud (PEC): Target market addressed

44 Sources: Schober Group International, 2015; techconsult, “IT-Cloud-Index” 2015

3,500,000

approx. 16,000

30

550

>90%

70-80%

15-30%

DAX enterprises

Large enterprises

>5,000 IT seats/employees

Upper SMEs

200 – 5,000 IT seats/employees

Small and very small enterprises

<200 IT seats/employees

Global Players

Providers

Number of German

companies according

to size categories

Web hosters

Degree of use

external

IT operations

QSC AG

PEC: Share of wallet in the target market

45 Source: “ITK-Marktzahlen Deutschland 2015”, BITKOM

26%

14%

4% 33%

16%

7%

Expenditure

structure

ICT budget

approx. 16,000 target enterprises

IT services

Software

TC infrastructure

TC services

IT hardware (proportionate)

TC terminal devices

QSC AG

Cloud

Storage

SAP Consulting

Services

Security

Services

Client

Management

Compute

Resources

IP Telephony

UCC Services

Application

Management

VPN and

network

operation

Virtual Desktop

Services

Internet

of Things

Corporate

Applications

Mobile Device

Management

User

Help Desk

SAP Operations

PURE

ENTERPRISE CLOUD

PEC: Service portfolio through all QSC disciplines

46 QSC AG

QSC AG

Customer‘s view: Modular services

47

SECURITY SERVICES

END-TO-END RESPONSIBILITY

NETWORK AND CLIENT SERVICES

Company

headquarters

Branch

Home office

Mobile

employees

CLOUD PLATFORM

Public Cloud

Services

QSC data centres

CLOUD SERVICES

Customer‘s company Virtual desktops

IP telephony

Sector software

Collaboration

Legacy software

ERP software

Public SaaS/IaaS

All-IP

network

QSC AG

LAN/WAN

LAN/WAN

WAN

Mobility Internet of Things

PURE ENTERPRISE CLOUD

QSC AG

Cloud series production instead of IT manufacture

48

PURE ENTERPRISE CLOUD CUSTOMER

SHARED CLOUD PLATFORM AGGREGATION & SERVICE LAYER

Specialised

Team I

Specialised

Team II

Specialised

Team III

Specialised

Team N

Managed Private Cloud

QSC Data Centres

Managed Public Cloud

QSC Cloud

Service I

QSC Cloud

Service II

QSC Cloud

Service III

QSC Cloud

Service N

Customer A

Customer B

Customer C

Customer N

QSC AG

Prerequisite: Cloud series production in the “IT factory”

49

Availability of modern high-performance infrastructures (data centres, network)

Virtualised and scalable IT and system architectures (“shared” instead of “dedicated”)

New IT organisation and provision of services “from the conveyor belt” (no customer silos!)

Lean processes: Sales (offer), customer transition, IT operation, service and support

Adaption of customer requirement to QSC provider offer and not vice versa

Defined catalogue of services from pre-assembled service modules

Maximum standardisation/industrialisation/automation of all processes

Transformation to “IT factory” -> efficiency, operational stability, effects of scale

QSC AG

Transformation to “IT factory”: The 80/20 rule …

50

ICT provision SO FAR ICT provision IN FUTURE

Standardised

Standardised Customised

Customised

QSC AG

Pure Enterprise Cloud: Central milestones in 2015/2016

51

Pure Enterprise Cloud Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mch Apr May Jun Jul Aug Sep Oct Nov Dec

PEC design, planning, development

of infrastructure (network, host,

storage, data centres etc.)

PEC service catalogue of

standardised services available

Concept/roll-out new organisation

service delivery/operations

PEC “going live” (production-ready)

PEC further developments

(portfolio, industrialisation etc.)

PEC sales deadiness/marketing roll-

out (sales PPT, pre-sales calculator,

sales briefings etc.)

Start of customer portfolio migration

and acquisition of new customer

business

QSC AG

Pure Enterprise Cloud: Current portfolio structure

52


DATA CENTRES &

NETWORK INFRASTRUCTURE

ENTERPRISE WORKPLACE

ENTERPRISE APPLICATIONS

MANAGED SERVICES

SERVICE

& SUPPORT

SECURITY

QSC AG

Excerpt from the portfolio:

Digression into the “virtual desktop”

53


SERVICE

& SUPPORT

SECURITY

ENTERPRISE WORKPLACE

RECHENZENTREN &

INFRASTRUKTUR

ENTERPRISE APPLICATIONS

MANAGED SERVICES

VIRTUAL

DESKTOP

CLIENT

MANAGEMENT

ENTERPRISE

MOBILITY

UCC & IP-

TELEPHONY

END USER

HELPDESK

QSC AG

The “virtual desktop”: Start browser and get working …

54

Secure and individual

data and software access

via any terminal device

No up-front investment,

start immediately

Cost flexibilisation as a

result of use-dependent

charging according to

application/user/month

Window to entire enterprise IT

(ERP, sector, legacy software)

Ready-to-use office work

station from Pure

Enterprise Cloud

QSC AG

Customer view: IT agility and flexibility

55

Pay-per-use

(per month, per

application, per user,

per use)

Course of business

(revenue, number of

staff, necessary IT

resources)

Investment

costs

Rigid IT resource costs

(infrastructure,

service, licence and IT

staff costs)

Course of business

(revenue, number of

staff, necessary IT

resources) Unused investment capital

(“too many” IT resources)

Productivity losses

(“too few” IT resources)

Traditional IT operation

Pure Enterprise Cloud

Setup costs

Q1 Q2 Q3 Q4

Jan Feb Mch Apr May Jun Jul Aug Sep Oct Nov Dec Jan

QSC AG

Multi-Cloud Management: QSC as single point of contact

56

PUBLIC CLOUD

SERVICES

PRIVATE CLOUD/

TRADITIONAL IT

QSC CLOUD

SERVICES


Public

Enterprise

QSC

QSC AG

Pure Enterprise Cloud: Good reasons for the SME sector

57

Future-

proof End-to-end

services

Portfolio breadth

and depth

Trust and

security

Cost

flexibility

Agility and

scalability

Proprietary

data centre

SLA

At eye

level

Independence

from manufacturer Experience/

competence variety

Connectability

Internet of Things


QSC AG

Contact

QSC AG

Arne Thull

Head of Investor Relations

T +49 221 669-8724

M +49 221 669-8009

[email protected]

www.qsc.de

58

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