Berenberg/Goldman Sachs – Fifth German Corporate Conference Munich, 20 September 2016

THE DIGITISER OF THE GERMAN SME SECTOR

Disclaimer

This presentation contains forward-looking statements based on management estimates and reflects the current views of QSC AG's ("QSC's") 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.

1. Business overview

On the way to digitizing the German SME Sector

2000: IPO as an alternative TC provider
2003: Focus on TC for corporate customers (B2B2B)
2006: Set-up of an All-IP network
2011: Acquisitions with the aim of entering the Consulting and IT outsourcing market

2014: First steps into the IoT market with a proprietary platform
2015: Organisational restructuring / Cost-cutting programme
2015: Set-up of the Pure Enterprise Cloud
2016: QSC is growing in areas where the future is => TC for corporate customers, Consulting, Cloud and IoT

Key figures at a glance

>30,000 SME customers

Revenues of > €400m in 2015

years of experience 30

Proprietary TÜV and ISO-certified data centres on 20,000 m²

Proprietary nationwide All-IP-based network

Awards

Experton Security Leader 2016

~1,400

Experton Cloud Leader 2016

employees in 12 locations

QSC AG is the digitiser of the German SME sector.

With decades of experience and expertise in the areas of Cloud, Internet of Things, Consulting and Telecommunications, QSC accompanies its customers securely into the digital age.

Secure. Innovative. At your side.

Cloud solutions are driving digitalisation

Cloud solutions offer an agile and flexible reference model for IT services which satisfies current and future requirements of the SME sector.

QSC is a full-service provider for the digital age

Portfolio covers the key digital technologies

QSC AG

Excellent position in the competitive environment

Our competitive advantages

1. Full-service ICT portfolio including proprietary infrastructure and software development
2. Respected partner within the SME sector
3. Real end-to-end quality

Focus on the German SME Sector

Providers

Huge share of wallet in the "Larger SMEs" target market

2. Key financials and outlook

Q2 2016: Positive development across the board

High revenue growth in Cloud business (y-o-y: +135%) thanks to
initial Pure Enterprise Cloud (PEC) projects
considerable project revenues from IoT business
Faster-than-expected progress in the cost-cutting programme in Q2 2016
Staff-reduction programme nearing its target of reducing headcount by some 350 employees
Return to profitability
Positive EBIT for two quarters in a row
First net profit since Q1 2014
Positive FCF of € 6.3 million

QSC is growing in areas where the future is

Drivers in Q2 2016		Revenue development in 2016

Cloud	Launch of PEC / considerable IoT project

Outsourcing	Starting the migration to the PEC; no new customers in 1:1 outsourcing

Consulting	High demand for SAP projects

TC for corporate customers	Growing demand for All-IP solutions	$\rightarrow$

TC for resellers	Fierce price competition

The Pure Enterprise Cloud is picking up speed

Sales push started in February 2016
First projects with existing and new customers
First significant order from apt Hiller Group in July 2016 (400 workplaces)
According to Experton's Cloud Vendor Benchmark 2016, QSC is a "Rising Star" in the "Cloud Workplaces" category
QSC is a "Cloud Leader" in three other categories
H2 2016 will see more PEC projects going live

IoT is generating considerable revenues

Commercialisation of IoT solutions is gaining speed
Pilot projects in several industries: utilities, real estate, heating systems
According to Crisp Research, QSC is now an IoT "Innovator" like Google and Oracle
Since May 2016, QSC's IoT management has been strengthened by a seasoned IoT manager with an excellent track record
Since July 2016, QSC has been part of Scheer's Industry 4.0 expert network
Focus in H2 2016: further commercialisation and partnerships

Q2 2016: First net income since Q1 2014

Higher profitability despite revenue decline

in $\epsilon$ million	Q2 2015	Q2 2016	Δ	$\Delta$ in %
Revenues	100.9	99.2	$-1.7$	$-1.7%$
Cost of revenues	73.7	72.9	$-0.8$	$-1.1%$
Gross profit	27.2	26.3	$-0.9$	$-3.3%$
Sales and marketing expenses	8.5	7.9	$-0.6$	$-7.1%$
General and admin expenses	8.3	8.0	$-0.3$	$-3.6%$
Other operating income	0.3	0.3	$\overline{\phantom{a}}$
EBITDA	10.6	10.7	$+0.1$	$+0.9%$
Depreciation	12.8	8.7	$-4.1$	$-32.0%$
EBIT	(2.2)	2.0	$+4.2$	$+190.9%$
Financial result	(1.5)	(1.2)	$+0.3$	$+20.0%$
Income taxes	1.0	(0.6)	$-1.6$	nm
Net income	(2.7)	0.2	$+2.9$	$+107.4%$

Revenues

Two-track development as expected:
Growth in Cloud, Consulting and in TC for corporate customers vs. decrease in TC for resellers and in traditional Outsourcing

Earnings

Cost-cutting programme impacting positively

Cost-cutting programme ahead of schedule

Since February 2015, a company-wide cost-cutting programme has been in place
Key aspects of the programme
Reduction in headcount by some 350 employees
Reduction in number of external consultants
Reduction in number of locations
Streamlining administration
Optimisation of purchasing processes
Standardisation/Industrialisation of IT operations
Savings achieved by 30 June 2016: approx. € 20 million

QSC is nearing its target of 1,350 employees

Two-track development in H2 2016

Recruitment of Cloud experts for sales and operation of the Pure Enterprise Cloud
Staff cuts necessary in order to achieve the target of 1,350 employees by the end of 2016
Staff reorganisation leads to further one-off costs in the mid-single-digit million euro range

Progress in cost-cutting contributes to higher EBITDA

EBITDA continues to rise despite lower revenues
H2 2016 will be impacted by the completion of the reorganisation

EBITDA margin

Significant decrease in depreciation

QSC is benefitting from a significant decrease in depreciation on the TC infrastructure
For FY 2016, QSC expects depreciation of approx. € 36 million

Significant improvement in EBIT

Positive EBIT for two quarters in a row
Successful cost cutting and lower depreciation helped to improve EBIT significantly
H2 2016 will also be impacted by the completion of the reorganisation

EBIT margin

Cloud: Revenues more than doubled

Cloud business still in its early stages
Considerable IoT project revenues in Q2 2016
Positive effects of the PEC will be felt in H2 2016
Significantly improved segment contributions thanks to the business model's scalability

Segment margin

Outsourcing: Cost-cutting programme is paying off

No new customers in 1:1 outsourcing
Start of migration to the PEC and focus on high-margin revenues will lead to a further revenue decline in H2 2016
Increase in segment margin thanks to success of the ongoing reorganisation and the cost-cutting programme

Segment margin

Consulting: Continued revenue growth

High demand for SAP consulting
Growing demand for Cloud expertise (SAP HANA)
Lower segment contribution due to one-off effect in Q2 2015
Attractive segment margin of 15% in personnel-intensive consulting
Microsoft
SAP
Microsoft and SAP
Segment margin

Telecoms: Growing All-IP revenues

Despite a stagnating market, QSC managed to increase its B2B2B revenues by 7%
Positive impact of migration to All-IP solutions
Business with resellers impacted by fierce price competition
TC revenues with resellers
TC revenues with corporate customers
TC revenues (total)
Segment margin

CAPEX at a moderate level

Focus

Infrastructure
Developing the Pure Enterprise Cloud
Customer projects

Higher CAPEX in H2 2016 due to further investments in infrastructure and the PEC

Share of CAPEX in revenues as a percentage

Rapid increase in FCF

Higher earnings and moderate CAPEX enabled QSC to increase FCF significantly
FCF in H2 2016 will be impacted by higher CAPEX and one-off costs for the completion of the reorganisation

QSC is well on track to fulfilling the guidance

Highlights H2 2016

Growing revenues, especially in Cloud business
Further IoT projects
More investments in infrastructure and the PEC
Completion of reorganisation
Recruitment of a growing number of Cloud experts

QSC is confident about the current guidance for FY 2016

Revenues: € 380-390 million
EBITDA: € 34-38 million
Positive FCF

4. Appendix

Stable shareholder structure

Founders never sold a single share since the IPO in 2000

12.55% Gerd Eickers¹ 12.50% Dr. Bernd Schlobohm² 74.95% Free float

¹ Founder and Member of the Supervisory Board
² Founder and Chairman of the Supervisory Board

As of 31 August 2016

Contact

QSC AG Arne Thull Head of Investor Relations

T +49 221 669 -8724 M +49 221 669 -8009 [email protected] www.qsc.de

Twitter.com/QSCIRde Twitter.com/QSCIRen blog.qsc.de xing.com/companies/QSC AG slideshare.net/QSCAG

QSC AG QSC AG Mathias-Brueggen-Str. 55 50829 Cologne

AI Terminal