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QSC AG
Interim / Quarterly Report • Aug 12, 2024
343_10-q_2024-08-12_1a15a158-e69d-4e3b-b94f-5a4de5f3ada1.pdf
Interim / Quarterly Report
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Q q.beyond
Half-Year Financial Report
as of 30 June 2024
At a Glance
Key figures
| € million | 2024 | 2023 | 2024 | 2023 |
|---|---|---|---|---|
| 01/04/-30/06/ | 01/04/-30/06/ | 01/01/-30/06/ | 01/01/-30/06/ | |
| Revenues | 47.3 | 46.4 | 94.4 | 93.0 |
| Managed Services | 33.7 | 31.8 | 66.6 | 62.9 |
| Consulting | 13.5 | 14.6 | 27.8 | 30.1 |
| Gross profit | 7.9 | 8.3 | 16.1 | 14.2 |
| Managed Services | 7.0 | 7.2 | 14.0 | 12.8 |
| Consulting | 0.9 | 1.1 | 2.1 | 1.4 |
| EBITDA | 2.2 | 1.0 | 4.2 | (0.2) |
| Depreciation and amortisation ${ }^{1,2}$ | (3.2) | (3.4) | (6.3) | (6.7) |
| EBIT | (1.0) | (2.3) | (2.1) | (6.9) |
| Consolidated net income | (0.8) | (2.7) | (1.9) | (7.7) |
| Earnings per share ${ }^{3}$ (in €) | (0.01) | (0.03) | (0.02) | (0.07) |
| Capital expenditure ${ }^{4}$ | 0.5 | 1.1 | 1.2 | 1.6 |
| Free cash flow | 0.8 | (1.1) | 1.4 | 0.0 |
| Net liquidity | $39.0^{6}$ | $37.6^{7}$ | ||
| Net liquidity per share (in €) | $0.31^{8}$ | $0.30^{7}$ | ||
| Shareholders' equity | $97.5^{8}$ | $99.4^{7}$ | ||
| Equity ratio (in \%) | $65.6^{8}$ | $64.4^{7}$ | ||
| Xetra closing price ${ }^{5}$ (in €) | 0.81 | 0.65 | ||
| Number of shares ${ }^{5}$ | 124,579,487 | 124,579,487 | ||
| Market capitalisation ${ }^{5}$ | 100.9 | 81.0 | ||
| Number of employees ${ }^{5}$ | 1,116 | 1,090 |
[^0]
[^0]: ${ }^{1}$ Including share-based remuneration.
${ }^{2}$ Including depreciation of
${ }^{3}$ (right-of-use assets (IFRS 16).
${ }^{4}$ Diluted and basic.
${ }^{5}$ Net accounting for IFRS 16.
${ }^{6}$ As of 30 June.
${ }^{7}$ As of 30 June 2024.
${ }^{1}$ As of 31 December 2023.
Our earnings strength continues to grow thanks to consistent implementation of the "2025 Strategy" and despite the ongoing weak macroeconomic climate.
Group Interim Management Report
Executive Summary
EBITDA rises by $€ 1.2$ million to $€ 2.2$ million
q.beyond's earnings and financial strength continues to grow thanks to consistent implementation of its "2025 Strategy" and notwithstanding the ongoing weak macroeconomic climate. EBITDA in the second quarter of 2024 rose year-on-year by $€ 1.2$ million to $€ 2.2$ million. Quarterly revenues grew year-on-year by $€ 0.9$ million to $€ 47.3$ million, while free cash flow improved by $€ 1.9$ million to $€ 0.8$ million in the second quarter of 2024. This was accompanied by a further increase in net liquidity at our debt-free company to $€ 39.0$ million, compared with $€ 37.6$ million at the end of 2023. This corresponds to $€ 0.31$ per q.beyond share.
Comparison of the half-year figures underlines the pleasing development in the operating business. EBITDA for the first six months of the current financial year totalled $€ 4.2$ million, compared with $€-0.2$ million in the previous year. Revenues for the same period grew from $€ 93.0$ million to $€ 94.4$ million, while free cash flow rose to $€ 1.4$ million, up from $€ 0.0$ million in the first half of 2023. Against this backdrop, we can affirm the full-year forecast for 2024: we have budgeted for EBITDA to rise by at least $40 \%$ to between $€ 8$ million and $€ 10$ million and for this to be accompanied by revenues of between $€ 192$ million and $€ 198$ million and sustainably positive free cash flow.
Business Performance
2025 Strategy leads to growing earnings strength
This significant improvement in the company's earnings strength in the first half of 2024 was driven in particular by the impact of "One q.beyond" within the 2025 Strategy and the associated standardisation and simplification of processes and structures and systematic expansion in the share of nearshoring and offshoring activities. We raised this share to $12 \%$ as of 30 June 2024, up from 3\% at the beginning of 2023. Concentrating on higher-margin business fields has also had a positive impact. Profitability has clear priority over growth.
Focused business model is paying off
Within the 2025 Strategy, the company is focusing its sales activities on select sectors. And this approach is succeeding: at $€ 54.2$ million, new orders in the second quarter of 2024 were significantly ahead of the previous year's figure of $€ 39.8$ million. Furthermore, $72 \%$ of revenues in the past quarter were generated in the five focus sectors of retail, logistics, manufacturing, financial services, and the public sector. The resilience of our business model is further boosted by the high share of recurring revenues, which stood at $75 \%$ in the second quarter of 2024.
$€ 0.31$
net liquidity per q.beyond share.
$12 \%$
share of nearshoring and offshoring activities.
The strength of our company's position in its focus sectors is underlined by the fact that it is now providing managed services in line with the critical infrastructure requirements of the Federal Office for Information Security (BSI) on behalf of a new customer, namely Rosneft Deutschland, which is under trust management by the Federal Network Agency (BNetzA). Compliance with these BSI standards for information technology in critical infrastructures is a decisive criterion determining the selection of IT service providers, particularly in the public sector. Following the successful transition phase, we are now responsible for operating IT services for Rosneft Deutschland, one of Germany's largest mineral oil processing companies, at our certified high-security data centres on the basis of a 5-year contract. Among others, the services provided include q.beyond's SAP and Microsoft applications.
Awards underline performance capacity in managed services business
According to "ISG Provider Lens ${ }^{\text {TM }}$ Private/Hybrid Cloud - Data Center Services", a comparison of providers conducted once again in 2024, our company has been designated as a "Leader" in no fewer than two segments, namely "Managed Services for Midmarket" and "Managed Hosting for Midmarket". To perform the study, ISG, which is a leading global analysis and market research company in the technology sector, compared the cloud services offered by 100 IT service providers. According to the study, our company's leading position in managed services is based on three key strengths: its modular service portfolio, which allows customers to choose freely
New orders in second quarter significantly ahead of previous year. In addition, 72\% of revenues are generated in our five focus sectors.
between public, private or hybrid cloud models; the individual adaptability of solutions; and its provision of independent economic viability and technology analyses. ${ }^{1}$
An accolade in the trade journal "Computerwoche" in spring 2024 further demonstrates the performance capacity of our managed services. This lists q.beyond as one of the best managed services providers in Germany. ${ }^{2}$ According to the latest ranking compiled by market watchers at Lünendonk, our company is also one of Germany's leading IT service companies.
[^0]
[^0]: 1 https://www.qbeyond.de/en/investor-relations/ir-releases/2024/ qbeyond-is-a-leader-in-cloud-services-isg-awards-top-status-in-two-categories
2 https://www.computerwoche.de/a/deutschlands-beste-managed-service-provider-2024,3617905 (only available in German)
Business Framework
German economy stagnating
Dashing hopes from the start of the year, Germany is not expected to witness an economic upturn this year. A forecast issued by the International Monetary Fund in July 2024 predicts that German gross domestic product will grow by a mere $0.2 \%$ this year. No other major industrialised economy is expected to report similarly weak growth. ${ }^{3}$ The scepticism with which German companies assess the situation is documented by the ifo Business Climate Index, which fell for the second consecutive time in July 2024. ${ }^{4}$ In this climate, medium-sized companies are hesitant to take investment decisions, not least for their IT.
Bitkom cuts growth forecast for IT market
Due not least to these considerations, in July the sector association Bitkom reduced its full-year growth forecast. It now expects IT revenues in Germany to grow by $5.4 \%$ this year; it had originally deemed growth of $6.1 \%$ possible. ${ }^{5}$ Future markets, such as software, artificial intelligence, and cybersecurity, will escape this negative trend. As part of its 2025 Strategy, our company is gradually expanding its activities in these markets too. One example: it now has independent teams for artificial intelligence and cybersecurity. In recent
q.beyond is gradually expanding its activities in future markets, such as software, artificial intelligence, and cybersecurity.
times, q.beyond has massively felt the effects of this sharp rise in demand for comprehensive cybersecurity solutions on the part of medium-sized companies. q.beyond's services in this area range from initial analysis and strategy to implementing suitable security mechanisms and technologies to the ongoing further development of all IT security services. The company has recently also succeeded in extending the terms, and often also the scopes, of the contracts with all its customers in the field of software development.
[^0]
[^0]: ${ }^{3}$ https://www.imf.org/en/Publications/WEO/Issues/2024/07/16/world-economic-outlook-update-july-2024
${ }^{4}$ https://www.ifs.de/en/facts/2024-07-25/ifo-business-climate-in-dex-declines-july-2024
5 https://www.bitkom.org/Presse/Presseinformation/Digitalbranche-waechst-aber-nicht-ueberall (only available in German)
Earnings Performance
Significant improvements in EBITDA, EBIT and consolidated net income
Based on revenues of $€ 47.3$ million, cost of revenues stood at $€ 39.4$ million in the second quarter of 2024 (Q2 2023: € 38.2 million). Gross profit amounted to $€ 7.9$ million, compared with $€ 8.3$ million in the previous year. Over the same period, sales and marketing expenses decreased by $€ 0.7$ million to $€ 2.7$ million. General and administrative expenses fell by $€ 0.8$ million to $€ 3.1$ million in the second quarter of 2024. Accounting for the other operating result, which was unchanged at $€ 0.1$ million, EBITDA amounted to $€ 2.2$ million, up from $€ 1.0$ million in the previous year.
Depreciation and amortisation for the quarter under report decreased from $€ 3.4$ million in the previous year to $€ 3.2$ million. As a result, operating earnings (EBIT) for the second quarter of 2024 rose by $€ 1.3$ million to $€-1.0$ million. As the financial result also rose, while the loss from associates decreased and the tax charge also turned out lower, consolidated net income for the past quarter even improved by $€ 1.9$ million to $€-0.8$ million. Consistent with the targets set out in the 2025 Strategy, our company is well on course to generate sustainably positive consolidated net income starting in the coming year.
Earnings Performance by Segment
Managed Services achieves
gross margin of 21\%
Revenues in the "Managed Services" segment grew year-on-year by $€ 1.9$ million to $€ 33.7$ million in the second quarter of 2024. Cost of revenues rose by $€ 2.2$ million over the same period to $€ 26.8$ million. Here, the substantial rise in licence expenses left its mark. Against this backdrop, gross profit stood at $€ 7.0$ million in the past quarter, compared with $€ 7.2$ million in the previous year.
Comparison of the six-month figures underlines the ongoing strength of the margin in this segment: while revenues grew by $€ 3.7$ million to $€ 66.6$ million, cost of revenues rose by $€ 2.5$ million to $€ 52.6$ million. Gross profit improved by $€ 1.2$ million to $€ 14.0$ million, while the half-year gross margin increased year-on-year by 1 percentage point to $21 \%$.
Consulting affected by weak economic climate
Revenues in the "Consulting" segment amounted to $€ 13.5$ million in the second quarter of 2024, as against $€ 14.6$ million in the previous year. Whereas multiyear contracts tend to be the norm in the managed services business, when it comes to consulting and development projects many customers prefer short-term contracts. The persistent reluctance to invest among SMEs has therefore had a greater impact on this reporting segment. When comparing revenue performances, it should also be noted that, as part of the 2025 Strategy, we have optimised our consulting portfolio and discontinued activities in low-margin business fields. This being so, cost
Earnings Performance
by Segment
Managed Services achieves
gross margin of 21\%
Revenues in the "Managed Services" segment grew year-on-year by $€ 1.9$ million to $€ 33.7$ million in the second quarter of 2024. Cost of revenues rose by $€ 2.2$ million over the same period to $€ 26.8$ million. Here, the substantial rise in licence expenses left its mark. Against this backdrop, gross profit stood at $€ 7.0$ million in the past quarter, compared with $€ 7.2$ million in the previous year.
Comparison of the six-month figures underlines the ongoing strength of the margin in this segment: while revenues grew by $€ 3.7$ million to $€ 66.6$ million, cost of revenues rose by $€ 2.5$ million to $€ 52.6$ million. Gross profit improved by $€ 1.2$ million to $€ 14.0$ million, while the half-year gross margin increased year-on-year by 1 percentage point to $21 \%$.
of revenues came to $€ 12.6$ million in the second quarter of 2024 compared with $€ 13.5$ million in the previous year. Gross profit stood at $€ 0.9$ million, as against $€ 1.1$ million in the previous year's quarter.
Comparison of the six-month figures clearly shows that the second segment is also contributing to our company's growing earnings strength. While halfyear revenues fell by $€ 2.3$ million to $€ 27.8$ million, gross profit rose by $€ 0.7$ million to $€ 2.1$ million. The gross margin rose by 3 percentage points to $8 \%$.
Financial and
Asset Position
Net liquidity rises to $€ 39.0$ million
Our company has no liabilities to banks and finances itself exclusively from its own liquidity. As of 30 June 2024, we had net liquidity of $€ 39.0$ million compared with $€ 38.2$ million as of 31 March 2024.
Based on our definition, the change of $€ 0.8$ million in net liquidity corresponds to free cash flow, with no account being taken of payments for acquisitions and distributions in the period under report. No such payments were made in the second quarter. Free cash flow therefore amounted to $€ 0.8$ million, as against $€-1.1$ million in the previous year. This figure was also influenced by capital expenditure which, excluding IFRS 16 items, stood at $€ 0.5$ million in the past quarter as against $€ 1.1$ million in the second quarter of 2023.
Solid balance sheet
q.beyond has a solid balance sheet in which noncurrent assets are fully financed by equity. Due above all to depreciation and amortisation, total non-current assets decreased to $€ 63.7$ million as of 30 June 2024, down from $€ 65.1$ million at the end of 2023.
Total current assets fell to $€ 84.9$ million, compared with $€ 89.3$ million as of 31 December 2023. As outlined above, liquid funds, i.e. cash and cash equivalents, increased, while trade receivables fell from $€ 34.1$ million at the end of 2023 to $€ 30.2$ million as of 30 June 2024.
Equity ratio rises to 66\%
Due to negative consolidated net income, equity changed as of 30 June 2024 and amounted to $€ 97.5$ million, compared with $€ 99.4$ million at the balance sheet date at the end of 2023. Given the reduction in total assets, the equity ratio nevertheless rose by 2 percentage points to $66 \%$.
Slightly greater use was made of lease financing arrangements, as a result of which non-current liabilities rose to $€ 14.2$ million, up by $€ 0.9$ million compared with the 2023 balance sheet date. Current liabilities fell to $€ 36.9$ million as of 30 June 2024, as against $€ 41.6$ million at the end of 2023. This was mainly due to a reduction in trade payables and other liabilities to $€ 21.2$ million, compared with $€ 25.5$ million as of 31 December 2023.
Opportunity and Risk Report
No material changes in opportunity and risk situation
There are currently no material changes compared with the opportunities and risks presented in the 2023 Annual Report. Just like other risks or erroneous assumptions, however, all of the risks listed there could lead future actual earnings to deviate from q.beyond's expectations. Unless they constitute historic facts, all disclosures in this unaudited Half-Year Financial Report represent forward-looking statements. They are based on current expectations and forecasts concerning future events and may therefore change over time.
Outlook
Forecast affirmed:
profitability set to rise significantly in 2024
Following the pleasing business performance in the first half of the current financial year, we can affirm our full-year forecast for 2024. We have budgeted for EBITDA to rise by at least $40 \%$ to between $€ 8$ million and $€ 10$ million and for this to be accompanied by revenues of between $€ 192$ million and $€ 198$ million, and sustainably positive free cash flow.
We will generate positive free cash flow from the operating business once again in the current financial year. In addition, we expect to receive a net inflow of around $€ 4$ million in the second half of the year as a result of the decisions taken by tax authorities in 2023 concerning the tax treatment of the Plusnet sale in 2019. The related income and expense items were already recognised in the previous year.
Given the pleasing business performance in H1 2024, we can affirm our forecast: EBITDA is budgeted to rise by at least $40 \%$ to between $€ 8$ million and $€ 10$ million in 2024.
Interim Consolidated Financial Statements
Consolidated Statement of Comprehensive Income (unaudited)
| € 000s | 2024 | 2023 | 2024 | 2023 |
|---|---|---|---|---|
| 01/04/-30/06/ | 01/04/-30/06/ | 01/01/-30/06/ | 01/01/-30/06/ | |
| Revenues | 47,272 | 46,445 | 94,382 | 93,030 |
| Cost of revenues | (39,382) | (38,162) | (78,243) | (78,789) |
| Gross profit | 7,890 | 8,283 | 16,139 | 14,241 |
| Sales and marketing expenses | (2,665) | (3,445) | (5,568) | (7,026) |
| General and administrative expenses | (3,067) | (3,931) | (6,774) | (7,732) |
| Depreciation and amortisation | ||||
| (including share-based remuneration) | (3,170) | (3,371) | (6,272) | (6,675) |
| Other operating income | 112 | 154 | 509 | 360 |
| Other operating expenses | (64) | (24) | (104) | (72) |
| Operating earnings (EBIT) | (964) | (2,334) | (2,070) | (6,904) |
| Financial income | 332 | 141 | 609 | 209 |
| Financial expenses | (90) | (60) | (164) | (117) |
| Income from associates | (101) | (157) | (166) | (346) |
| Earnings before taxes | (823) | (2,410) | (1,791) | (7,158) |
| Income taxes | 19 | (299) | (125) | (586) |
| Consolidated net income | (804) | (2,709) | (1,916) | (7,744) |
| Other comprehensive income | ||||
| Line items that are not reclassified in the income statement | ||||
| Currency translation | (1) | - | - | - |
| Other comprehensive income after taxes | (1) | - | - | - |
| Total comprehensive income | (805) | (2,709) | (1,916) | (7,744) |
| Attribution of consolidated net income | ||||
| Owners of the parent company | (1,008) | (3,043) | (2,377) | (8,361) |
| Non-controlling interests | 204 | 334 | 461 | 617 |
| Attribution of consolidated net income | (804) | (2,709) | (1,916) | (7,744) |
| Attribution of total comprehensive income | ||||
| Owners of the parent company | (1,009) | (3,043) | (2,377) | (8,361) |
| Non-controlling interests | 204 | 334 | 461 | 617 |
| Attribution of total comprehensive income | (805) | (2,709) | (1,916) | (7,744) |
| Earnings per share (basic) in $€$ | (0.01) | (0.03) | (0.02) | (0.07) |
| Earnings per share (diluted) in $€$ | (0.01) | (0.03) | (0.02) | (0.07) |
Consolidated Statement of Cash Flows (unaudited)
| € 000s | 2024 | 2023 |
|---|---|---|
| 01/01/-30/06/ | 01/01/-30/06/ | |
| Cash flow from operating activities | ||
| Earnings before taxes | $(1,791)$ | $(7,158)$ |
| Depreciation and amortisation of non-current assets | 4,287 | 4,989 |
| Depreciation of right-of-use assets (IFRS 16) | 1,935 | 1,727 |
| Other non-cash income and expenses | (108) | 46 |
| Profit from retirement of assets | (8) | (2) |
| Income taxes paid | (97) | (127) |
| Income taxes received | 186 | 2 |
| Interest received | 597 | 201 |
| Interest paid in connection with leases (IFRS 16) | (161) | (112) |
| Net financial expenses | (444) | (92) |
| Income from associates | 166 | 346 |
| Changes in provisions | $(1,864)$ | $(721)$ |
| Changes in trade receivables | 4,052 | 6,354 |
| Changes in trade payables | $(2,287)$ | $(3,919)$ |
| Changes in other assets and liabilities | (273) | 889 |
| Cash flow from operating activities | 4,190 | 2,423 |
| Cash flow from investing activities | ||
| Payments for purchase of intangible assets | (13) | (10) |
| Payments for purchase of property, plant and equipment | $(1,186)$ | $(1,588)$ |
| Proceeds from sale of property, plant and equipment | 9 | 855 |
| Cash flow from investing activities | $(1,190)$ | $(743)$ |
| Cash flow from financing activities | ||
| Repayments of convertible bonds | (1) | - |
| Repayments of lease liabilities | $(1,629)$ | $(1,676)$ |
| Cash flow from financing activities | $(1,630)$ | $(1,676)$ |
| Change in cash and cash equivalents | 1,370 | 4 |
| Cash and cash equivalents as of 1 January | 37,642 | 36,388 |
| Cash and cash equivalents as of 30 June | 39,012 | 36,392 |
Consolidated Balance Sheet
| € 000s | 30/06/2024 (unaudited) | 31/12/2023 (audited) |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment | 14,201 | 15,864 |
| Land and buildings | 15,584 | 15,943 |
| Goodwill | 13,955 | 13,948 |
| Right-of-use assets | 10,092 | 8,637 |
| Other intangible assets | 4,406 | 5,481 |
| Financial assets recognised at equity | 2,597 | 2,763 |
| Prepayments | 1,243 | 1,211 |
| Other non-current assets | 1,623 | 1,203 |
| Non-current assets | 63,701 | 65,050 |
| Current assets | ||
| Trade receivables | 30,191 | 34,135 |
| Prepayments | 5,193 | 6,776 |
| Inventories | 114 | 109 |
| Other current assets | 10,368 | 10,631 |
| Cash and cash equivalents | 39,012 | 37,642 |
| Current assets | 84,878 | 89,293 |
| TOTAL ASSETS | 148,579 | 154,343 |
| € 000s | 30/06/2024 (unaudited) | 31/12/2023 (audited) |
|---|---|---|
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||
| Shareholders' equity | ||
| Issued capital | 124,579 | 124,579 |
| Capital reserve | 144,382 | 144,382 |
| Other reserves | (435) | (435) |
| Accumulated deficit | (173,056) | (170,680) |
| Equity attributable to owners of parent company | 95,470 | 97,846 |
| Non-controlling interests | 2,010 | 1,549 |
| Shareholders' equity | 97,480 | 99,395 |
| Liabilities | ||
| Non-current liabilities | ||
| Lease liabilities | 6,376 | 5,239 |
| Other financial liabilities | 3,841 | 3,841 |
| Accrued pensions | 1,893 | 2,099 |
| Other provisions | 990 | 928 |
| Trade payables | 375 | 375 |
| Deferred tax liabilities | 774 | 829 |
| Non-current liabilities | 14,249 | 13,311 |
| Current liabilities | ||
| Trade payables and other liabilities | 21,197 | 25,530 |
| Lease liabilities | 3,821 | 3,395 |
| Other financial liabilities | 1,342 | 1,342 |
| Other provisions | 2,331 | 4,053 |
| Tax provisions | 6,231 | 5,996 |
| Deferred income | 1,928 | 1,321 |
| Current liabilities | 36,850 | 41,637 |
| Liabilities | 51,099 | 54,948 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 148,579 | 154,343 |
Consolidated Statement of Changes in Equity (unaudited)
| € 000s | Equity attributable to equity holders of q.beyond AG | |||
|---|---|---|---|---|
| Issued capital | Capital reserve | Other reserves (actuarial losses) | Accumulated deficit | |
| Balance as of 1 January 2024 | 124,579 | 144,382 | (435) | $(170,680)$ |
| Total comprehensive income | - | - | - | $(2,377)$ |
| Balance as of 30 June 2024 | 124,579 | 144,382 | (435) | $(173,056)$ |
| Balance as of 1 January 2023 | 124,579 | 144,084 | (319) | $(153,203)$ |
| Total comprehensive income | - | - | - | $(8,361)$ |
| Balance as of 30 June 2023 | 124,579 | 144,084 | (319) | $(161,564)$ |
| Total | Non-controlling interests | Total equity | |
|---|---|---|---|
| 97,846 | 1,549 | 99,395 | Balance as of 1 January 2024 |
| $(2,377)$ | 461 | $(1,916)$ | Total comprehensive income |
| 95,470 | 2,010 | 97,480 | Balance as of 30 June 2024 |
| 115,141 | 510 | 115,651 | Balance as of 1 January 2023 |
| $(8,361)$ | 617 | $(7,744)$ | Total comprehensive income |
| 106,780 | 1,127 | 107,907 | Balance as of 30 June 2023 |
Notes to the Interim Consolidated Financial Statements
Company Information
q.beyond AG (hereinafter also "q.beyond") is the key to successful digitalisation. We help our customers find, implement and operate the best digital solutions for their businesses. Our strong team of around 1,100 specialists accompanies SMEs reliably as they tackle their digital transformation. Customers benefit here from our all-round expertise in cloud, artificial intelligence, SAP, Microsoft, data intelligence, security, and software development. With locations across Germany, as well as in Latvia, Spain and India, and its own certified data centres, q.beyond is one of Germany's leading IT service providers.
q.beyond AG is a stock corporation registered in the Federal Republic of Germany. Its legal domicile is Richard-Byrd-Strasse 4, 50829 Cologne, Germany. The company is registered in the Commercial Register of Cologne District Court under number HRB 28281. q.beyond AG has been listed on the Deutsche Börse stock exchange since 19 April 2000 and in the Prime Standard since the beginning of 2003.
1 Basis of preparation
These condensed interim consolidated financial statements of q.beyond AG and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (IFRS), to the extent that these have been adopted by the EU, and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC), taking due account of International Accounting Standard (IAS) 34 Interim Financial Reporting. The interim consolidated financial statements do not include all notes and disclosures required of full year-end financial statements and should therefore be read in conjunction with the consolidated financial statements as of 31 December 2023.
Based on the Management Board's assessment, the interim consolidated financial statements contain all adjustments necessary to provide a true and fair view of the Group's net assets, financial and earnings position. The results for the reporting period ending on 30 June 2024 do not necessarily provide an indication of the future development in results.
The accounting policies applied in preparing these interim consolidated financial statements are basically consistent with those applied in the consolidated financial statements for the 2023 financial year.
Income tax expenses for the interim reporting period have been calculated using the effective tax rate expected for the financial year as a whole. Taxes relating to exceptional items are accounted for in the quarter in which the underlying items materialise.
The amendments to IFRS requiring mandatory application from the 2024 financial year onwards have not had any implications for the interim consolidated financial statements as of 30 June 2024.
The preparation of interim financial statements in accordance with IFRS requires a certain degree of reference to estimates and judgements affecting the assets and liabilities as recognised and the disclosures made concerning contingent assets and liabilities as of the reporting date. The amounts actually arising may deviate from such estimates.
There have been no material changes in the Management Board's assessments concerning the application of accounting policies compared with the consolidated financial statements as of 31 December 2023.
Unless otherwise stated, all amounts are rounded up or down to the nearest thousand euro amount ( $€ 000$ s). The rounding up or down of figures may result in minor discrepancies on a scale of $€ 1 \mathrm{k}$ or $0.1 \%$ between numbers and percentages in these interim consolidated financial statements.
These condensed interim consolidated financial statements, including the interim group management report, have neither been audited pursuant to $\S 317$ of the German Commercial Code (HGB) nor subject to any audit review by any suitably qualified person. The interim consolidated financial statements and interim group management report were approved for publication by the Management Board on 5 August 2024.
2 Scope of consolidation and amendments under company law
The interim consolidated financial statements comprise the financial statements of q.beyond AG, Cologne, and the subsidiaries it controls:
| Subsidiary, domicile, country | Shareholdings in \% |
|---|---|
| SIA G.BEYOND, Riga, Latvia | 100 |
| q.beyond ibérica S.L., Jerez de la Frontera, Spain | 100 |
| q.beyond logineer GmbH, Hamburg, Germany | 51 |
| q.beyond Data Solutions GmbH, Hamburg, Germany | 51 |
| q.beyond logineer India Private Limited, Chennai, India | 51 |
3 Financial instruments
Disclosures on the balance sheet. No separate disclosures are provided for the respective fair values as the carrying amounts largely correspond to the fair values.
| € 000s | Amortised cost | Fair value in equity | Fair value hedging instruments | Fair value through profit or loss | ||
|---|---|---|---|---|---|---|
| 31 December 2023 | ||||||
| Assets not measured at fair value | ||||||
| Cash and cash equivalents | 37,642 | $\cdot$ | ||||
| Receivables from finance leases | 391 | $\cdot$ | ||||
| Current trade receivables and other contract receivables | 42,735 | $\cdot$ | ||||
| Liabilities not measured at fair value | ||||||
| Trade payables and other liabilities | 14,037 | $\cdot$ | ||||
| Contract liabilities | 1,101 | $\cdot$ | ||||
| Lease liabilities | 8,634 | $\cdot$ | ||||
| Other financial liabilities | 740 | $\cdot$ | ||||
| Liabilities measured at fair value | ||||||
| Other financial liabilities | 4,444 | $\cdot$ |
Disclosures on fair values measured on a recurring basis. At the end of the reporting period, q.beyond determines whether any reclassifications are required between the measurement hierarchy levels. No reclassifications were made in the period under report from 1 January 2024 to 30 June 2024.
4 Revenues
The tables below provide a breakdown of revenues by geographical region and sector. Furthermore, the tables reconcile revenues with the segments presented in Note 5.
5 Segment reporting
In accordance with the provisions of IFRS 8, the basis for identifying segments is the company's internal organisational structure as used by corporate management for business administration decisions and performance assessments. Consistent with the focused business model, the company divides its activities into consulting and development services (the "Consulting" segment) and operating services (the "Managed Services" segment).
Managed Services. The services offered in the "Managed Services" segment have as their centrepiece the provision of a flexibly adaptable, networked and secure IT structure for companies to operate their IT. The portfolio ranges from turnkey cloud modules to digital workplaces facilitating networked mobile work to individual IT outsourcing services. Private cloud solutions can be implemented just as successfully as hybrid concepts which, depending on the tasks to be performed, can integrate different cloud infrastructures and services, as well as cloud applications from various providers.
Consulting. The second segment, "Consulting", comprises a wide variety of consulting and customised development services. We adapt software on behalf of customers and supply solutions in the form of mobile apps and of cloud and other applications that enable customers to further develop their businesses.
Our consulting activities focus on supporting customers in using SAP and Microsoft solutions. In addition, we offer reliable security solutions enabling our customers to protect their IT against attacks, as well as business intelligence solutions. This way, customers can enhance their business processes while also analysing and forecasting data on a cross-system basis.
The Management Board refers to gross profit as the key segment performance indicator. Gross profit is defined as revenues less cost of revenues. For income statement purposes, revenues and cost of revenues are thus allocated in full to the respective segment. The direct and indirect allocation of costs to individual segments is consistent with internal reporting and management structures.
The Management Board does not receive any regular information about segment-specific assets and liabilities, or about sales and marketing expenses, general and administrative expenses, depreciation and amortisation and other operating income and expenses.
| € 000s | Managed Services | Consulting | Group |
|---|---|---|---|
| 01/04/ - 30/06/2024 | |||
| Revenues | 33,738 | 13,534 | 47,272 |
| Cost of revenues | $(26,754)$ | $(12,628)$ | $(39,382)$ |
| Gross profit | 6,984 | 906 | 7,890 |
| Sales and marketing expenses | $(2,665)$ | ||
| General and administrative expenses | $(3,067)$ | ||
| Depreciation and amortisation (including share-based remuneration) | $(3,170)$ | ||
| Other operating income | 112 | ||
| Other operating expenses | $(64)$ | ||
| Operating earnings (EBIT) | (964) | ||
| Financial income | 332 | ||
| Financial expenses | (90) | ||
| Income from associates | (101) | ||
| Earnings before taxes | (823) | ||
| Income taxes | 19 | ||
| Consolidated net income | (804) | ||
| € 000s | Managed Services | Consulting | Group |
| 01/04/ - 30/06/2023 | |||
| Revenues | 31,796 | 14,649 | 46,445 |
| Cost of revenues | $(24,623)$ | $(13,539)$ | $(38,162)$ |
| Gross profit | 7,173 | 1,110 | 8,283 |
| Sales and marketing expenses | $(3,445)$ | ||
| General and administrative expenses | $(3,931)$ | ||
| Depreciation and amortisation (including share-based remuneration) | $(3,371)$ | ||
| Other operating income | 154 | ||
| Other operating expenses | (24) | ||
| Operating earnings (EBIT) | $(2,334)$ | ||
| Financial income | 141 | ||
| Financial expenses | (60) | ||
| Income from associates | (157) | ||
| Earnings before taxes | $(2,410)$ | ||
| Income taxes | (299) | ||
| Consolidated net income | $(2,709)$ |
| € 000s | Managed Services | Consulting | Group |
|---|---|---|---|
| 01/01/-30/06/2024 | |||
| Revenues | 66,610 | 27,772 | 94,382 |
| Cost of revenues | $(52,574)$ | $(25,669)$ | $(78,243)$ |
| Gross profit | 14,036 | 2,103 | 16,139 |
| Sales and marketing expenses | $(5,568)$ | ||
| General and administrative expenses | $(6,774)$ | ||
| Depreciation and amortisation (including share-based remuneration) | $(6,272)$ | ||
| Other operating income | 509 | ||
| Other operating expenses | (104) | ||
| Operating earnings (EBIT) | (2,070) | ||
| Financial income | 609 | ||
| Financial expenses | (164) | ||
| Income from associates | (166) | ||
| Earnings before taxes | (1,791) | ||
| Income taxes | (125) | ||
| Consolidated net income | (1,916) | ||
| € 000s | Managed Services | Consulting | Group |
| 01/01/-30/06/2023 | |||
| Revenues | 62,903 | 30,127 | 93,030 |
| Cost of revenues | $(50,095)$ | $(28,694)$ | $(78,789)$ |
| Gross profit | 12,808 | 1,433 | 14,241 |
| Sales and marketing expenses | $(7,026)$ | ||
| General and administrative expenses | $(7,732)$ | ||
| Depreciation and amortisation (including share-based remuneration) | $(6,675)$ | ||
| Other operating income | 360 | ||
| Other operating expenses | (72) | ||
| Operating earnings (EBIT) | (6,904) | ||
| Financial income | 209 | ||
| Financial expenses | (117) | ||
| Income from associates | (346) | ||
| Earnings before taxes | (7,158) | ||
| Income taxes | (586) | ||
| Consolidated net income | (7,744) |
Revenues for the first half of 2024 include revenues of $€ 714 \mathrm{k}$ with non-German EU customers (mainly Netherlands [€ 289k], Austria [€ 273k], Malta [€ 55k] and France [€ 51k]), as well as $€ 1,807 \mathrm{k}$ with non-EU customers (mainly UK [€ 1,460k] and Switzerland [€ 286k]); all other revenues were generated in Germany. In the first half of the 2024 financial year, two customers at the overall Group accounted for more than $10 \%$ of consolidated revenues ( $15 \%$ and $13 \%$ respectively). Of the revenues with these two major customers, $88 \%$ were reported in the Managed Services segment and $12 \%$ in the Consulting segment.
6 Cash flow from financing activities
Financial liabilities developed as follows:
7 Issued capital
Issued capital amounted to $€ 124,579,487$ as of 30 June 2024 and was unchanged compared with 31 December 2023. It comprised 124,579,487 no-par registered ordinary shares.
8 Legal disputes
Neither q.beyond AG nor its group companies are involved in any court or arbitration proceedings which could have any material impact on their economic positions.
9 Related party disclosures
Persons and companies count as related parties pursuant to IAS 24 when one party has the possibility of exercising control or significant influence over the other party. All contracts with these companies require approval by the Supervisory Board and are agreed on customary market terms.
Deliveries and services amounting to $€ 36 \mathrm{k}$ were performed between q.beyond AG and Teleport GmbH, domiciled in Cologne, in the first half of the 2024 financial year. The majority shareholders in q.beyond AG, Dr. Bernd Schlobohm and Gerd Eickers, indirectly hold more than 90\% of the shares in Teleport GmbH.
10 Management Board
The following table presents information about the number of shares held by the Management Board:
| Shares | ||
|---|---|---|
| 30/06/2024 | 30/06/2023 | |
| Thies Rixen | 336,035 | 300,000 |
| Nora Wolters | 50,000 | - |
11 Supervisory Board
The following table presents information about the number of shares held by members of the Supervisory Board:
| Shares | ||
|---|---|---|
| 30/06/2024 | 30/06/2023 | |
| Dr. Bernd Schlobohm, Chair | 15,818,372 | 15,769,910 |
| Dr. Frank Zurlino, Deputy Chair (deceased on 1 December 2023) | - | 10,000 |
| Ina Schlie, Deputy Chair (since 19 December 2023) | 50,000 | 50,000 |
| Gerd Eickers | 15,577,484 | 15,577,484 |
| Thorsten Dirks (since 25 January 2024) | 100,000 | - |
| Matthias Galler ${ }^{1}$ | 2,100 | 2,100 |
| Martina Altheim ${ }^{1}$ | 1,800 | 1,800 |
[^0]
[^0]: ${ }^{1}$ Employee representative.
12 Events after balance sheet date
No events after the balance sheet date require report here.
Cologne, August 2024
q.beyond AG
The Management Board
Thies Rixen
Nora Wolters
Statement of Responsibility
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the Condensed Interim Consolidated Financial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Interim Consolidated Management Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
Cologne, August 2024
q.beyond AG
The Management Board
Thies Rixen
Chis
Nora Wolters
$28 \quad$ q.beyond Half-Year Financial Report as of 30 June 2024
Calendar
Quarterly Statement G3 2024
11 November 2024
Contact
q.beyond AG
Arne Thull
Head of Investor Relations
Richard-Byrd-Strasse 4
50829 Cologne, Germany
T +49 221 669-8724
[email protected]
www.qbeyond.de/en
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Editorial Responsibility
q.beyond AG, Cologne
Design
sitzgruppe, Düsseldorf
For further information: www.øbeyond.de/en