QSC AG — Investor Presentation 2011

Nov 17, 2011

QSC AG Company Presentation Results Q3 2011

Cologne, November 7, 2011

AGENDA

• 1. Highlights Q3 2011
• 1. Financial Results Q3 2011
• 1. Outlook 2011
• 1. Questions & Answers

MAJOR ACHIEVEMENTS IN Q3 2011

• • Ongoing transformation: IP -based revenues grew by 40 percent based
• • Steady track record: QSC group won projects with a total contract value of €35 million
• • Investment in g g rowth: Due to hi gh demand for ICT services, QSC invested in new people and new capacity
• • Augmentation of Management Board: Thomas of Board: Stoek, CEO of INFO AG, and Arnold Stender, former head of the Business Units Products and Wholesale, are now members of the QSC Board , Q

STRONG GROWTH IN IP-BASED REVENUES

Growth drivers:

• • Consolidation of INFO AGand IP Partner
• • New clients in Managed Services

Growth restraints:

• • Fierce p p rice com petition in legacy voice and ADSL2+ business
• • Lower termination fees for mobile and fixed-line calls

QSC WON CONTRACTS WORTH € 35 MILLION WITHIN ONE QUARTER

Industry	Total contract value
Gas/Energy	€ 18,500,000
Consumer Goods	€ 3,400,000
Logistics/Shipping	€ 3,000,000
Consumer Electronics	€ 2,100,000
Insurance	€ 2,100,000
Drinks/Tobacco	€ 1,900,000
Medical-/Health Care	€ 1,600,000
Others	€ 2,500,000

SUCCESSES IN NEW BUSINESS HAVE HELPEDTO BOOST MANAGED SERVICES REVENUES

ONGOING DEMAND FOR MANAGED SERVICES NECESSITATES INVESTMENT IN GROWTH

Initial position:

• •Fast growth of Managed Services business
• •Rising sales pipeline (> € 60 million in tender process)
• • Sustained and strong growth for IT services: IDC predicts a CAGR of 3.8% per year until 2015

T ti t t f th k t QSC ill i t i To continue to outper form the maret, QSC will inves in

• •Data center capacity
• •IT experts

QSC IS EXPANDING ITS FOOTHOLD TO BECOME THE GERMAN CLOUD PROVIDER

• • In 2011, QSC is focussing on doubling its capacity for housing and hosting (IP P ) i 6 000 Partner) services to 6,000 sqm
• • Q2 2011: QSC opened a new data centerwith 1 000 ith 1,000sqm for DATEV
• • H2 2011: QSC is expanding capacity in its existing data centers in Munich and Nuremberg
• • At year-end QSC will run data centers year end, with a capacity of ~12,000 sqm in total

INFO AG HAS WON MORE AND MOREIT EXPERTS EACH QUARTER

KEY TAKEAWAYS

• • QSC has developed into a full-service ICT provider for the German Mittelstand
• •Huge demand for IT-related services
• •Difficult market environment for legacy TC business

• •QSC is investing in ICT and Cloud growth

• 1. Highlights Q3 2011
• 1. Financial Results Q3 2011
• 1. Outlook 2011
• 1. Questions & Answers

Q3 2011: QSC ON PROFITABLE GROWTH COURSE

I € i l l i n m o n s	Q 3 2 0 1 0	Q 3 2 0 1 1
R • e v e n u e s	1 0 5 6	1 2 8 3	2 1. 5 % +
( ) 1 C f t • o s o r e e n e s v u	6 9 3	8 8 7	2 8 0 % +
G f i t • r o s s p r o	3 6. 3 +	3 9. 6 +	9. 1 % +
( 1 ) O h i t t • e r o p e r a n g e x p e n s e s	1 6 0	1 8 8	1 7 5 % +
E B I T D A •	2 0. 3 +	2 0. 8 +	2 % 5 +
D i i t • e p r e c a o n	1 3 8	1 2 8	2 % 7 -
E B I T •	6 6. 5 5 + +	8 8. 0 0 + +	2 2 3 3. 1 1 % % + +
F i i l l t • n a n c a r e s s u	0 4 -	1. 0 -	6 0 0 % -
I t • n c o m e a e s x	0 0 3 3 -	0 0 6 6 -	0 0 0 0 % % 5 5 -
f N i t t • e p r o	8 5. +	6. 4 +	1 0. 3 % +

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(1) Excluding depreciation and non-cash share-based payments

CONSOLIDATION OF INFO AG IS CHANGINGTHE SET-UP OF COSTS OF REVENUES

DESPITE HIGHER COSTS OF REVENUES, QSC HAS EARNED A HIGHER EBIT

CAPEX RELATIVE TO REVENUESIN LINE WITH TARGETS

FREE CASH FLOW REACHED €6.1 MILLION IN Q3 2011

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Effects in Q3 2011:

• •Slight increase of EBITDA
• •Decrease of CAPEX
• • Neg gp ative workin g ca pital impact

NET DEBTS REACHED ITS PEAK IN Q3 2011

QSC IS SOLIDLY FINANCED FOR 2011 AND BEYOND

• • Ongg p oin g and sustainable positive free cash flow
• • Collaboration and integration with INFO AG and IP Partner will have an additional positive impact in 2012 and beyond positive
• •Low level of net debt as of September 30, 2011

• •New credit facility of € 150 million

• 1. Highlights Q3 2011
• 1. Financial Results Q3 2011
• 1. Outlook 2011
• 1. Questions & Answers

OUTLOOK 2011: QSC SPECIFIES FORECAST FOR 2011

• Accelerated transformation process through the acquisition of INFO AG
• Focus on profitability and financial strength
• • Payment of a dividend for fiscal 2011

2011 IS JUST THE BEGINNING OF A LONG-TERM GROWTH STORY: OUR GROWTH VISION

In 2011, QSC is a company with

• •Revenues of € 478 million*
• •An EBITDA margin of 17%*
• • Free cash flow of € 40 45 million

In 2016, QSC will be a company with

• •Revenues of € 0.8 – 1.0 billion
• •An EBITDA margin of 25%
• • Free cash flow of € 120 – 150 million

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* Consensus

OUR STRATEGY: QSC WILL BECOME THE GERMAN CLOUD PROVIDER

QSC IS IN A PERFECT POSITION TO BECOME Q THE GERMAN CLOUD PROVIDER

• • Realizing opportunities in cross- and up-selling g pp p
• •Fast sales integration of INFO AG and IP Partner
• • Joint customer base of more than 30,000 customers in the German Mi l dtte stand
• • Seizing opportunities in Cloud computing
• • QSC is in pole position for targeting the fast fast-growing growingmarket, as we have all necessary competencies on board
• • Profiting from long experience in scaling products and services
• • QSC is rooted in the TC sector, a sector with a proven track record of automation and industrialization

• ⇒ QSC will grow its business and focus on profitability and financial strength to generate returns for shareholders

• 1. Highlights Q3 2011
• 1. Financial Results Q3 2011
• 1. Outlook 2011
• 1. Questions & Answers

CONTACT

QSC AG Arne Thull Head of Investor RelationsMathias-Brüggen-Strasse 55 50829 Cologne

Phone +49-221-6698-724Fax +49-221-6698-009E-mail invest@qsc.de Web www.qsc.de

twitter.com/QSCIRde

• twitter.com/QSCIRen
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• blog.qsc.dexing.com/companies/QSCAG
• slideshare.net/QSCAG

SAFE HARBOR STATEMENT

This presentation includes forward-looking statements as such term is defined in the U.S. Private Securities Litigation Act of 1995. These forward-looking statements are based on management's current expectations and projections of future events and are subject to risks and uncertainties. Many factors could cause actual results to vary materially from future results expressed or implied by such forward-looking statements, including, but not limited to, changes in the competitive environment, changes in the rate of development and expansion of the technical capabilities of DSL technology, changes in prices of DSL technology and market share of our competitors, changes in the rate of development and expansion of alternative broadband technologies and changes in prices of such alternative broadband technologies, changes in government regulation, legal precedents or court d i i l ti th thi t li h i t f t decisions relating, among other things, to line s haring, rent for co-l ti d ocation an unbundled local loops, the pricing and timely availability of leased lines, and other matters that might have an effect on our business, the timely development of value-added services, our ability to maintain and expand current marketing and distribution agreements and enter into new marketing and distribution agreements our ability to agreements, receive additional financing if management planning targets are not met, the timely and complete payment of outstanding receivables from our distribution partners and resellers of QSC services and products, as well as the availability of sufficiently qualified employees .

A complete list of the risks, uncertainties and other factors facing us can be found in our public reports and filings with the U.S. Securities and Exchange Commission.

DISCLAIMER

• • This document has been produced by QSC AG ( (the "Company Company )" and is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person.
• • No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein and, accordingly, none of the Company or any of its parent or subsidiary undertakings or any of such person s' officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.
• • The information contained in this document does not constitute or form a part of, and should not be construed as, an offer of securities for sale or invitation to subscribe for or purchase any securities, and neither this document nor any information contained herein shall form the basis of, or be relied on in connection with, any offer of securities for sale or commitment whatsoever.