Date post: | 23-Jul-2015 |
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QSC WITH A GOOD START TO Q1 2015
• Strong TC revenues led to total revenues of € 104.7 million (Q1 2014: € 109.1million)
• TCV rises to € 64.2 million (Q1 2014: € 27.3 million), mainly driven by a € 40 million order
from SÜWAG (revenue impact from 2016 onwards)
• Improvement in earnings: EBIT higher than in Q3 and Q4 2014
• Staff cuts: Termination of around 100 employee contracts agreed by end of April
• Progress in Cloud business: Vodafone will integrate FTAPI technology into its
“Secure E-Mail” solution
• New segment reporting gives a better view of each business segment
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• B-B-B segment, which offers voice and data services to medium-sized companies,
has been stable and profitable for years now
• QSC’s access product portfolio for business customers is very competitive
• Our network benefits our customers in the Outsourcing segment
• Security and reliability will be very important for cloud services
QSC DECIDED TO CONTINUE OPERATING
ITS DSL NETWORK
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PARADIGM SHIFT IN OUTSOURCING BUSINESS
• Recent market studies show an increasing demand for outsourcing
• Standardisation of IT services is very important for our business customers,
due to cost-cutting requirements
• Our infrastructure (IP network and data centres) supports our strategy
• QSC will offer multi-cloud services and migrate traditional outsourcing services to the cloud
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• Market for IT Consulting shows stable growth with yearly growth rates of 4-5%
• Consulting is essential for Cloud onboarding
• Consulting business is a good door-opener for Outsourcing business
• The relevance of industry-specific know-how is growing fast
CONSULTING MARKET SHOWS STABLE GROWTH
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OUR WHOLESALE APPROACH AND EXPERIENCE
FIT PERFECTLY WITH CLOUD PRODUCTS
• Vodafone will be relying in future on encryption
technology from QSC’s subsidiary FTAPI
• Consistent end-to-end encryption
• Automatic key exchange
• Integration and further use of existing e-mail accounts
• QSC is currently in talks with other European telcos
– to multiply this wholesale approach
QSC STARTED Q1 2015 BETTER THAN EXPECTED
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Revenues:
• TC and Outsourcing weaker
than in the previous year
• Consulting and Cloud business
improved
EBIT:
• Below Q1 2014
• Better than Q3 & Q4 2014
• Too early to notice a huge
impact of the cost-cutting
programme
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NEW SEGMENTATION REFLECTS PRODUCT-ORIENTED
MANAGEMENT SYSTEM
• From 1 January 2015 on, segment reporting
will be based on the current product portfolio:
• Telecoms
• Consulting
• Outsourcing
• Cloud
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STABLE TELECOMS BUSINESS
• Stability despite negative regulatory
impact of € 2.5 million per quarter
in 2015
• Stable B-B-B revenues since Q2 2014
• Decline in B-B-C revenues softened
by very efficient network operations
• Consumer market still characterised
by tough competition
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OUTSOURCING’S FUTURE FOCUS IS ON SMEs
• Focus on medium-sized customers
• Focus on specific industries such
as energy, financial services,
manufacturing and transportation
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CONSULTING IS WELL ON TRACK
• After the setback in H1 2014,
Consulting is well back on track
• Revenue driver: SAP applications
• Consulting – a good door-opener
for the Cloud business
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CLOUD BUSINESS STILL CHARACTERIZED
BY PROJECTS AND PILOTS
• +86% growth compared to Q1 2014
• Cloud business still in the early
stages, characterised by
• Development activities
• Pilot projects
• Initial market successes
• Next steps:
• Recurring revenues (e.g. Vodafone)
• Strengthening of online sales
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GROSS MARGIN BACK AT THE LEVEL OF Q2 2014
• In Q1 2015, QSC earned a
gross margin of 25.9%
• Cost of revenues influenced
by lower ongoing costs and
first reductions in personnel
costs
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EBITDA DEVELOPED AS PLANNED IN Q1 2015
• In Q1 2015, QSC earned
an EBITDA margin of 8.7%
• Strengthening of sales
activities for the Cloud
business prevents higher
increase
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FIRST INCREASE IN EBIT SINCE THE END OF 2013
• In Q4 2014, goodwill
impairment reduced EBIT
by € 18.0 million
• Further one-off effect due
to restructuring provisions
of € 7.2 million
LOWER LEVEL OF CAPEX
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• 70% of CAPEX in Q1 2015
were customer-driven
• Low investments in infrastructure
• Shift from CAPEX to OPEX of
development activities
SOLID BALANCE SHEET
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• Financing matches maturity:
Long-term liabilities and equity
cover 130% of long-term assets
• Strong cash position of € 80.5 million
QSC AIMS TO INCREASE EBITDA AND FREE CASH FLOW
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• Effects of the cost-cutting
programme will be seen from
H2 2015 onwards
• Financial strength will be
supported by CAPEX reduction
to € 25 million
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QSC AG
Arne Thull
Head of Investor Relations
Mathias-Brüggen-Strasse 55
50829 Cologne
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Phone +49-221-669-8724
Fax +49-221-669-8009
E-mail [email protected]
Web www.qsc.de
CONTACT
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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 decisions
relating, among other things, to line sharing, rent for co-location and 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 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.
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DISCLAIMER • This document has been produced by QSC AG (the “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