Challenging 2014 financial year • By promoting its development into an ICT provider, QSC acted early to initiate a transformation process aimed at compensating for the expected reduction in con- ventional TC revenues and seizing new growth opportunities in promising future business fields, such as cloud computing. The course of business in 2014 underlined the scale of the challenges involved in such a far-reaching transformation. In the summer months, the Company therefore took initial measures to additionally boost sales and stabilise its cost base. In autumn 2014, it adjusted its full-year forecast for 2014. The cost-cutting and focusing programme will now ensure that QSC can master the existing challenges and return to its former fi nancial and earnings strength. Revenues amounted to € 431.4 million in the past financial year, compared with € 455.7 million in the previous year. Sales in the Resellers segment alone, where most of the conventional TC business is pooled, fell by € 20.8 million to € 102.6 million. This was essentially due to three factors. On the one hand, in these business fields QSC is obliged to operate in saturated or in some cases even contracting markets characterised by highly intense competition. The intensity of competition in turn leads to falling prices. QSC does not participate in bidding contests, but rather focuses on market niches in which revenues can still be generated with adequate mar- gins. Furthermore, the regulatory framework is also becoming more restrictive. In 2014, QSC lost revenues of € 8 million and EBITDA of € 3 million due to regulatory factors. The expectation that it would be possible to offset at least part of these losses with new cloud products for resellers proved to be incorrect.
New orders of € 177.4 million • The ICT business, by contrast, posted a comparatively better per- formance. New orders in Direct Sales, which essentially comprises the Consulting and Outsour- cing businesses, came to € 177.4 million, as against € 153.9 million in 2013. The Company suc- cee ded in particular in extending contracts with its existing customers – proof of the consistently
TC revenues at QSC fall due to market and regulatory factors
high quality of its services. In November 2014, for example, FRESSNAPF Tiernahrungs GmbH, Eu- rope’s largest pet supply retailer, extended its comprehensive ICT service contract by five years through to 31 December 2019. The contract volume amounts to around € 13 million and, among other aspects, covers SAP operations, SAP application support and the link-up of around 800 stores in Germany to its headquarters.
The Company also succeeded in acquiring new customers. In September 2014, for example, QSC acquired the Dussmann Group, one of the world’s largest private multi-service providers, as a new customer in its Consulting business unit. QSC will take care of the group-wide launch of the HR solution SAP HCM, as well as performing all related consulting and integration tasks.
Overall, Direct Sales generated revenues of € 207.3 million in 2014, as opposed to € 209.2 mil- lion in the previous year. Unlike in previous years, it was not possible to achieve consistent reve- nue growth in the course of the year. This was attributable on the one hand to the lack of new large-scale Outsourcing orders and on the other to temporary weakness in the Consulting busi- ness. Direct Sales nevertheless introduced countermeasures in 2014 already and thus managed to increase its new orders once again in the second half of the year.
Positive performance of established ICT products • Given the underlying framework in the TC mar ket, Indirect Sales, the third business unit, posted a satisfactory business performance in 2014. Revenues here came to € 121.6 million, as against € 123.2 million in the previous year. While TC revenues with business customers reduced due to market and regulatory factors, business with existing ICT products developed positively. QSC generated revenues above all with broadband, se- cure internet connections and networks, as well as with services based on these connections. Revenues with new ICT products, on the other hand, did not yet live up to the original expectations. It took longer than expected to train and certify sales partners. Not only that, despite having shown interest many potential customers hesitated to actually make use of QSC’s innovations in practice. In response to this, after the summer break QSC already introduced a whole package of measures to boost turnover with the new products. Special “on-boarding teams” now offer customers sup- port in introducing cloud-based products. A special telesales team addresses customers just as directly as do proprietary sales employees for individual products. In parallel, QSC is stepping up online marketing for its innovative products.
QSC awarded “Cloud Leader” status in two categories • QSC is on the right course with its in- novations. This was also underlined by the awarding to the Company of “Cloud Leader” status in two categories by market researchers at the Experton Group in June 2014. The experts single out companies with highly attractive ranges of products and services and strong market and com- petitive positions – in short, companies like QSC.
NEW ORDERS, DIRECT SALES (in € million)
2014 2013
177.4 153.9
Takeover of majority interest in encryption specialist FTAPI • When innovating for the cloud age, QSC is relying not only on internal resources, but also on targeted acquisitions. In February 2014, QSC acquired 51 percent of the shares in the Munich-based company FTAPI Software GmbH. The remaining shares are held by the company’s two founders, who are now pressing ahead with FTAPI’s further development within QSC’s network. The purchase price for the shares thereby acquired amounted to € 3.1 million. Further information about this can be found in Note 37 of the Notes to the Consolidated Financial Statements.
Founded in 2010, this start-up company markets a number of products ensuring the highly se- cure transfer and storage of enterprise-critical data. FTAPI enables files to be transferred and stored in different security levels. Its functionalities can be smoothly integrated into existing CRM and ERP systems, as well as into e-mail solutions such as Outlook. The encryption is easy to handle, also works for large data quantities on a gigabyte scale and is available both as a local software solution and as a cloud service. Having taken over a majority interest, QSC integrated FTAPI’s portfolio into its own range of services and products and presented it to the Company’s sales partners. As FTAPI is managed as an independent profit centre, it retains the necessary latitude to continually extend its range of services and products.
QSC places promissory note loan of € 150 million • Other than the aforementioned developments, there were no events in themselves of material relevance for the course of business in the past financial year. As previously announced, the Company optimised its financing structure and to this end placed a debut promissory note loan of € 150 million with around 30 investors in Ger- many and abroad. QSC has drawn on a large share of this fresh capital to substitute for a syndi- cated loan still running until September 2016.