DGAP-News: QSC AG / Key word(s): Preliminary Results/Forecast QSC maintains strong Cloud growth in 2016 and 2017 06.03.2017 / 07:30 The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- QSC maintains strong Cloud growth in 2016 and 2017 - Preliminary figures for 2016: Revenues on target at EUR 386.0 million - Cloud revenues surge 148 % to EUR 18.1 million - Free cash flow improves to EUR 8.4 million; EBITDA comes to EUR 37.1 million - Outlook for 2017: higher free cash flow and stable EBITDA despite lower revenues - High growth momentum with Pure Enterprise Cloud and IoT projects Cologne, 6 March 2017. The cloud and ICT service provider QSC can report an operating business performance in line with expectations for 2016. Revenues rose in those business fields in which this digitiser to the German SME segment expected to generate growth - and especially in its forward-looking Cloud segment. At the same time, the Company made significant progress with its organisational restructuring and in this context achieved a further substantial reduction in its workforce. Despite the ongoing restructuring programme and the associated one-off expenses, QSC increased its free cash flow for 2016 by 18 % to EUR 8.4 million. As in the previous year, the Management Board will therefore propose the distribution of a dividend of 3 cents per share. Revenue growth in all strategic business fields Based on preliminary calculations, QSC generated revenues of EUR 386.0 million in 2016, as against EUR 402.4 million in 2015. The highest growth was achieved in Cloud, the newest segment, where revenues surged year-on- year by 148 % to EUR 18.1 million. This high growth was driven by QSC's success in marketing its Pure Enterprise Cloud and IoT portfolio. Consulting revenues grew by 6 % to EUR 40.3 million, while TC revenues with corporate customers rose by 4 % to EUR 91.8 million. Consistent with expectations, QSC posted lower revenues in its TC business with resellers (down 9 % to EUR 118.4 million) and its traditional Outsourcing business (down 15 % to EUR 117.4 million). Among other factors, 2016 witnessed the migration of the first traditional Outsourcing customers to the Pure Enterprise Cloud. Comments QSC's CEO Jürgen Hermann: "I am satisfied with our business performance in 2016. We have for the first time demonstrated the momentum harboured by the Cloud business. We will be building on this in 2017 and beyond." Successful completion of cost-cutting programme QSC laid a foundation for focusing more closely on its Cloud business in the past two years by implementing a far-reaching organisational restructuring process. The Company completed the associated cost-cutting programme at the end of 2016. Among other measures, in 2015 and 2016 QSC succeeded in downsizing its workforce by almost 350 employees. The Company still had 1,360 employees at the end of 2016. These staff cuts and organisational restructuring measures led to further one-off expenses in the second half of the year in particular. Accordingly, and consistent with expectations, EBITDA for 2016 came to EUR 37.1 million, as against EUR 42.2 million one year earlier. Due to the one-off write-downs of EUR 15.2 million already announced on 20 December 2016, based on preliminary calculations QSC generated consolidated net income of EUR -25.1 million in 2016 compared with EUR -13.2 million in 2015. 2017: QSC plans revenues of EUR 355-365 million and EBITDA of EUR 36-40 million In the current financial year, QSC is continuing to focus on those business fields in which it expects to generate future growth - and above all on its Cloud and Consulting businesses and its TC business with corporate customers. The Company expects to see the highest growth rates once again in its Cloud segment with its two key focuses of Pure Enterprise Cloud and IoT. Overall, for the current financial year QSC has budgeted revenues of between EUR 355 million and EUR 365 million, and EBITDA of between EUR 36 million and EUR 40 million. The main factor preventing a better revenue performance is the TC business with resellers. Due to market and regulatory conditions, QSC expects revenues here to decline by around EUR 25 million. This will be accompanied by a budgeted reduction in revenues in the traditional Outsourcing business. Irrespective of these developments, the Company expects to generate a free cash flow ahead of the previous year's figure of EUR 8.4 million.

EUR million                          2016   2015   Change
Revenues                             386.0  402.4  -4 %
Cloud revenues                       18.1   7.3    +148 %
Consulting revenues                  40.3   38.0   +6 %
Outsourcing revenues                 117.4  138.5  -15 %
Telecommunications revenues          210.2  218.7  -4 %
- of which with resellers            118.4  130.7  -9%
- of which with corporate customers  91.8   88.0   +4 %
EBITDA                               37.1   42.2   -12 %
EBIT                                 -13.1  -11.1  -18 %
Consolidated net income              -25.1  -13.2  -90 %
Free cash flow                       8.4    7.1    +18 %
Capital expenditure                  28.4   26.7   +6 %
Number of employees                  1,360  1,454  -6 %
at 31 December

Notes: QSC will publish its 2016 Annual Report on 30 March 2017. This Corporate News includes forward-looking statements. These are based on current expectations and forecasts as to future events made by the management of QSC AG. Due to risks or erroneous assumptions, actual results may deviate substantially from these forward-looking statements. Contact for enquiries: QSC AG Arne Thull Head of Investor Relations T +49 221 669-8724 F +49 221 669-8009 [email protected] www.qsc.de --------------------------------------------------------------------------- 06.03.2017 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de --------------------------------------------------------------------------- Language: English Company: QSC AG Mathias-Brüggen-Straße 55 50829 Cologne Germany Phone: +49-221-669-8724 Fax: +49-221-669-8009 E-mail: [email protected] Internet: www.qsc.de ISIN: DE0005137004 WKN: 513700 Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange End of News DGAP News Service --------------------------------------------------------------------------- 550417 06.03.2017