presentation of financial results of qumak s.a. for 1h 2016 · financial results in 1h 2016....

Presentation of financial

results of QUMAK S.A.

for 1H 2016

Warsaw, 28 September 2016

Management Board

Tomasz LaudyPresident of the Management Board

Since June 2016 is a President of the Management Board of Qumak. For 20

years has been associated with an IT sector. Worked for such companies as:

Ericsson, Siemens, Orange, or Roshan. Since 2013 fulfills a function of a

President of the Management Board at itWorks S.A. Graduated from the

Warsaw University of Technology. Developed business competencies at

renowned universities abroad, i.a. IESE and St. Gallen Business School.

Jacek SuchenekVice President for Realizations

Since March 2013 is a Member of the Management Board of Qumak, since

2015 a Vice President. Fulfills a function of a Contracts Realization Division

Director. In the company since 2005. Graduated from the Warsaw University

of Technology.

Marek TiahnybokVice President for Finance

Has many years of experience in managerial functions of a financial profile

as well as in fulfilling functions in management boards of joint-stock

companies, i.a. Grupa Prokom Software S.A. and Asseco Poland. Graduated

from the CUE and holds an Executive MBA from Gdańska Fundacja

Menedżerów, University of Gdańsk and Rotterdam School of Management.

In Qumak since June 2015.

Wojciech StrusińskiVice President for Sales

In Qumak for over 10 years. Since January 2013 is a head of Sales Division in

the Company (Commercial Sector), and since June 2015 is a Member of the

Management Board of the Company. Holds an Executive MBA, issued jointly

by ESSEC Business School and SGGW.

Agenda

Financial results in 1H2016 and the Company’s financial standing

Sales and orders portfolio in 1H2016

Growth potential of backlog

ISOK – undertaken actions

Perspectives in the area of products

Summary

Financial results in 1H 2016

Revenue

Results 1H2016 vs. 1H2015

352.8

176.0

1H2015 1H2016

mln

PLN

-50%

16.8 16.9

1H2015 1H2016

mln

PLN

3.8

-0.4

1H2015 1H2016

mln

PLN

1.7

-6.4

1H2015 1H2016

mln

PLN

Ne

t resu

lt

Gross income from sales Operating result

• Revenue – an effect of high sales base in 1H2015. The highest sales in the history

• EBIT 1H2015 includes released provisions PLN 2.7 million for KGP

• Selective approach to contracts in public sector (resignation from submitting 33%)

• Focus on higher margin

• Closing of a 5-year investment cycle, with delay in starting the next cycle

+1%

Significant improvement in profitability 2Q vs. 1Q

Results in 1Q2016

• Changes in sales structure: smaller contracts but

higher margin

• Decreased share of subcontractors

• Organizational optimization

Results in 2Q2016

15.1

6.4

0.8

MBS EBIT NET

mln

PLN

1.8

-6.8 -7.2

MBS EBIT NET

mln

PLN

Profitability from sales

Operating profitability

15%

6.4%

mln

PLN

/ %

G&A and SG&A to revenue

352.8

176.0

4.6%

9.6%

0

50

100

150

200

250

300

350

1H2015 1H2016

SG&A to revenueG&A to revenue

mln

PLN

/ %

• Increase of %GA – smaller sales and severance

for employees and managers

• Executed employment reduction -5%

• Higher sales costs i.a. because of growing

number of 2-stage tenders

• Increase in outsourcing of specialists













352.8

176.0

5.9%

0,0%1,0%2,0%3,0%4,0%5,0%6,0%7,0%8,0%9,0%10,0%11,0%12,0%13,0%14,0%15,0%16,0%17,0%18,0%19,0%20,0%21,0%22,0%23,0%24,0%

1H2015 1H2016

2.2%2.2%

Cash flow 1H 2016 and financing structure

-26.6

-1.0 -4.2

-31.8

CF Op. CF Inv. CF Fin. CF net

mln

PLN

10 11 14

67

2935

1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016

Cash flow Cash level

• Lack of net debt

• High cash level (ca. 60%

capitalization)

• Financing of current capital

from own resources and

using cost-effective debt



capitalization)






capitalization)




• CFO – stage of „investing”

in contracts

• Increasing leverage

in 3Q with planned backlog

growth


in contracts



growth


in contracts



growth

mln PLNAs at 30.06.2016

used available

Non-interest-bearing financing or with preferential interest 7.6 X

Interest-bearing financing (including factoring) 9.2 60.8

Optimal management of working capital

CKG netto w dniach

�Liabilities: trade, borrowings, bank loans, factoring, other, guarantee deposits, tax liabilities

�Receivables: trade and other, guarantee deposits

�In relation to net income

�Averaged values

�Period: 180 days

• The Company skillfully uses extended

dates for payment and preferential

financing

• Simultaneously the Company maintains

fast rotation of inventories



financing





financing



77.516.4

103.6

-17.6

Receivables Inventories Liabilities Cash

conversion

Low debt – very good financial situation

Profitability ratios 1H2016 1H2015

Sales profitability (gross) 9.6% 4.8%

EBITDA profitability 0.9% 1.5%

Operating profit margin -0.2% 1.1%

Gross profitability -0.6% 0.6%

Net profitability -3.6% 0.5%

Rules of calculation:

Sales profitability (gross) = gross profit from sales/ income from sales

EBITDA profitability = (loss from operations + depreciation)/ income from sales

Operating profit margin = loss from operations/ income from sales

Gross profitability = loss before taxes/ income from sales

Net profitability = net loss/ income from sales

Financing structure ratiosAs at

30.06.2016

As at

31.12.2015

General debt ratio 0.79 0.82

Interest-bearing debt to assets ratio 0.07 0.03

Coverage of fixed assets with equity ratio 1.30 1.30

Equity indebtedness ratio 0.34 0.17


General debt ratio = liabilities and provisions for liabilities in total/ assets in total

Interest-bearing debt to assets ratio = interest-bearing indebtedness/ assets in total

Coverage of fixed assets with equity ratio = equity/ fixed assets

Equity indebtedness ratio = interest-bearing indebtedness/ equity

Liquidity ratios As at 30.06.2016 As at 31.12.2015

Current liquidity ratio (current ratio) 1.15 1.13

Quick liquidity ratio (quick ratio) 0.88 0.99


Current ratio = current assets/ short-term liabilities

Quick ratio = (current liabilities – inventories – short-term accruals)/ short-term liabilities

Sales and orders

portfolio 1H 2016

Market environment

1570

960

2Q2015 2Q2016

mln

PLN

-39%

Value of public procurement

*By PPO data

Very poor use of means in the new financial Perspective of the

European Union 2014-2020, by estimations below 10%

Decrease in investments in 2Q by 4.9% y/y – significantly lower GDP

dynamics than expected

Double-digit decrease in public procurement for infrastructure

sector

73% of tenders in the IT segment involves delivery of hardware and

licenses

Noticeable increase of investments of companies, particularly

financial, in specialized IT solution, mainly IT Security

Large interest of enterprises in outsourcing – looking for savings and

optimization. According to experts, this will be one of the market

segments with most potential in the next years

• Lowest number of tenders since

3 years. Dynamics -54% vs. 2014*

• Value of tenders -39% vs. 2015







Sales 1H 2015/1H 2016

18%

7%

16%

7%10%

10%

17%

15%

Data Center

Airport Automation

Building Automation

Software Development

Multimedia Exhibitions

DMS

Hardware and Licenses

Other segments

Sales structure in 1H16

Change in sales in particular business lines y/y.

• Biggest impact on decrease in sales y/y –

finishing large infrastructure projects





• Significant decrease in sales in lines

of large exposure to public market

mln

PLN

352.8

-89,4

-40,5+4,2 -0,7 -11,3

+0,5 -10,0-29,4

176.0

1H2015 AirAuto BuildAuto DataCen HardSof SofDev Multim DMS Other 1H2016

Current backlog in next years

mln

PLN

Rok 2016

Rok 2017+Total backlog

PLN 286 million

* As at 31 July

Rok 2016

• Over a year of delay in

distributing projects

in the perspective 2014-20

• Expected growth of portfolio

within several months











367.5

193.8

134.7

92.2

2015 2016*

Effectiveness of acquiring orders

26%Commercial Public27%

Backlog in 2016+

Backlog

wg linii

biznesowych

Data Center

12%

Building Automation 24%

Airport Automation 8%

Mutlimedia Exhibitions

23%

DMS 8%

Enterprise AM 6%

Deliveries of

hardware/licenses 12%

Other

Growth potential of backlog –

submitted offers

Pipeline 2016+ of value PLN 292 million

22% 20% 15% 8% 8% 7% 4% 4% 12%

En

terp

rise

AM

Air

po

rt

Au

tom

ati

on

Oth

er

Ma

na

ge

me

nt

an

d

ma

inte

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of

com

pu

ter

an

d

tele

com

sys

tem

s

Bu

idli

ng

Au

tom

ati

on

Se

curi

ty I

T

Da

ta C

en

ter

De

live

rie

s o

f

ha

rdw

are

/lic

en

ses

Sm

art

Cit

y

• Diversification: 174 clients

• Double-digit margin I

• Share of public market < 30 %







ISOK – current state and

undertaken actions

ISOK – current situation and undertaken actions

Received notice on rescinding the realization of stage 5 of ISOK. Without a negative

impact on future results

Realization works in a developer environment have been finished. System ready to

be implemented in the ordering party’s environment was secured and placed in a

court’s depository

Decision on the next steps in the project is on the ordering party’s side, Qumak

sustains the ability to finish the performance of this Project

The Company will claim its rights in court

Perspectives in the area of

products

Simulator

SIMTRAQ Full VR – EN57

Simulator of virtual reality;

Seat on a 6-axes mini-platform;

Goggles and gloves for interaction.

SIMTRAQ – EN57

Cab simulator EN57;

Can be installed on a 6-axes platform;

Physical cockpit, physical recreation of a driver’s cab.

Innovative simulator of the most popular multiple unit in Poland EN57

(rolling stock ca. 1000 items). Enthusiastic reception on the largest world transport fair

INNOTRANS

Achieved ability to produce any cab locomotive in around 6 months (rolling stock ca.

3000 items)

Ability to construct a simulator of any machine in a year instead of even 3 years

Cooperation with vocational schools and universities

Own software can be an „engine” of any simulation in augmented reality (AR); Use of

behavioral mechanisms and artificial intelligence to simulate behaviors of people,

vehicles, security forces: offer i.a. for airports, military, police, anti-crisis services,

intelligence.

Potencjalne

rynkiestimated market of rail simulators in Poland 2017-2018

60

mln

Energy sector

(sustainability)

Transport systems

Security Communication platforms

e-administration

Smart City – innovative products for municipalities

Products in groups already developed or under development

Smart City – innovative products for cities and municipalities

• Platform supporting local job market

• Tool for measuring environmental conditions

• Application for management of utilities consumption in public buildings

• Tool integrating e-services (transport, culture, sports, social) on a local level

• Platform integrating e-communication with municipal offices

• System of spatial information on the basis of GIS maps

Selected products offered to municipalities at present

estimated annual value of available market115

mlnestimated share of Qumak 10-25%

Frontier implementation of Qumak for Energa-Operator – received an award at the fair

ENERGETAB 2016

Storage is to save energy during production and put it to use (release) when such need

arises

Key element of construction of modern networks Smart Grid, usage of balancing of

energy system and improvement of quality of electricity

Large interest from the side of Distribution System Operators (DSO)

Can also support operations of traditional power stations

Sales potential also in the industrial sector

Energy storages – unique implementation

Initial aims of the strategy 2017-2020

Developing strategy based on the market development directions indicated by

Gartner, Forester, and also on the basis of experience and predictions of

managerial staff

Simplifying and arranging structure – changing many business lines to 4-5

synergic areas of products and services

Organizational excellence through reduction of processes, flexible approach to

project management, and greater stress on systematic upskilling of employees

Innovative services and products (including business applications) and own

solutions, i.a. in the segment of Smart City

Development of outsourcing and more flexibility in employment

Going abroad in terms of close cooperation with global technological partners

Significant decrease of exposure to public market

Maintaining market share in key areas, where the company’s competencies are

unique and the market position is strong

Summary 1H 2016

Summary

Difficult market situation in the public segment with a large impact on

infrastructure projects

Significant improvement of profitability in 2Q vs. 1Q 2016, thanks to changing sales

structure and decreased share of subcontractors

Very good liquidity situation, lack of net debt

Backlog with a high growth potential

Important stage of building portfolio of products is finished:

• Simulation products

• Applications for municipalities and cities

• Energy storages

www.qumak.pl

Aleje Jerozolimskie 134

PL 02-305 Warszawa

T: +48 22 519 08 00

F: +48 22 519 08 33

e-mail: [email protected]

Appendix

Results 1H2016 – P&LA and balance sheet

In PLN thousand 30.06.2016 31.12.2015

Equity in total 48 534 55 194

Fixed assets in total 37 350 42 545

Working assets, including: 194 438 257 772

Inventories 16 415 11 073

Trade and other receivables 90 498 147 312

Assets from unfinished contracts 32 981 20 849

Other non-financial assets 19 064 11 331

Cash and cash equivalents 34 956 66 781

Assets in total 231 788 300 317

Long-term liabilities, including: 14 700 16 621

Long-term borrowings and bank loans 2 239 1 422

Trade and other liabilities 5 449 8 354

Provisions 7 012 6 845

Short-term liabilities, including: 168 544 228 502

Short-term borrowings, debt instruments and bank

loans14 302 7 818

Trade and other liabilities 103 420 160 691

Liabilities from unfinished contracts 8 736 31 637

Provisions 13 243 6 465

Deferred revenue 28 853 21 600

Total equity and liabilities 231 788 300 317

In PLN thousand 1H2016 1H2015 Change %

Income from sales 176 048 352 787 -50.1%

Own cost of sales 159 114 335 964 -52.6%

Gross income from sales 16 934 16 823 0.7%

Costs of sales 6 950 8 324 -16.5%

Costs of administration 10 383 7 735 34.2%

Other operating revenue 372 3 482 -89.3%

Other operating expenses 745 465 60.2%

Profit on operating activity -412 3 781 -

Result on revenues and financial costs -730 -1 777 -58.9%

Profit before tax -1 142 2 004 -

Income tax and deferred income tax 5 288 332 -

Net profit -6 430 1 672 -

LEGAL DISCLAIMER

This presentation is not a sales offer of any securities of Qumak S.A. (“Company”), in particular does not include information on securities and

conditions for acquiring them, as well as cannot be regarded as an invitation to sell securities, submit buy offers or to subscribe for the

Company's securities.

This presentation and any of its part, as well as its distribution, are not the grounds to enter into any contract or to incur any liability. Also it is not a

source of information which can be a basis for deciding on entering into any contract or on incurring any liability.

You should not rely on the information included in this presentation for any reasons, as well as assume that this information is complete, precise or

reliable. All such assumptions are made at your own risk.

Neither the Company, nor persons acting on its behalf, in particular members of the Management Board of the Company, and any other persons,

grant any clearly stated or implied guarantees or assurances regarding the precision, completeness or reliability of information or opinions included

in this presentation.

Statements included in this presentation, which are not historical facts, are “statements considering the future”. Statements considering the future,

in particular these regarding predicting revenues from particular markets or considerations regarding the Company's development, its subsidiaries,

as well as associated and affiliated entities (“Capital Group”), must not be understood as binding prognoses. Neither the Company, nor persons

acting on its behalf, in particular members of the Management Board of the Company, and any other persons, grant assurance that prognoses

regarding the future will be met, in particular do not guarantee the compatibility of future results or events with these statements, as well as the fact

that the future results of the Capital Group will not significantly differ from such predictions.

Information included in this presentation can undergo substantial changes.

Neither the Company, nor any other person, is obliged to update or care over updating information included in this presentation or to correct any

possible inconsistencies; all opinions expressed in this presentation can undergo changes with no prior notice. Neither the Company, nor any

member of its bodies, employee of higher or other position, or any other person, shall be held responsible for any damages suffered arising from the

use of this presentation or its content.

By taking part in this presentation or accepting a copy of this document, you accept applying to the mentioned above restrictions and conditions.

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