Presentation of financial results of QUMAK S.A.

for 1Q2016

Warsaw, 18 May 2016

Agenda

Financial results in 1Q2016

Sales and orders portfolio 1Q2016

Growth potential of backlog

Perspectives in selected business lines

Summary

Appendix

• Explanation of corrections Y2015

• 1Q results – table

Financial results 1Q 2016

Income

Results under pressure of decreased revenue

106.3

75.1

1Q2015 1Q2016

mln

PLN

-29%

2.6

-7.2

1Q2015 1Q2016

mln

PLN

7.3

1.8

1Q2015 1Q2016

mln

PLN

-75%

3.5

-6.8

1Q2015 1Q2016

mln

PLN

Net result

Gross result from

sales

Operating result

• High base - one-off in 1Q2015 2.7 million

• Profitability: decreased revenue with fixed costs of retaining staff

• Stagnation in the public sector

mln

PLN

/ %

G&A and SG&A in relation to revenue

106.3

75.1

7.2%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

0,0

50,0

100,0

1Q2015 1Q2016

3%

106.3

75.1 6%

11.5%

0%

2%

4%

6%

8%

10%

12%

14%

0

50

100

1Q2015 1Q2016

SG&A to revenue G&A to revenue

mln

PLN

/ %

• Increased costs/revenue mainly because of the lower sales and the necessity to retain key employees in slowdown periods. Costs of severance and recruitment exceeds the cost of retention

• Planned outsourcing of a part of staff

Cash flow 1Q 2016 and financing structure

-37.5

-1.2 1

-37.7

CF Op. CF Inv. CF Fin. CF netm

ln P

LN

10 11 14

67

29

1Q2015 2Q2015 3Q2015 4Q2015 1Q2016

Cash flow Cash

mln PLN As at 31.03.2016

Non-interest bearing financing or with preferential interest 10.3

Interest-bearing financing 0

• Lack of net debt

• Financing working capital with own means and affordable debt

• Cash used for working capital

• Increased leverage in 2H with planned growth of backlog

Sales and orders portfolio 1Q 2016

Stagnation on the market of public tenders

1900

984

1Q2015 1Q2016

mln

PLN

-48%

Value of public tenders

*By PPO data

Waiting for the activation of a new financial Perspective of the European Union 2014-2020

Construction and assembly production by 13.3% lower than a year ago. Infrastructure investments significantly slowed down in the 1st quarter – much smaller GDP dynamics than expected

Waiting for the amendment of the Public Procurement Law

Staff rotation in key functions at ordering parties and slowdown of a decision-making process in the area of tenders and purchases

More strict savings policy at ordering parties in a group of state treasury companies (with regard to a tight public budget)

• The lowest number of public tenders since 3 years. Dynamics -50% vs. 2014 *

• Value -48% vs. 2015

106.3

-13.9 -4.1 0 +3.8

-4 -0.2 -6.8 -6

75.1

1Q2015 AirAuto BuildAuto DataCen LicSales SofDev Multim DMS Other 1Q2016

Sales 1Q 2015/1Q 2016

7%

29%

23%

11%

11%

2% 3%

14% Airport Automation

Building Automation

Delivery of hardware

Data Center

DMS

Software Development

Multimedia

Other segments

Sales structure in 1Q16

Change in sales in specific business lines y/y

• The biggest influence on decreased sales y/y – finishing of large airport projects

• Significant decrease in sales in lines of a large exposure to the public market m

ln P

LN

Backlog 1Q in next years

2016 238

392 455

554

459

248

103

42

2011 2012 2013 2014 2015 2016*

mln

PLN

2017+ Total backlog PLN 290 million

* As at 5 May 2016

2016

• Over a year of delay in allocating projects in a perspective 2014-2020

• 53% key projects in BL financed by EU in 2015. At present it is 18%

• Expected growth of portfolio in 2H2016

Multimedia exhibitions

19% Building Automation

22%

Data Center 17%

Software Development

9%

Airport Automation 8%

Management and service of computer

systems 10%

Outsourcing of IT services

2%

IT security 5%

Other 8%

Backlog for 2016+

Backlog by business lines

Growth potential of backlog – submitted offers

Value of submitted offers in the public sector

Value of submitted offers in the commercial sector

Growth of exposure to projects performed in the commercial sector

Greater exposure to the commercial market

230

370

1Q2015 1Q2016

mln

PLN

61%

126

68

1Q2015 1Q2016

mln

PLN

-46%

Value of submitted offers by client sectors

35% 65%

1Q2015

Public Commercial

15%

85%

1Q2016

Public Commercial

Pipeline 2016+ of the value of PLN 341 million

Build

ing

Auto

mat

ion

IT se

curit

y

Deliv

ery

of h

ardw

are

DMS

Data

Cen

ter

Out

sour

cing

Airp

ort A

utom

atio

n So

ftw

are

Deve

plom

ent

Smar

t City

O

ther

0 50 100 150 200 250 300 350

Pipe

line

by b

usin

ess

lines

19% 5% 5% 18% 17% 10% 8% 7% 6% 4%

18%

15%

11%

11% 10%

10%

6%

6%

6%

4%

Gov. entities and LRU

Uniformed services

Financial

Specialized publ. institu.

Telecommunication

Construction

Utilities

Industry

Education

Other

Pipeline by industries

Selected top offers

Outsourcing of specialists – PLN 10 million

Delivery of hardware for one of telecoms – PLN 30 million

Works in IT Security segment for a financial institution – PLN 14 million

Contract in the area of DMS for one of the energy companies – PLN 10 million

Agreement within the scope of BMS for one of the largest IT companies in Poland - PLN 6.7 million

Value of offers at the 1st place 70 mln

*Net amounts

Perspectives in selected business lines

Airport Automation – rozwojowy rynek

Civil and medical heliports

Military airports

Estimated annual value of market of aviation infrastructure to 2020

Security Areas with potential

97 %

420 mln

To 2025 air traffic in Poland will grow by 71% - the necessity to expand airports and supporting infrastructure (e.g. radars, security). Modlin will allocate several tens of million PLN for expanding to 2018, Balice - over PLN 200 million

Airports reach for financing from outside of EU means – among others bonds

Compulsory installation of EDS - scanner Explosives Detection Systems Standard 3 at all civil airports to ‘20 (EU funds reserved in the new perspective)

Until 2020 PANSA will allocate over PLN 1 billion for investments increasing safety of flights

Modernization of military airports – currently only 2 out of 16 military airports were comprehensively adapted. 8 planned military AWOS. Large budgets funded by Alliance

At least PLN 140 million for building medical landing areas (target share in this market 25-30 %)

Potential abroad (EDS, BHS): 800 large airports in EU. First tender procedures: Croatia, Serbia

Installation for IMGW

Increase of air traffic ’16 vs ‘15 10 % Source: http://www.ulc.gov.pl/pl/regulacja-rynku/3732-prognoza-ruchu-lotniczego, report PwC

Institute of Meteorology and Water Manag.

Polish Air Navigation Services Agency

Civil Airports Value of offers to submit in 2016

Airports and landing areas for military

Civil and medical heliports

Other (obstruction lighting systems)

min. 86 mln

Potential projects for 2017

min. 175 mln

Airport Automation

Desktop Management Services – large savings

Around PLN 2 million savings thanks to centralization of resources in two locations, and in one as a target – ability to achieve a subsidy from the city

Better use of field service technicians – achieving the effect of an operating leverage (ca. + 30 % of margin more)

Enterprises with extensive network of offices is an interesting market to the section Field Support

Large potential on the energetics market

Priorytetowe rynki

SKIERNIEWICE

KRAKÓW

ŁÓDŹ

? ? ?

telco

tourism

energetics Potential contracts – industries

industry

administration

Ca. 5 mln PLN/y

Smart city solutions are preferred by EU – 25 billion in subsidies for urban regeneration (extensive IT and infrastructure projects)

Wide range of activities: e-services for citizens, intelligent transport, energy efficiency, communication platforms

Qumak offers applications in the area of e-services – planned sales during 2016-2017 is around PLN 2 million (30-40 implementations dedicated reproducible products)

In 2016/2017 the company will take part in at least 3 tender proceedings concerning the implementation of ITS solutions

Large part of solutions is built on the basis of already created in the company – low CAPEX

Smart City – ITS and software products

Intelligent transport systems

City media management systems value of ITS projects that QMK will take part until 2017

e-services platforms Offered solutions 150

mln

Infrastructure maintenance planned sales of smart city products until 2017

60-70 mln

from OPI&E for energy efficiency and to be used RES in public infrastructure

450 mln EUR

health service

banking

maximum value of planned sales in the next quarters

defense 100 mln

Constant increase in IT power – the need of bigger space for servers

Large part of companies does not allow transferring their data to colocation server rooms – the need to build own centers

We enter the era when first large server rooms (of 10-15 years) will require a complete modernization

Large need on the side of the national defense segment – money from outside of EU means

Other tender procedures in the public sector on hold

local governments

Markets of priority

Data Center – stability of revenue

projected dynamics of market growth y/y 3%

security

military

transport

Project is in the final stage of its performance – premiere August/September 2016

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

Interested in the simulator are PKP, PR, KM, SKM, as well as producers of rolling stocks

Since 2018 the laws will enforce the requirement of annual trainings of all drivers (19 thousand persons)

Qumak can deliver equipment as well as trainings – there are conducted analyses concerning final model of commercialization of the project

There are analyzed capabilities of using the project in other industries and abroad

Potential markets

per year the market of trainings for drivers is

worth

Locomotive simulator – end of the project

simulators needed in around a year 20

60 mln

Summary

Summary

Deepened seasonality of quarterly results caused by the stagnation on the public market

Increased exposure to the commercial market

Expected improvement of sales and result in 2H2016

High cash position and lack of net debt

PLN 290 million in backlog, PLN 70 million – top offers

Good long-term perspectives in the segments of Airport Automation and Smart City, planned 2 million of savings in DMS, stable situation in a key line Data Center

Simulator of rail vehicles at the finish line – process of commercialization launched

Ability to go abroad with selected solutions

Appendix

Explanation of corrections Y2015 separate

(mln PLN) Y2015 before correction

New circumstances

vs. Q4

Valuation of long-term contracts

Changes in presentation

Agent/Principal, penalties, write-

downs

Various correctio

ns

Corrections of

auditor’s valuation

Correction in total

Y2015 after correction

Income from sales 767.9 -5.3 -14.2 -30.2 -0.8 -8.6 -59.1 708.8 Own cost of sales 714.6 1.6 -12.6 -30.2 0.8 6.5 -33.9 680.7

Gross income (loss) from sales 43.5 -6.9 -1.6 -1.6 -15.1 -25.2 18.3

Cost of sales 15.5 -0.6 0 -0.6 14.9

Cost of administration 15.1 -0.7 0 -0.7 14.4

Other operating income 4.1 -0.6 -0.9 0 -1.5 2.6

Other operating costs 8.4 -6.6 -0.6 0 -7.2 1.2

Profit (loss) from operations 8.5 -0.3 -1.6 -1.2 -15.1 -18.2 -9.7

Financial costs 3 0.7 0 0.7 3.7

Profit (loss) before taxes 5.7 -0.3 -1.6 -1.9 -15.1 -18.9 -13.2

Income tax -1.4 -1.3 -0.3 -0.6 0.2 -2 -3.4

Net profit (loss) from continued operations 7.1 1 -1.3 -1.3 -15.3 -16.9 -9.8

Net profit (loss) 7.1 1 -1.3 -1.3 -15.3 -16.9 -9.8

43.5

-6.9 -1.6

-1.6 -15.1

18.3

Gross income fromsales'15 before

correction

New events vs. Q4 Valuation of long-term contracts

Various corrections Corrections ofauditor's valuation

Gross income fromsales'15 after

correction

Explanation of corrections Y2015 separate

Gross income from sales

767.9

-5.3 -14.2 -30.2 -0.8 -8.6

708.8

Income fromsales'15 before

correction

Newcircumstances

vs.Q4

Valuation of long-term contracts

Change inpresentation

agent/princip.,penalties, write-

downs

Variouscorrections

Corections ofauditor'svaluation

Income fromsales'15 after

correction

Income from sales

7.1

+1

-1.3 -1.3

-15.3

-9.8

Net profit'15 beforecorrection

New circumstancesvs.Q4

Valuation of long-term contracts

Various corrections Corrections ofauditor's valuation

Net profit'15 aftercorrection

Explanation of corrections Y2015 separate

Net profit

8.5

-0.3 -1.6 -1.2

-15.1

-9.7

Profit (loss) fromoperations before

correction

New circumstancesvs.Q4

Valuation of long-term contracts

Various corections Corrections ofauditor's valuation

Profit (loss) fromoperations after

correction

Operating result

Correction with no influence on cash flow Y2015

(thousand PLN) Y2015 – before

correction Y2015 – after

correction Change

Net cash flows from operations 52 738 54 187 +1 449

Net cash flows from investments -8 942 -10 391 -1 449

Net cash flows from financial activity 6 293 6 293 0

Net increase of cash and cash equivalents 50 089 50 089 0

Cash and cash equivalents at the end of the period 66 781 66 781 0

thousand PLN 1Q2016 1Q2015 Change (% / p.p.)

Revenue 75 082 106 286 -29%

Gross income from sales 1 781 7 328 -75%

Gross margin from sales (%) 2.34% 6.89% -4.55

Operating result (EBIT) -6 777 3 462

Operating margin (%) -9.03% 3.26% -12.29

Net profit -7 212 2 586

Net margin (%) -9.61% 2.43% -12.04

EBITDA -5 689 4 094

Margin EBITDA (%) -7.58% 3.85% -11.43

Results 1Q2016

www.qumak.pl

Aleje Jerozolimskie 134

PL 02-305 Warszawa T: +48 22 519 08 00 F: +48 22 519 08 33

e-mail: qumak@qumak.pl

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