QSC AG

Earnings Release • Nov 8, 2010

News Details

Corporate | 8 November 2010 07:50

QSC’s financial strength and profitability up sharply in third quarter of 2010

QSC AG / Key word(s): Quarter Results

08.11.2010 07:50

QSC's financial strength and profitability up sharply in third quarter of
2010
- Net income nearly triples to EUR 5.8 million
- Free cash flow more than triples to EUR 8.5 million

Cologne, November 8, 2010. Cologne-based QSC AG sustained its
transformation process from a network operator to a service provider in the
third quarter of 2010, and was again able to significantly improve its
financial strength and profitability by focusing on higher-margin IP-based
revenues. Overall, revenues advanced to EUR 105.6 million, as opposed to
EUR 104.4 million for the same quarter one year earlier. While revenues
from such classical network operator products as Call-by-Call and ADSL2+
decreased by EUR 7.2 million to EUR 32.5 million during the past quarter,
revenues with IP-based products and services rose by EUR 8.4 million to EUR
73.1 million. As a result, in the third quarter of 2010 QSC was already
generating 69 percent of its total revenues in these promising,
forward-looking lines of business.

Net income higher in third quarter of 2010 than for entire 2009 fiscal year

Through its focus on IP-based revenues, QSC was able to improve its EBITDA
by EUR 1.1 million over the third quarter of 2009 to EUR 20.3 million on a
revenue rise of EUR 1.2 million, with the EBITDA margin increasing by one
percentage point to 19 percent. Depreciation expense declined on schedule,
enabling QSC to grow its operating profit (EBIT) by EUR 3.4 million year on
year to EUR 6.5 million, with the EBIT margin doubling to 6 percent.
Totaling EUR 5.8 million, as opposed to EUR 2.1 million for the same
quarter the year before, QSC's net income for the quarter was higher than
it had been for the full 2009 fiscal year, when it had stood at EUR 5.5
million.

Net liquidity rises to EUR 21.4 million

QSC's rising profitability is also producing higher cash flows. In the
third quarter of 2010, the company earned a free cash flow of EUR 8.5
million, enabling it to more than triple this figure, which had stood at
EUR 2.6 million in the third quarter of 2009, within the space of a single
year. During the first nine months of the current fiscal year, QSC earned a
free cash flow of EUR 20.6 million, as opposed to EUR 9.2 million for the
comparable period one year earlier. This raised the level of liquid assets
by EUR 7.2 million to EUR 48.5 million as of September 30, 2010, as opposed
to EUR 41.3 million as of December 31, 2009. During this same period, QSC
reduced its interest-bearing liabilities by EUR 13.4 million to EUR 27.1
million. This increased net liquidity as of September 30, 2010, to EUR 21.4
million, as opposed to EUR 0.7 million as of December 31, 2009.

QSC plans to double free cash flow and to triple net income

Given the good development of business, QSC is reiterating its guidance for
the current fiscal year, which it had raised in August: The company
anticipates a free cash flow of more than EUR 25 million, thus doubling the
previous year's level of EUR 12.9 million. Moreover, QSC plans to grow its
revenues and EBITDA and to triple net income to more than EUR 16 million,
as opposed to EUR 5.5 million in fiscal 2009. During the past fiscal year,
the company had earned an EBITDA of EUR 76.9 million on revenues of EUR
420.5 million. QSC Chief Executive Officer Dr. Bernd Schlobohm notes: 'QSC
will be sustaining its transformation process in the coming quarters and
rigorously raising the percentage of IP-based revenues. This will further
strengthen our financial position and profitability.'

In EUR millions Q3 2010 Q3 2009
Revenues 105.6 104.4
Gross profit 36.3 35.3
EBITDA 20.3 19.2
EBIT 6.5 3.1
Net income 5.8 2.1
Free cash flow 8.5 2.6
Net liquidity 21.4 0.7*
Liquidity 48.5 41.3*
CAPEX 8.2 10.3
Workforce 619 660

* As of December 31, 2009

Queries to:
QSC AG
Arne Thull
Investor Relations
Phone: +49 221 6698-724
Fax: +49 221 6698-009
E-mail: invest@qsc.de
Internet: www.qsc.de

Notes:
The 9-month report is available for download at
www.qsc.de/en/qsc-ag/investor-relations.html. This corporate news contains
forward-looking statements. These forward-looking statements are based on
current expectations and forecasts of future events by the management of
QSC AG. Due to risks or mistaken assumptions, actual results may deviate
substantially from those made in such forward-looking statements. The
assumptions that may involve material deviations due to unforeseeable
developments include, but are not limited to, the demand for our products
and services, the competitive situation, the development, dissemination and
technical performance of DSL technology and its prices, the development and
dissemination of alternative broadband technologies and their respective
prices, changes in respect of telecommunications regulation, legislation
and adjudication, prices and timely availability of essential third-party
services and products, the timely development of additional marketable
value-added services, the ability to maintain and enlarge upon marketing
and distribution agreements and to conclude new marketing and distribution
agreements, the ability to obtain additional financing in the event that
management's planning targets are not attained, the punctual and full
payment of outstanding debts by sales partners and resellers of QSC AG, and
the availability of sufficient skilled personnel.

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Language: English
Company: QSC AG
Mathias-Brüggen-Straße 55
50829 Köln
Deutschland
Phone: +49 (0)221 66 98-112
Fax: +49 (0)221 66 98-009
E-mail: invest@qsc.de
Internet: www.qsc.de
ISIN: DE0005137004
WKN: 513700
Indices: TecDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in München, Düsseldorf, Berlin, Stuttgart

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