DGAP-News: QSC planning to boost free cash flow and again

DGAP-News: QSC AG / Key word(s): Preliminary Results QSC planning to boost free cash flow and again raise dividend 26.02.2014 / 07:30 --------------------------------------------------------------------- QSC planning to boost free cash flow and again raise dividend Cologne, February 26, 2014. During the 2013 fiscal year, QSC continued its evolution into an ICT provider, and increasingly invested in future growth. With revenues of EUR 455.7 million, an EBITDA margin of 17 percent and a free cash flow of EUR 25.6 million - according to preliminary numbers - the company achieved all of the targets it had announced in early 2013. Given QSC's stronger financial position and profitability, the Management Board will propose that the Annual Shareholders Meeting raise the dividend by 1 cent to EUR 0.10 per share. ICT business in Direct Sales grows by 11 percent Preliminary numbers show that QSC generated revenues of EUR 455.7 million in 2013, as opposed to EUR 481.5 million the year before. Regulatory- and market-induced declines in conventional TC revenues were offset by rising ICT revenues. In 2013, just the significant reduction in mobile and fixed-network routing and interconnection fees in December 2012 led to a revenue shortfall of nearly EUR 30 million year on year. Plus revenue shortfalls in the same amount stemming from persistent stiff price competition in the conventional TC market. On the other hand, ICT business in Direct Sales, in particular, developed on a positive note in 2013, with revenues up by 11 percent to EUR 209.2 million. Its Outsourcing, Consulting and Networking business is benefiting from the sustained high level of order bookings, totaling EUR 153.9 million in 2013. Moreover, in 2012 QSC had won requests for proposals for three major Outsourcing projects valued at some EUR 120 million, thus enabling it to post new orders of EUR 193.1 million overall. Transitioning these major projects into regular operation and the investments this involved played a major role in raising capital expenditures to EUR 39.6 million in 2013, as opposed to EUR 37.9 million the year before. Nevertheless, preliminary numbers show that free cash flow improved to EUR 25.6 million from EUR 23.6 million the year before. Workforce rises by 14 percent to 1,689 In addition to fixed assets, QSC increasingly invested in future growth in 2013, first and foremost in ICT professionals and innovations. The workforce grew by 204 people in 2013 to a total of 1,689. The development budget rose by EUR 3.9 million to EUR 5.9 million. However, these investments in future growth initially had hardly any impact on QSC's profitability: According to preliminary numbers, EBITDA of EUR 77.8 million in 2013 remained virtually unchanged from the previous year's level of EUR 77.9 million, even though tightened regulation burdened EBITDA by just under EUR 4 million. The EBITDA margin advanced by 1 percentage point to 17 percent. As a result of declining depreciation expense, EBIT rose from EUR 24.6 million the year before to EUR 26.5 million, with consolidated net income improving from EUR 19.0 million the year before to EUR 23.6 million. Outlook for 2014: QSC to increasingly invest in growth During the current fiscal year, QSC will be increasingly investing in future growth, focusing on innovative ICT and Cloud products. Acquisitions of small technology companies can accelerate this innovation process; just at the beginning of this week, QSC acquired encryption specialist FTAPI. Depending upon the progress that is made in conjunction with the market launch of its innovations, QSC anticipates revenues of between EUR 450 and EUR 470 million for 2014, along with an EBITDA of between EUR 60 and EUR 70 million and a free cash flow of between EUR 26 and EUR 32 million. As in 2013, revenues are likely to develop on a two-track basis: As a result of market and regulatory effects, rising ICT revenues will be offset by sharply declining TC revenues. Both this decline as well as tightened price competition, first and foremost in ADSL2+ business, are likely to burden EBITDA by nearly EUR 10 million in 2014. Moreover, QSC is planning a development budget that is some EUR 5 million higher than in 2013. In addition, during the current fiscal year QSC will no longer be able to benefit from the return of deferred income in the amount of some EUR 20 million per year that had been formed in connection with the buy-back of network operating company Plusnet and returned on a periodic basis through year-end 2013. Since this return had no impact on liquidity, the company is planning for a renewed rise in free cash flow in 2014, in spite of higher investments in future growth. QSC Chief Executive Officer Jürgen Hermann notes: "In 2013, we internally concluded the transformation process of becoming an ICT provider. With our existing team, in 2014 we'll now be able to focus on expanding our positioning as an innovative ICT provider." Hermann also intends to continue to enable the company's shareholders to participate in QSC's success: "The proposed 10-cent dividend per share represents the minimum for future distributions." <pre> In EUR million 2013 2012 Total revenues 455.7 481.5 Revenues, Direct Sales (ICT) 209.2 187.9 Revenues, Indirect Sales (ICT/TC) 123.2 125.1 Revenues, Resellers (TC) 123.4 168.5 EBITDA 77.8 77.9 EBIT 26.5 24.6 Consolidated net income 23.6 19.0 Earnings per share 0.19 0.14 Free cash flow 25.6 23.6 Capital expenditures 39.6 37.9 Workforce 1,689 1,485 </pre> Notes: The 2013 Annual Report will be available for download at www.qsc.de/en/qsc-ag/investor-relations.html from March 31, 2014. 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. Queries to: QSC AG Arne Thull Head of Investor Relations Phone: +49 221 669-8724 E-mail: invest@qsc.de Internet: www.qsc.de End of Corporate News --------------------------------------------------------------------- 26.02.2014 Dissemination of a Corporate News, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: QSC AG Mathias-Brüggen-Stra�e 55 50829 Köln Germany Phone: +49-221-6698-724 Fax: +49-221-6698-009 E-mail: invest@qsc.de Internet: www.qsc.de ISIN: DE0005137004 WKN: 513700 Indices: TecDAX Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart End of News DGAP News-Service --------------------------------------------------------------------- 254356 26.02.2014