DGAP-News: QSC AG / Key word(s): Quarter Results
QSC starts fiscal 2014 as planned and reiterates guidance
12.05.2014 / 07:30
---------------------------------------------------------------------
QSC starts fiscal 2014 as planned and reiterates guidance
- Revenues of EUR 109.1 million
- EBITDA of EUR 13.4 million
- Free cash flow of EUR 4.6 million
- Optimized financing through promissory note loan nearing conclusion
Cologne, May 12, 2014. QSC started fiscal 2014 as planned; rising revenues
with ICT products and services were offset by market- and
regulatory-induced declines in TC revenues in what is traditionally the
rather weaker first quarter. Overall, the company generated revenues of EUR
109.1 million in the first quarter of 2014, in contrast to EUR 113.0
million for the same quarter the year before. Regulatory rulings by the
German Federal Network Agency in November 2013, alone, are producing
revenue shortfalls of some EUR 2 million per quarter and decreasing EBITDA
by nearly EUR 1 million. Moreover, TC business was suffering from stiff
pricing and shakeout competition, which, in addition to conventional voice
telephony, is now increasingly reaching the ADSL2+ market. On the other
hand, there was rising demand for ICT products and services, with order
bookings for the quarter increasing by 16 percent year on year to EUR 27.3
million.
In terms of profitability, the effect of higher investments in future
fields of growth and the elimination of a deferred income item in the
amount of some EUR 5 million per quarter did, as expected, leave their
mark; through year-end 2013, this deferred income item had enabled QSC to
return as income the payment received in connection with the premature
termination of collaboration with TELE2 in network operating company
Plusnet. Consequently, EBITDA stood at EUR 13.4 million in the first
quarter of 2014, as opposed to EUR 18.9 million for the same quarter one
year earlier; EBIT amounted to EUR 1.1 million, as opposed to EUR 6.3
million, and consolidated net income stood at EUR 0.3 million, in contrast
to EUR 5.1 million. Since the return of the deferred income item did not
impact liquidity, free cash flow totaled EUR 4.6 million in the first
quarter of 2014, in contrast to EUR 5.1 million for the same period the
year before.
QSC doubling development budget
QSC Chief Executive Officer Jürgen Hermann: "We are increasingly investing
in future growth in 2014 and focusing on the development of innovative ICT
and Cloud products." QSC will be doubling its development budget to around
EUR 10 million during the current fiscal year, and will be accelerating the
innovation process through the acquisition of smaller technology companies;
in February, the company already acquired a majority stake in encryption
specialist FTAPI. Hermann notes: "Our sales partners are showing a very
positive response to the FTAPI products, which relate to the highly secure
transfer and storage of enterprise-critical data. These easy-to-handle
products are coming at just the right time and opening up a new growth
market for QSC." The FTAPI team headed up by its two founders plans to
ready further innovations for market during the coming quarters.
QSC plans to increase free cash flow to between EUR 26 and EUR 32 million
Now that fiscal 2014 has begun as planned, QSC is reiterating the guidance
for the full fiscal year that it had announced on February 26, 2014.
Depending upon the progress made in bringing innovative ICT products and
services to market, QSC anticipates revenues of between EUR 450 and EUR 470
million, an EBITDA of between EUR 60 and EUR 70 million, as well as a free
cash flow of between EUR 26 and EUR 32 million.
Revenues are likely to continue to develop on a two-track basis: Rising ICT
revenues will be offset by declining TC revenues as a result of market and
regulatory effects. This decline, as well as heightened pricing
competition, first and foremost in ADSL2+ business, are likely to impact
EBITDA by nearly EUR 10 million in 2014. Moreover, in 2014 QSC will no
longer be benefiting from the return as income of the deferred income item.
QSC optimizing its financing and extending terms
With a view to the sustained low level of interest rates, in late 2013 QSC
had announced that it intended to optimize its outside financing this year
and extend its terms. In all likelihood, the company will in the days to
come be entering into a contract for a five- to seven-year EUR 150-million
promissory note loan. Thereafter, the company would make significantly less
use than before of a consortial credit facility of most recently EUR 140
million running through September 2016. The keen interest on the part of
the banks would additionally enable QSC, contrary to what had been planned
at the outset of the year, to redeem INFO AG's factoring in the amount of
EUR 11 million, which had been in place prior to the acquisition of the
majority interest in this company in 2011. This redemption would impact net
debt during the further course of the year and would therefore be presented
separately in calculating free cash flow, as it is based upon an obligation
stemming from acquisitions and is merely a technical financial measure in
which QSC is redeeming factoring liabilities through liabilities stemming
from a promissory note loan. QSC Chief Executive Officer Hermann cites a
further advantage of the new financing: "The promissory note loan will
broaden our financing latitude for making targeted investments in future
fields of growth and thus accelerate our profitable growth in ICT and Cloud
business."
<pre>
In EUR million Q1 2014 Q1 2013
Revenues 109.1 113.0
EBITDA 13.4 18.9
EBIT 1.1 6.3
Consolidated net income 0.3 5.1
Free cash flow 4.6 5.1
Capital expenditures 4.7 9.8
Workforce 1,705 1,565
</pre>
Notes:
The 3-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.
Queries to:
QSC AG
Arne Thull
Head of Investor Relations
Phone: +49 221 669-8724
Fax: +49 221 669-8009
E-mail: invest@qsc.de
Internet: www.qsc.de
End of Corporate News
---------------------------------------------------------------------
12.05.2014 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-StraÃe 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
---------------------------------------------------------------------
267668 12.05.2014
DGAP-News: QSC starts fiscal 2014 as planned and reiterates guidance
| Source: EQS Group AG