QSC grows revenues and operating profit significantly in second quarter of 2011
- Revenues advance by 16 percent to € 121.8 million
- IP-based revenues now account for 79 percent of total revenues
- EBIT improves by 25 percent to € 6.4 million
- Initial consolidation of INFO AG
- Forecast reiterated for full 2011 fiscal year
Cologne, August 8, 2011. Cologne-based QSC AG returned to its growth course in the second quarter of 2011, with revenues rising to € 121.8 million, as opposed to € 104.9 million for the same quarter the year before. The Company's two new subsidiaries, IT Outsourcing and IT Consulting provider INFO AG and Housing and Hosting specialist IP Partner, played a major role in this positive development. They made a key contribution toward enabling QSC to significantly boost the share of total revenues accounted for by IP-based revenues year on year from 67 percent to 79 percent; the Company generated only 21 percent of its revenues in the conventional lines of business of a telecommunications provider, such as Call by Call offerings and reselling DSL lines.
For the first time, the quarterly financial statements include a pro rata share of the numbers of INFO AG, in which QSC acquired a majority interest on May 2, 2011. In addition to the non-recurring acquisition costs in the amount of € 0.8 million that were necessary in this connection, further costs were incurred in the second quarter of fiscal 2011 for the emerging collaboration with INFO AG and with IP Partner, which had already been acquired in early 2011. The total acquisition-related costs are in the low single-digit million euro range.
Stable EBITDA and significantly higher EBIT
In spite of temporarily higher costs, the Company's EBITDA of € 19.3 million came close to matching the € 19.7-million level for the same quarter the year before. And, in fact, QSC was able to grow its operating profit from € 5.1 million to € 6.4 million. As a result of both provisions for income taxes as well as a change in deferred taxes following the acquisition of INFO AG, on the other hand, consolidated net income of € 3.9 million fell slightly short of this key metric of € 4.3 million for the same quarter one year earlier.
Totaling € 7.0 million, QSC again earned a sustained positive free cash flow in the second quarter of 2011. Both this free cash flow as well as available liquid assets served QSC as major sources of financing for its latest acquisitions, as well as for ongoing capital investments. Capital expenditures rose to € 12.7 million in the second quarter of 2011, as opposed to € 6.5 million for the comparable quarter the year before. The major reason: IP Partner is doubling the floor space available for Housing and Hosting projects this year.
QSC anticipates free cash flow of between € 35 and € 45 million in 2011
July 26, 2011, marked the end of the public tender offer for INFO AG; QSC now already holds a 91.90-percent interest in this subsidiary. During the coming months, QSC will be focusing on intensifying collaboration with both this company as well as with IP Partner. Particular attention is being paid to opening up possibilities for collaboration in sales and marketing. QSC anticipates that these preparations will culminate in a significant contribution to revenues and profitability during the course of the coming fiscal year.
In spite of the time and costs that this will involve, QSC is reiterating its forecast for the full 2011 fiscal year: The Company anticipates that free cash flow will rise to between € 35 and € 45 million. Moreover, plans call for the first distribution of a dividend for the current fiscal year.
|In € million||Q2 2011||Q2 2010||H1 2011||H1 2010|
|Consolidated net income||3.9||4.3||10.4||7.5|
|Free cash flow||7.0||7.6||28.9||12.1|
The 6-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.