03/03/2010

QSC significantly improves financial position and profitability in 2009

Preliminary results for 2009

• Free cash flow totals € 12.9 million
• Net debts entirely eliminated
• EBITDA advances to € 76.9 million
• EBITDA margin improves to 18 percent

Outlook for 2010

• Free cash flow of more than € 22 million
• Further rise in revenues, EBITDA and net income

Cologne, March 3, 2010. QSC's strategy of focusing on strengthening its financial position and profitability in view of the extremely difficult environment during the past fiscal year has paid off: The company was able to improve all key figures and eliminate its net debts entirely with a positive free cash flow of € 12.9 million.

Higher profitability
Preliminary results show that QSC increased its revenues to € 420.5 million in fiscal year 2009, as opposed to € 413.3 million the year before. Given the economic and financial crisis, the company focused on lines of business that offer a sufficiently high contribution margin, while taking a cautious attitude toward markets that are characterized by price competition.

This focus on profitable growth and strict cost discipline led to significantly improved results in 2009 according to preliminary results. EBITDA rose by € 9.6 million to € 76.9 million, while revenues were up by € 7.2 million during the same period. In this connection, QSC increased its EBITDA in all segments. Overall, the company was able to improve its EBITDA margin to 18 percent for the past fiscal year, as opposed to 16 percent in 2008.

At € 66.7 million, as opposed to € 60.6 million the year before, depreciation expense reached its high water mark in 2009. Nevertheless QSC also succeeded in further improving its EBIT to € 9.7 million during the past fiscal year, as opposed to € 6.1 million in 2008. Net income rose to € 5.5 million, as opposed to € 0.8 million one year earlier.

Capital expenditures down by more than half
As planned, following the conclusion of the network expansion project, QSC reduced its capital expenditures to € 42.2 million in fiscal year 2009, as opposed to € 91.4 million the year before. Merely € 10.0 million was attributable to ongoing replacement investments in QSC's nationwide network as well as evolving its nationwide Next Generation Network (NGN).

The bottom line: QSC is debt free
The good development of QSC's operations, which generated a corresponding level of cash from operating activities, as well as the lower level of capital expenditures, enabled the company to earn a sustained positive free cash flow of € 12.9 million in 2009; the year before, there had still been a negative free cash flow of € -32.3 million. This enabled QSC to entirely eliminate its net debts by year-end 2009, which had stood at € -12.2 million at the outset of the year, and to record net liquidity in the amount of € 0.7 million. In this connection, liquid assets totaling € 41.3 million were offset by interest-bearing payables and liabilities in the amount of only € 40.6 million; QSC had reduced this figure by € 20.8 million during 2009.

Financial position and profitability to see further growth in 2010
Given the to some extent weak state of the market, in fiscal year 2010 QSC is sustaining its strategy of focusing on lines of business with sufficiently high contribution margins, which involves further strengthening its financial position and profitability. The company is planning on improving free cash flow to more than € 22 million, as opposed to € 12.9 million in 2009. QSC additionally anticipates a further rise in revenues, EBITDA and net income.

QSC Chief Executive Officer, Dr. Bernd Schlobohm, explains: "In 2010, QSC will continue its evolution from a network operator to a solutions provider. In doing so, we will intentionally be foregoing revenues with low-margin standard products, preferring instead to concentrate on broadening our unrivaled positioning as a mid-size company serving mid-size companies in the telco market."

*As of December 31

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 annual report will be available for download at www.qsc.de/en/qsc-ag/investor-relations.html at March 31, 2010. 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.