QSC AG / Key word(s): Preliminary Results/Profit Warning 16.10.2014 16:30 Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- QSC lowers guidance following weak quarter Cologne, October 16, 2014. According to preliminary calculations, QSC's operating business developed on a weaker note during the past quarter than had been planned. Revenues totaled EUR 106.6 million, as opposed to EUR 113.8 million for the same quarter the year before. Contrary to expectations, significant advances in both business with new ICT products as well as IT Consulting and IT Outsourcing failed to materialize in the face of a noticeable downturn in the economy following the summer vacation season. As a result of revenues that failed to materialize in high-margin lines of business, preliminary calculations show that EBITDA of EUR 8.8 million in the third quarter of 2014, too, was down from the previous year's level of EUR 19.4 million; the year before, the return of a deferred income line item in the amount of EUR 5.2 million per quarter had had the effect of increasing profitability. Moreover, profitability was additionally burdened by an unfavorable revenue mix in the company's largest business unit, Direct Sales: QSC generated higher revenues here than otherwise customary through sales of hardware and benefited less than customary from new orders. Order bookings, themselves, rose sharply in the third quarter of 2014, reaching a total of EUR 55.3 million. According to preliminary calculations, free cash flow stood at EUR 3.7 million, in contrast to EUR 6.5 million in the third quarter of 2013. Following the second disappointing quarter in a row, QSC is adjusting its guidance for the full 2014 fiscal year and is now focusing squarely on a return to its customary high profitability. QSC anticipates revenues of at least EUR 430 million and an EBITDA of at least EUR 40 million for the 2014 fiscal year. The full amount of the lower EBITDA will impact free cash flow, which will now thus amount to at least EUR 6 million. At the same time, during the fourth quarter of 2014 QSC will also be responding to a stricter accounts receivable management on the part of major suppliers in times of an economic downturn; this will produce an additional negative working capital effect in the amount of some EUR -18 million. Altogether, this will lead to a negative free cash flow of max. EUR -12 million for the full 2014 fiscal year. QSC continues to plan to distribute a dividend of at least 10 cents per share for the full 2014 fiscal year. With a view to the disappointing second quarter of 2014, the company had already launched an initial package of measures following the summer vacation season: QSC is now broadening the "Clarity" program and expects to see considerable cost savings during the course of fiscal 2015. Plus several growth measures. To strengthen its core business and innovation activities, the company is additionally planning to make one or two further acquisitions over the course of the coming months. When at the end of January 2015 it announces its initial preliminary numbers for fiscal 2014, QSC will be offering an outlook for the 2015 fiscal year, including the effects of a comprehensive package of measures aimed at regaining the company's customary profitability. Note: The 9-month report of QSC AG will be available for download from www.qsc.de/en/qsc-ag/investor-relations.html as of November 10, 2014. This ad-hoc release contains forward-looking statements. They are based on current expectations and predictions of future events by the Management of QSC AG. Due to the risks of mistaken assumptions, actual results could vary 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: [email protected] 16.10.2014 The DGAP 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-Straße 55 50829 Köln Germany Phone: +49-221-6698-724 Fax: +49-221-6698-009 E-mail: [email protected] 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 Announcement DGAP News-Service ---------------------------------------------------------------------------