QSC AG. Preliminary results 2008 & Outlook 2009 Corporate Conference CeBIT Hanover, March 5, 2009

Transcription

1 QSC AG Preliminary results 2008 & Outlook 2009 Corporate Conference CeBIT 2009 Hanover, March 5,

2 AGENDA 2008 Strategic Update Preliminary Results FY 2008 Outlook

3 FINANCIAL OVERVIEW FOR THE FULL YEAR 2008 Net profit of 0.8 million (FY 2007: million) EBITDA up by 93% to 67.3 million (FY 2007: 34.9 million) EBITDA margin rose from 10% to 16% Revenues up by 23% to million (FY 2007: million) Significant reduction of CAPEX to 91.4 million (FY 2007: million) 3 NB: All results are based on IFRS

4 STRONG OPERATING PROGRESS IN A DIFFICULT ENVIRONMENT Ongoing strong and profitable revenue growth despite increasing economic challenges Strong increase of ULLs to 555,700 (+123%) New business driven by - QSC s contribution to productivity gains of customers - New product/service portfolio based on NGN No material loss of existing business/customers No noticeable change in payment defaults Swift implementation of synergies with Broadnet Increased focus on cost discipline 4 => QSC well positioned for economic downturn

5 MAIN ACHIEVEMENTS NETWORK ROLLOUT COMPLETED BY MID ,900 central offices under network coverage New opportunities based on SHDSL.bis Next Generation Network (NGN) up and running More than 90% of the traffic is IP traffic Significant cost advantages New opportunities in Voice Wholesale Nationwide voice network (474 POIs) Separate Wireless Local Loop (WLL) network in 42 regions up to 400 Mbps 5

6 MAIN ACHIEVEMENTS QSC REACHED NETWORK BREAKEVEN 6

7 MAIN ACHIEVEMENTS SWIFT INTEGRATION OF BROADNET ACQUISITION Revenues - Revenues and customers of Broadnet successfully transferred to QSC Network - Overlap is eliminated - QSC takes full advantage of Broadnet s WLL network Sales and Marketing - All sales offices in Germany are merged - Consolidated product range Administration - Headquarters functions are consolidated in QSC s headquarters in Cologne 7

8 FURTHER ACHIEVEMENTS New organization up and running All three Business Units develop further growth potential All three Business Units with focus on cost discipline and KPIs Increased focus on the SME segment Attractive growth in wholesale business with carrier Wholesale/Reseller segment is more than ADSL2+ New board member: Joachim Trickl (since February 1, 2009) After the shortage in ULL supply in autumn 2007, QSC is back on track! 2008 was a successful year for QSC! 8

9 BU WHOLESALE ADSL2+ WHOLESALE MAIN REVENUE DRIVER IN 2008 Break-up of revenues 45% of segment revenues from ADSL2+ German Broadband Market Dynamics 3.1 million new DSL customers in 2008 Substitution of T-DSL Resale by ULLs (2.5 million on December 31, 2008) Rising market share of DTAG (~50% in Q4 2008) Good momentum of cable operators Further ADSL2+ growth outside of QSC s network coverage 9 Increasing ULL churn

10 BU WHOLESALE (Residential) 2 nd GROWTH DRIVER: VOICE CARRIER SOLUTIONS ADSL2+ Voice Carrier Solutions Numbering Administration freenet - - HanseNet - United Internet congstar Cable Operators - - NetCologne - - M'Net - - 3U Telecom - - Versatel - - Other

11 BU WHOLESALE (Business) 3 rd GROWTH DRIVER: CARRIERS & ISPs Profitable and growing business with SDSL: Carriers AT&T BT Colt Orange Verizon Internet Service Providers Claranet Easynet Interoute Pironet.. 11

12 BU PRODUCTS CHALLENGING YEAR FOR PRODUCT SEGMENT Break-up of revenues 47% legacy voice (H1 2008: 50%) Market ,000 DSL lines for business customers Price competition in legacy voice - Call-by-Call: -20% for Voice minutes* - Preselect: -19% for Voice minutes* Strong growth of VoIP based on DSL 12 * Source: VATM

13 BU PRODUCTS REVENUES STABILIZED QSC s development Structural transition from legacy voice to Direct Access/VoIP is accelerating Overall revenues are growing again - Declining significance of legacy voice business - Higher demand for Direct Access - Strong growth of VoIP business Marketing of new products is paying off 13

14 BU MANAGED SERVICES QSC SELLS EFFICIENCY GAINS TO ENTERPRISES Market 2008 Growth opportunities in IP-VPN, especially in the SME segment Integration of VoIP in IP-VPN solutions Growing demand of Managed and Hosted Services (Telco-Softwareas-a-Service) 14

15 BU MANAGED SERVICES SUCCESSFUL FOCUS ON MEDIUM-SIZED ENTERPRISES Medium-sized QSC generates new business mainly with medium-sized enterprises High loyalty of existing customers: 2/3 of new business stems from existing customers SMEs are starting to embrace IP-Centrex and Hosted PBX as these solutions reduce CAPEX and increase flexibility In 2008, VirtuOS-ACD a Telco-SaaS solution of QSC has proven the attractiveness of hosted services 15

16 QSC IS MOVING UP THE VALUE CHAIN 16

17 AGENDA 2008 Strategic Update Preliminary Results FY 2008 Outlook

18 HIGHEST ORGANIC GROWTH IN QSC s HISTORY 18

19 TRADITIONALLY, EXCEPTIONALLY STRONG GROWTH IN THE FOURTH QUARTER Strong Q Open call-by-call benefits from Christmas season ICA payback in Q High-margin one-off revenues with wholesale customers 19

20 NON-RECURRING BUSINESS IN WHOLESALE DRIVES Q PROFITABILITY In million Q Q Revenues % Network expenses (1) % Gross profit % Other operating expenses (1) % EBITDA profit % Depreciation % EBIT profit % Financial results % Income taxes nm 20 Net profit (1) Excluding depreciation and non-cash share-based payments %

21 REVENUE GROWTH, COST DISCIPLINE AND SYNERGY EFFECTS LEAD TO IMPROVED RESULTS In million Revenues % Network expenses (1) % Gross profit % Other operating expenses (1) % EBITDA profit % Depreciation % EBIT profit/ loss nm Financial results % Income taxes nm 21 Net profit/loss (1) Excluding depreciation and non-cash share-based payments nm

22 EFFICIENCY GAINS IN SALES AS WELL AS G&A 22

23 CONTINUOUS EXPANSION OF EBITDA MARGIN 23

24 Q REPRESENTS REALISTIC BASIS FOR MARGIN DEVELOPMENT IN 2009 Q margin driven by seasonality/ non-recurring business 24

25 QSC IS EARNING A SUSTAINABLE NET PROFIT 25 In accordance with IFRS 3, the net income 2007 was corrected by -2.3 million with regard to the valuation of financial assets and depreciation

26 REDUCTION OF CAPEX IN 2008 Significant reduction of CAPEX After finalization of network rollout in Q2 2008, annual CAPEX was substantially reduced by 26% In 2008, share of customerdriven CAPEX rose to 62% (FY 2007: 44%) 26

27 ~90% OF CUSTOMER-DRIVEN CAPEX ARE INVOICED TO CUSTOMERS Customer-related CAPEX In 2008, ~90% of customer-driven CAPEX were invoiced to customers Average term of cash payment: ~60 days 27

28 SIGNIFICANT REDUCTION OF TRADE PAYABLES In million + Cash and short-term deposits Available-for-sale financial assets Liquidity Finance lease obligations Short- and long-term liabilities Liabilities due to banks Financial debt = Net liquidity (net debt) Trade receivables Trade payables = Working capital

29 SOLID FINANCING OF QSC 50 million revolving credit facility Amount: 50 million revolving credit facility Banks: Commerzbank (40%) Sparkasse KölnBonn (30%) DZ Bank (30%) Term: December 31, 2011 Interest rate: Covenants: EURIBOR % p.a. depending on EBITDA margin; as of January 1, 2009, EURIBOR +1.0% p.a. Equity/Total assets (adjusted) Net debt/ EBITDA EBITDA margin in % 29 As of 31/12/2008: 22.6 million undrawn revolving credit facility available QSC has drawn down 15.0 million in liquidity and 12.4 million in guarantees

30 QSC HAS ACHIEVED ITS GOALS 2008 Revenues > 405 million EBITDA > 60 million Net income ~ 0 million => million => 67.3 million => 0.8 million 30

31 AGENDA 2008 Strategic Update Preliminary Results FY 2008 Outlook

32 OUTLOOK 2009 QSC WELL POSITIONED FOR ECONOMIC DOWNTURN Germany hit by the hardest recession since 1945 Low propensity to invest Fierce price competition for standard Telco products Gradual saturation of residential DSL market But: Higher demand of SMEs for IP-based products like voice-data integration - Cost & CAPEX savings - Productivity gains - Pay-per-use/seat flexibility New product/service portfolio based on NGN Increased interest in managed services which increase customers efficiency 32

33 OUTLOOK 2009 QSC EXPECTS FREE CASH FLOW > 10 MILLION Focus 2009: Improvement of cash flow and earnings Free Cash Flow > 10 million EBITDA of between million Sustainable positive net income Revenues of between million with improved quality of revenues Slight volume growth in Wholesale Stabilization of Products Further growth in Managed Services 33

34 BU WHOLESALE SLIGHT GROWTH IN 2009 Limited growth potential of ADSL2+ wholesale business Less net adds growing mainly outside QSC s network coverage: : 2.0 million : 1.3 million : 0.9 million Increased competition from DTAG and cable operators Attractive growth potential in Voice wholesale NGN has made QSC a cost and innovation leader in this field Collaboration with all significant cable operators 34 Ongoing demand in SDSL wholesale business Higher bandwidth (SHDSL.bis) New sales channel (white label): Sales organizations for business customers New service (H2 2009): Ethernet Wide Area Services

35 BU PRODUCTS STABILIZATION OF REVENUES BUT HIGHER QUALITY Focus on higher-margin products SHDSL.bis (high bandwidth) QSC-Complete: Integration of SHDSL.bis IPfonie centraflex: Release 3.0 Efficiency gains through migration from legacy telephony to VoIP-based applications VoIP revenues mitigate negative impact of legacy voice business development 35 Focused sales strategy with Partner Certification Program

36 BU MANAGED SERVICES FURTHER GROWTH QSC will focus especially on medium-sized customers Managed IP-VPN market continues to grow at attractive rates SoHo segment (CAGR : 11%) SME segment (CAGR : 7%) New value add opportunities with medium-sized enterprises Momentum of growing demand for home office solutions Clear focus on attractive customer segments 36

37 THE FUTURE OF QSC SOLUTION PROVIDER WITH NETWORK ACCESS 37

38 QSC IS PREPARED FOR NEW ACCESS STRUCTURES DSL will remain the dominant access technology in the coming years QSC is already able to connect its infrastructure to a multitude of fiberbased local or regional networks The heart of QSC s network technology is the NGN layer (100% QSC-owned) QSC will be a solution provider for business customers CAPEX will be much lower than in previous years 38

39 OUTLOOK 2009 POSITIVE DEVELOPMENT Recession: Gloomy economic outlook for Germany Growth in most market segments with relevance to QSC Efficiency gains based on our services portfolio should provide relatively good insulation from the recessionary environment QSC will concentrate on positive Free Cash Flow and Profitability 39 Sharpened focus on profitable revenues More focused market segmentation ( what to sell & what not to sell ) More focus on the most profitable revenues More automatization Strict cost discipline

40 FINANCIAL CALENDER 2009 March 31, 2009 Publication of Annual Report 2008 May 13, 2009 Publication of Quarterly Report I/2009 May 20, 2009 August 12, 2009 November 11, 2009 Annual Shareholders Meeting Publication of Quarterly Report II/2009 Publication of Quarterly Report III/

41 CONTACT QSC AG Arne Thull Head of Investor Relations Mathias-Brüggen-Strasse Cologne Germany Phone +49-(0) Fax +49-(0) Web 41

42 SAFE HARBOR STATEMENT This presentation includes forward-looking statements as such term is defined in the U.S. Private Securities Litigation Act of These forward-looking statements are based on management s current expectations and projections of future events and are subject to risks and uncertainties. Many factors could cause actual results to vary materially from future results expressed or implied by such forward-looking statements, including, but not limited to, changes in the competitive environment, changes in the rate of development and expansion of the technical capabilities of DSL technology, changes in prices of DSL technology and market share of our competitors, changes in the rate of development and expansion of alternative broadband technologies and changes in prices of such alternative broadband technologies, changes in government regulation, legal precedents or court decisions relating, among other things, to line sharing, rent for colocation and unbundled local loops, the pricing and timely availability of leased lines, and other matters that might have an effect on our business, the timely development of value-added services, our ability to maintain and expand current marketing and distribution agreements and enter into new marketing and distribution agreements, our ability to receive additional financing if management planning targets are not met, the timely and complete payment of outstanding receivables from our distribution partners and resellers of QSC services and products, as well as the availability of sufficiently qualified employees. A complete list of the risks, uncertainties and other factors facing us can be found in our public reports and filings with the U.S. Securities and Exchange Commission. 42

43 DISCLAIMER This document has been produced by QSC AG (the Company ) and is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein and, accordingly, none of the Company or any of its parent or subsidiary undertakings or any of such person s officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document The information contained in this document does not constitute or form a part of, and should not be construed as, an offer of securities for sale or invitation to subscribe for or purchase any securities and neither this document nor any information contained herein shall form the basis of, or be relied on in connection with, any offer of securities for sale or commitment whatsoever 43

44 APPENDIX 44

45 STABLE SHAREHOLDER STRUCTURE SINCE IPO 45