08/12/2003, 09:00 Uhr CESTAd-hoc Release

QSC: Planned cash-flow breakeven sooner than originally planned

• Preliminary numbers for Q2 2003
• Revenues up 136%
• EBITDA advances 52%
• Guidance for 2003 financials revised upward

Cologne, August 12, 2003. According to preliminary results, Cologne-based QSC AG increased its revenues by 136% to EUR 28.3 million for Q2 2003 (Q2 2002: EUR 12.0 million). The revenue increase is primarily due to ongoing order growth from business and project customers, as well as due to the first time effects of the consolidation of voice carrier Ventelo, which was acquired in late 2002. In the first half of 2003, QSC grew its revenues by 160% to EUR 55.9 million (H1 2002: EUR 21.5 million).
QSC succeeded in reducing its EBITDA loss by more than 50% in Q2 2003. According to preliminary results, it amounted to EUR -7.2 million, (Q2 2002: EUR -14.9 million). This significant improvement is mainly attributable to the growth in high-margin services to business and project customers, as well as to the synergy effects resulting from the Ventelo integration. The EBITDA loss for the first half of 2003 amounted to EUR -17.2 million (H1 2002: EUR -31.2 million).
For the ninth time in a row, QSC recorded a quarter-to-quarter reduction in its net cash outflow: From EUR -10.9 million in Q1 2003 to EUR -8.6 million in Q2 2003. QSC anticipates that its average cash burn in 2003 will decline by at least 2 million euros per quarter. As at June 30, 2003, cash and cash equivalents totaled EUR 68.1 million.
The positive development of the operating business during the first half of 2003 has prompted QSC to raise the full year guidance it had announced last February for the current fiscal year. The company is now forecasting annual revenues of over EUR 115 million, as opposed to its previous guidance of EUR 105 to 115 million. On the basis of the updated plan, QSC expects an annual EBITDA loss better than EUR -25 million; up until now, QSC had anticipated an EBITDA loss of between EUR -25 and -30 million for the full year 2003. Given the steady reduction in cash burn, QSC expects to reach the cash flow breakeven point ahead of schedule, during the first half of 2004; previous guidance had indicated that the company would reach this breakeven point sometime during the course of the year 2004. QSC continues to plan on reaching the EBITDA breakeven point during the course of Q4 2003.

Queries to:
QSC AG
Arne Thull
Investor Relations
Fon: +49(0)221-6698-112
Fax: +49(0)221-6698-009
E-Mail: invest@qsc.de

Notes :
The half year report of QSC AG is available from the 26th of August at www.qsc.de. This ad hoc announcement contains forward-looking statements pursuant to the US "Private Securities Litigation Act" of 1995. 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.