05/09/2005

QSC off to strong, profitable growth in 2005

• Revenues increase by 29 percent
• Gross profit up by 54 percent
• € 0.5 million EBITDA
• Full year guidance reiterated

Cologne, May 9, 2005. According to preliminary results, Cologne-based QSC AG increased  its revenues by 29 percent to € 41.5 million in the first quarter of 2005, as opposed to € 32.2 million for the same quarter the year before. In particular, QSC sustained its strong growth in high-margin business with large enterprises.
Gross profit advanced by 54 percent to € 10.5 million according to preliminary results, as opposed to € 6.8 million for the comparable quarter the year before. The preliminary EBITDA improved to € 0.5 million, as opposed to € 0.1 million for the first three months of 2004.
As already announced in late February 2005, annual pre-payments to Deutsche Telekom for the full fiscal year had a non-recurring negative impact on liquid assets in the first quarter of 2005. Therefore, operating cash flow for the first three months of 2005 amounted to € -4.9 million, as opposed to € -14.8 million in the first quarter of 2004. Liquid assets totaled € 31.3 million as of March 31, 2005.
QSC continues to anticipate a positive operating cash flow of at least € 10 million for the full 2005 fiscal year. Given the positive developments during the first quarter of 2005, the company is reiterating its revenue and profitability guidance for the full year: QSC is planning on revenue growth of at least 20 percent to more than € 175 million for the current fiscal year, as well as a positive EBITDA of  € 4 to 8 million.

Information requests to:
QSC AG
Arne Thull
Investor Relations
Fon: +49(0)221-6698-112
Fax: +49(0)221-6698-109
Email: invest@qsc.de

Notes:
The 3-months report of QSC AG is available starting the 31st of May at www.qsc.de. This corporate news 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.