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QSC posts strong and profitable growth - Preliminary results for 2004

  • Revenues up by 26 percent to € 145.9 million
  • Gross profit nearly quadruples to € 32.0 million
  • Positive € 0.9 million EBITDA; € 29.4 million improvement
  • QSC forecasts revenues of at least € 175 million for 2005

Cologne, February 28, 2005. According to preliminary results, Cologne-based QSC AG grew its revenues by 26 percent to € 145.9 million for the past fiscal year, as opposed to € 115.6 million in 2003. A 32-percent rise in revenues to € 40.0 million in the fourth quarter of 2004, alone, as opposed to € 30.3 million for the fourth quarter of 2003, underscores the dynamics of the company´s development.
QSC posted its strong revenue growth in 2004 with overall expenses that remained virtually constant. As a result, gross profit nearly quadrupled to € 32.0 million according to preliminary results, as opposed to € 8.4 million in 2003. For the first time, QSC recorded a positive annual EBITDA, amounting to € 0.9 million; the year before, an operating loss before depreciation of € -28.5 million had been incurred. The preliminary net loss declined by 64 percent to € -21.6 million, as opposed to € -60.6 million in 2003.
The company has been earning a positive free cash flow and a positive operating cash flow since the second quarter of 2004. Overall, the operating cash flow improved to € -4.8 million in the past fiscal year after € -28.0 million in 2003. In particular, annual prepayments to Deutsche Telekom for the full 2004 year resulted in a cash burn in the first quarter of 2004. These annual payments will again have a non-recurring effect on the cash flow in the first quarter of 2005, although to a significantly lesser degree. As of December 31, 2004, QSC accounted for liquid assets of € 40.3 million.
QSC plans to sustain its strong and profitable growth in the current fiscal year. As in the year before, the company is forecasting revenue growth of at least 20 percent, to more than € 175 million. In addition, the company expects a positive EBITDA of between € 4 to 8 million for 2005, along with an operating cash flow of at least € 10 million. Given the strong growth opportunities that exist, in particular in the business customer and project business segment, QSC will be specifically expanding its sales team, its portfolio of products and services and its own network during the current fiscal year, thus creating the foundation for profitable growth beyond 2005.

Preliminary results in € millions20042003Q4 2004Q4 2003
Net revenues145.9115.640.030.3
Network expenses*113.9107.230.826.9
Gross profit+32.0+8.4+9.2+3.4
Other operating expenses*
Net loss-21.6-60.6-5.1-14.3

* Exclusive of depreciation and non-cash compensation

The full annual report will be available on March 23, 2005, at

Queries to:
Arne Thull
Investor Relations
Fon: +49(0)221-6698-112
Fax: +49(0)221-6698-109

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.