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QSC publishes 2004 annual report: Strong, profitable growth

Cologne, March 23, 2005. Cologne-based QSC AG today published its 2004 annual report. There were no material changes to the preliminary results announced on February 28, 2005.

During the past fiscal year, QSC grew its revenues by 26 percent to € 145.9 million, as opposed to € 115.6 million in 2003. The solutions business with large enterprises proved to generate especially high growth, with revenues rising by 69 percent to € 33.2 million, as opposed to € 19.6 million the year before. In addition to revenues with residential customers revenues with both small and medium enterprises in the business customer segment continued to grow in 2004. "Today, QSC is generating the majority of its revenues with business customers," stresses QSC Chief Executive Officer Dr. Bernd Schlobohm. "And it is precisely in these areas that we intend to focus our growth in the coming years."
QSC posted its first positive EBITDA of € 0.9 million in 2004 after a negative EBITDA of € -28.5 million in the year before. Five years after the capital investment phase began more and more assets have now been fully depreciated, thus reducing depreciation expenses. As a result the company´s annual net loss declined by € 39.0 million to
€ -21.6 million, as opposed to € -60.6 million in 2003.
QSC plans to sustain its strong and profitable growth in the current fiscal year. The company is forecasting revenue growth of at least 20 percent to more than € 175 million annual revenues, a positive EBITDA of between € 4 and 8 million, as well as an operative cash flow of at least € 10 million for the year 2005. "The growing demand for enterprise networks, as well as for broadband communication in general, offers us an outstanding environment to continue our strong and profitable growth - and we are determined to use these opportunities," states Bernd Schlobohm. QSC had already added some 40 new people to its sales team during the first quarter of 2005. At the same time, the company´s existing voice network is being upgraded to a Next Generation Network, which will allow seamless use of Voice over IP technology with conventional telephone equipment, as well. QSC is also continuing to selectively expand its own DSL infrastructure; by mid year, the company will be present in more than 80 cities. "In 2005, we will lay the foundation for sustained profitable growth in the years to come, and our own infrastructure will play a key role in this development," says Schlobohm.

In millions of euros (€)20042003
Net revenues145.9115.6
Net loss-21.6-60.6
Earnings per share (in €)-0.20-0.58
Equity ratio (in %)61.467.4
Capital Expenditure12.48.5
Liquid assets as of December 31,40.354.3
Workforce as of December 31,367373

The full annual report is available at

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

This press release 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.