1&1 AG — Interim / Quarterly Report 2007

May 15, 2007

DRILLISCH AG – 1ST QUARTER 2007 REPORT

Drillisch 1ST Quarter 2007 Report 1

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DATA AND FACTS

Key Indicators of the Drillisch Group Report on 1st Quarter, 2007

Drillisch Group	I/2007 *	I/2006	I/2005
Turnover in € m	76.8	67.1	78.6
EBITDA in € m	7.5	6.1	5.6
EBIT in € m	6.7	5.2	4.7
EBT in € m	5.2	5.6	5.0
Consolidated profits in € m	3.2	3.3	3.0
Profit/loss per share in €	0.09	0.10	0.09
EBITDA margin in % of turnover	9.7	9.1	7.1
EBIT margin in % of turnover	8.7	7.8	6.0
EBT margin in % of turnover	6.8	8.3	6.3
Consolidated profit margin in % of turnover	4.2	5.0	3.8
Equity ratio (equity % of balance sheet total)	46.7	66.9	66.4
Return on equity (ROE) (ratio Group result to equity)	2.2	4.6	5.1
Cash flow from current business operation in € m	-5.6	-0.2	-3.7
Investments
(in tangible and intangible assets), adjusted in € m	0.8	0.9	0.9
Investments,
adjusted, in € m	0.6	0.4	1.0
Staff as annual average (incl. Management Board)	339	313	361
Wireless services customers as per 31/03 (approx. in thousands)	2,071	1,650	1,634
Wireless services customers, debit	1,229	1,110	1,217
Wireless services customers, credit	842	540	417

* Q1 2007 figures include 1 month of Telco Services GmbH being acquired in March 2007.

Contents

Data and Facts €	2
To Our Shareholders	4
Letter from the Management Board	4
Investor Relations Report	6
Market Environment	10
The Wireless Services Market	10
The Software Industry	11
Commercial Development of the Drillisch Group as per 31.03.07	12
Group Companies	12
Turnover and Earnings Position	13
Assets, Liabilities and Financial Position	14
Future Corporate Growth Opportunities and Risks	15
Consolidated Interim Accounts as per 31.03.07	15
Consolidated Income Statement	15
Consolidated Balance Sheet	16
Consolidated Statement of Change in Capital	17
Consolidated Capital Flow Statement	19
Consolidated Notes	20
Service Corner	22
Publications	22
Your Contacts	22
Information/Order Service	23
Editorial Information	23

TO OUR SHAREHOLDERS Letter from the Management Board

The Executive Board

Paschalis Choulidis Vlasios Choulidis Executive-Board Spokesman, Director of Sales, Director of Finances, Marketing and Customer Care Financial Communication, Controlling and IT

Dear Sir or Madam,

The strategy of profitable growth is a total success at Drillisch. The results of the first three months of 2007 seamlessly continued the economic development of 2006, itself – for the third time in succession – the best year in the Company's history. Turnover rose by 14.3% to € 76.8 million. About € 11 million of this total come from Telco Services GmbH, acquired at the beginning of March. The EBITDA (earnings before interest, taxes, depreciation and amortisation) improved by an impressive 21.9% to € 7.5 million. The EBITDA is the most important earning performance indicator in international comparisons of companies because it is independent of the various depreciation methods and the different types of financing of the companies. An EBITDA ratio (EBITDA in relation to turnover) of 9.7% (previous year: 9.1%) gives Drillisch a top position among the German wireless services providers.

All of the corporate divisions contributed to the success of the Company's business: post-paid, pre-paid and discount business. Consequently, we are pursuing the strategy of expanding further all of our business divisions. Discount business in particular is being driven forward by organic growth, using clever products which are marketed via the Internet or in cooperation with large retail store chains as well. The classical "contract business" was given a good push by the acquisition of Telco. So we will continue the sustained, profitable growth of recent years in the future as well.

TO OUR SHAREHOLDERS

Letter from the Management Board

In times when the total turnover volume of the market is no longer growing and competitors are desperately seeking to gain customers by conducting ruinous price wars, it is important to invest in sectors where business will still be profitable. Adhering to this principle, we have actively driven forward the consolidation in the German wireless services provider industry, first by acquiring an interest in mobilcom (now freenet) at the end of 2006 and then with the takeover of Telco at the beginning of 2007. We will remain true to our strategy of qualitative growth and thus continue to be a reliable partner for our specialist trade partners, the end customers and the shareholders.

As planning stands today, we expect an increase in turnover for 2007 as a whole to about € 390 million and an increase in the EBITDA to about € 37 million. Most of the synergies from the Telco acquisition will be realised within 12 to 18 months, which is why we expect - at constant conditions - a further rise in profitability for 2008.

Warmest regards from Maintal.

Paschalis Choulidis and Vlasios Choulidis

TO OUR SHAREHOLDERS Investor Relations-Report

The year 2007 began moderately. Although the marked upward trend from the previous year continued until mid-February and the DAX broke the 7,000-point barrier once again, the equity markets worldwide were subjected to considerable corrections from the end of February onwards as the discussions over the outlook for the global economy and the price losses on the Chinese markets led to a stronger aversion to risk. Given these impressions, the investors reduced their investments.

During March, the U.S. Federal Reserve announced to the markets that it assessed the probability of further interest-rate hikes as relatively low, and so cleared the way for an extensive recovery on the equity markets.

In the euro zone, the various business climate indices and the consumer price data managed to calm the bond markets. The policy of the ECB has now been communicated clearly to the markets, but an improvement in the atmosphere in the corporate sector or greater pressure on prices could lead to uncertainty during the remainder of the year about further interest-rate increases.

The German stock index DAX profited from the favourable environment and climbed 320.11 points (4.9%) from 6,596.92 to 6,917.03 in the first quarter. During the same period, the TecDAX improved by 13.2% from 748.32 to 846.79 points. The TecAllShare Index reached 1,100.44 points at the end of the quarter and so improved by 12.9% on its year-end value for 2006.

On the capital market, the Drillisch stock is regarded as a promising investment. The analysts' recommendations stated price targets in the double-figure range which were confirmed again and/or increased further following the presentation of the figures for the previous year.

In January 2007, Drillisch announced the takeover of its competitor Telco Services GmbH. The acquisition was sealed on 8 March, 2007 with the approval of the supervisory authorities. With the takeover of Telco Services GmbH, the Management Board of Drillisch AG pressed further forwards with its consolidation on the service-provider market, and gave the company access to several extremely good customers. Telco has been selected as the best service provider in Germany for three successive years (according to a survey by the technical magazine, 'markt intern').

The Drillisch Stock in the First Quarter of 2007

	Year-end 2006	30 March, 2007	% change
Drillisch	5.80	7.87	+35.7%
TecDAX	748.32	846.79	+13.2%
TecAllShare	974.64	1,100.44	+12.9%

In the first quarter, the stock was traded up to a high of 8.98, followed by a period of consolidation. The Drillisch stock therefore performed better than its peer group and the general market during the first quarter of 2007.

TO OUR SHAREHOLDERS Investor Relations-Report

Capital Re-arrangements in the First Quarter of 2007

In February, Drillisch AG increased the capital stock in the context of accelerated book-building and under the exclusion of any purchase rights by 3,249,995 shares at € 6.75 per share to a new total of 35,749,995 shares. As a result, approximately € 21.94 million flowed into the company. This influx of funds supported the financing of the takeover of Telco Services GmbH announced on 14 January. The shareholder structure can be viewed on the Investor Relations homepage.

Current Research Studies (as per 18 April, 2007)

Analysis	Title	Rating	Price target	Date
SES Research	2010 – With discount strategy…	Buy	€ 10.20	11 April
Berenberg Bank	Acquisition of Telco complete	Buy	€ 12.00	19 March
Sal Oppenheim	Still upside, takeover rather…	Fair value	€ 9.30	15 Feb.
Commerzbank	Q4 below expectations	Hold	€ 5.50	15 Feb.
Arete Research	Telunico/Drillisch deal or no deal	Buy	€ 10.00-14.00	9 Feb.

The Drillisch Share compared to TecDax

The Drillisch Share - Stock Price and Volume Development

TO OUR SHAREHOLDERS

Investor Relations-Report

Agenda for the first quarter:

DGAP Ad-hoc report

14 January	–	Takeover of Telco Services GmbH
15 January	–	Sale of own shares successfully completed
30 January	–	Drillisch plans capital increase without purchase
		rights by up to 3,249,995 shares
31 January	–	Successful private placement generates over
		€ 21.9 million for Drillisch AG
12 February	–	Provisional result 2007
8 March	–	Completion of the takeover of Telco Services GmbH,
		Idstein

Investor Relations Events

In the first quarter, the company held numerous discussions with institutional investors in Europe and the USA. The constantly growing attention paid to the Drillisch stock also led to a large number of discussions with existing and potential investors at the company headquarters in Maintal, Germany. The company also presented itself at the CeBIT Small/Midcap Day in Hanover on 19 March.

In the interests of fair disclosure, the information presented to the institutional investors can be viewed by all other interested parties on the Investor Relations homepage.

Directors' Dealings 2007

Date	Name	Function	Purchase/sale	No. of units	Price
31 Jan	P. Choulidis	Management Board	Securities lending	359,996	--
31 Jan	V. Choulidis	Management Board	Securities lending	340,000	--
31 Jan	N. Forster	Supervisory Board	Securities lending	350,000	--
5 Feb	N. Forster	Supervisory Board	Sale	10,000	7.65
7 Feb	N. Forster	Supervisory Board	Sale	10,000	7.71
9 Feb	P. Choulidis	Management Board	End of securities lending	359,996
9 Feb	V. Choulidis	Management Board	End of securities lending	340,000
12 Feb	N. Forster	Supervisory Board	End of securities lending	350,000

In the context of the capital increase, the members of the Management Board and the Supervisory Board made their own shares available for securities lending and so guaranteed fast handling.

TO OUR SHAREHOLDERS

Investor Relations-Report

Directors' Holdings (as of 31 March, 2007)

Number of shares		35.749.995
Management Board
P. Choulidis V. Choulidis	Units Units	837,400 ➞ 2.34% 648,984 ➞ 1.82%
Supervisory Board
Dr. Hartmut Schenk Johann Weindl Nico Forster Dr. Horst Lennertz Michael Müller-Berg Dr. Bernd H. Schmidt	Units Units Units Units Units Units	-0- -0- 1,062,879 ➞ 2.97% -0- -0- -0-

The shareholder structure (as of 31 March, 2007)

	Number of shares	in %
	35,749,995	100.00
Freefloat as per definition of Dt. Börse:	27,865,000	77.94
Freefloat as per definition of Drillisch:	23,110,701	64.65

• Freefloat
• VS GmbH
• M. Brucherseifer
• Montrica Investment LLP
• N. Forster
• P. Choulidis
• V. Choulidis

THE DRILLISCH GROUP AND THE MARKET

The Wireless Service Market

Wireless Services Continue to Advance

The number of wireless telecom connections will continue to grow in the coming years, even though at a lower rate of growth. This is the forecast of BITKOM (Bundesverband Informationswirtschaft, Telekommunikation und neue Medien e.V.) in its market prognosis dated March 2007. While the wireless telecom market in Germany at the end of last year already totalled 84 million connections – which corresponds to 102% of the total population – the figure should stand at almost 100 million in 2010. The trend towards owning a second or even third handset will continue, and the number of datacards is growing constantly.

A slight sales decline is anticipated for the entire telecommunications industry in 2007. Fixed-network income in particular will continue to fall. As people are making calls by mobile phone more often and for longer, wireless telecom sales should increase moderately with a gain of about 1%.

Customer-friendly Price Performance

The relatively low prices for phone calls and Internet applications are the driving force behind the continuing growth. This is supplemented by a wide range of new possible uses for mobile phones, such as mobile TV. However, the dramatic price slide of last year seems to have been halted. While the average minute prices in 2006 fell by more than 10%, they only fell by a further 3.3% in the twelve-month period from March 2006 to March 2007. The prices even remained stable compared to February 2007.

After the Federal Network Agency reduced the call forwarding charges that network operators receive for incoming calls from other networks by about 20% in November 2006, the next item on the agenda is the reduction of roaming fees throughout Europe. The 27 EU member states have agreed to reduce drastically the prices for incoming and outgoing international calls. Up to now, costs of up to € 1 per minute have been charged for international calls. The latest considerations of the federal government include an upper limit of 60 cents for outgoing and 30 cents for incoming calls. This German proposal would be far higher than the concepts of the industry committee at the European Parliament, which has proposed a maximum of 40 and 15 cents respectively.

In 2007, Drillisch is once again being a pioneer for customer-friendly and cheap mobile-phone tariffs. Here is the best example: since the beginning of February, the two Group brands Drillisch/ALPHATEL and VICTORVOX have been offering the new "Fair 9.9" tariff, which lets the customer phone to the German fixed network and all mobile networks for the sensational price of 9.9 cents per minute for the first time.

THE DRILLISCH GROUP AND THE MARKET The Wireless Service Market/ The Software Industry

Innovations and Development of the White-Label Product Range at simply

Drillisch also has its nose in front in terms of innovative mobile applications. Since as early as the end of January 2007, simply has been the first wireless service discounter in Germany to offer an option for mobile television ("watcha") for just € 8.95 per month. At present, "watcha" is available in the agglomerations of Berlin, Cologne, Dortmund, Frankfurt, Gelsenkirchen, Hamburg, Hanover, Leipzig, Munich, Nuremberg, Saarbrücken and Stuttgart. The broadcasting network for "watcha" will gradually be extended to cover the entire country.

Since February, the tariff range of simply has been extended with simply ten, which offers any interested parties three different tariff variants: simply prepaid, simply postpaid and simply ten. Thanks to simply ten, simply now has an additional attractive product in its range, which appeals to customers who would like to telephone at even lower minute prices (10 cents) based on low monthly minimum sales (€ 10).

Apart from the core discount brand simply, which is marketed via the Internet, simply is also active as a white-label service provider for discount products from the REWE Group. Following the successful launch of PENNY MOBIL in 2006, ja! mobil has been available since January 2007. As a service provider, simply is responsible for the implementation and customer service of both products.

Mobile Data Use Still has More Potential

After a hesitant start, UMTS mobile phones and cards are now being distributed in a sustained manner. They tripled in number from 2.3 to 6.5 million in the period from 2005 to 2006. By the end of 2007, the number will be about 10.5 million according to BITKOM estimates. The business with mobile data services is expected to develop even more strongly than the mere quantity of UMTS phones. Data use – including messaging services – now accounts for almost a third of the total wireless service sales: and the tendency is upwards.

BITKOM also sees further potential in the use of mobile Internet access. Although 80% of mobile phone customers possess this technical function, so far less than half of them actually use the facility. However, a growing interest is perceptible: in the first quarter of 2007 alone, the use of the top 20 news portals on the Internet increased by 12%. In particular, the increasing transmission rates are making the mobile Internet more and more attractive.

Strong Growth in IT Business

Following a strong start, the IT industry is looking forward to a successful year in 2007. According to the estimates of BITKOM, the information technology industry should grow by 3.5% this year, because commercial users and public funds are investing in the modernisation of their IT systems once again. A growth of 5.7% is anticipated for the software market and 4.9% for IT services.

COMMERCIAL DEVELOPMENT Group Companies

Commercial Development of the Drillisch Group as per March 31, 2007

Drillisch is one of the most profitable and innovative of the German wireless services providers. The Group subsidiaries market wireless services from all four of the network operators active in Germany through specialist shops and via the Internet. Within the Group, Drillisch AG has responsibility for the overlapping functions such as management, finances and accounting, controlling, cash management, human resources, risk management, corporate communications and investor relations.

Rate Schedules Tailored To Benefit The Customers

VICTORVOX has belonged to the Group since the end of 2003 and concentrates on contract customer business in the post-paid sector. The service provider Telco Services GmbH (Telco), Idstein, has been a part of the strong Drillisch corporate association since 8 March, 2007. Telco cooperates nationwide with many strong telecommunications specialist retailers, who ideally complement the dealer structure of the Drillisch Group companies. The customer base is characterised by strong loyalty and above-average turnover.

Strong Pre-paid Business with Its Own Platform for the Marketing of Cash Cards and Codes

ALPHATEL has specialised in pre-paid business and is the only service provider in Germany to use its own platform (processor status) for the marketing of cash cards and cash codes alongside the classic network operator rates. g~paid, the system used by ALPHATEL, enables the secure sending of PIN codes over electronic channels.

Expansion of the Discount Business Will Continue

The subsidiary simply markets wireless service rates on the T-Mobile network over the Internet and in cooperation with large retail store chains at especially favourable terms and conditions: no basic monthly fee, no minimum charges for use and no contractual commitment. Founded at the end of 2006, McSIM is a further expansion of the Drillisch discount portfolio. McSIM concentrates on wireless services at discount prices on the Vodafone network.

IQ-work – High IT Competence Secures the Efficiency of the Service Provider

The IT competence at Drillisch is bundled in its subsidiary IQ-work. The company performs all of the IT services for the Group firms and markets its own workflow management software.

Staff

As an average for the first three months of 2007, the Drillisch Group employed a staff of 339, including Management Board (previous year: 313). In comparison to the same quarter of the previous year, the number of vocational trainees rose from 15 to 20.

COMMERCIAL DEVELOPMENT Turnover and Earnings Position

Consolidation of the Service Provider Market Driven Forward by Telco Acquisition

At the beginning of fiscal year 2007, Drillisch took over the competitor Telco, thus driving forward the consolidation on the German wireless services provider market. The acquisition was financed by a capital increase, available cash and by using the credit line. Telco has been fully consolidated in the Drillisch Group since March. This means that the business figures for the first quarter of 2007 are not strictly comparable with those of the same quarter of the previous year. Turnover and earnings totals of Telco in relation to the Drillisch Group are explained in detail in the consolidated notes.

Turnover and Earnings Position

During the first three months of fiscal year 2007, the Drillisch Group increased turnover by 14.3% to € 76.8 million. Telco contributed € 10.9 million to this result. Cost of materials increased underproportionately to the increase in turnover by 12.6% to € 61.5 million, thus improving the quality of turnover yet again. The gross profit margin (turnover less cost of materials in relation to turnover) improved from 18.6% in the corresponding quarter of the previous year to 19.9%.

Personnel expenses increased by 7.6% to € 4.5 million, remaining substantially lower than the growth in turnover. Other operating expenses increased by 23.0% to € 4.5 million. The largest individual items here are the valuation allowances on receivables and bad debt losses – which, however, make up just 1% of turnover – and the legal and professional fees, the billing costs and the expenditures for advertising and marketing.

The EBITDA (earnings before interest, taxes, depreciation and amortisation) – one of the most important performance indicators for Group management and profitability at Drillisch – rose by 21.9% to € 7.5 million. The EBITDA ratio (EBITDA in relation to turnover) rose further from 9.1% in the same quarter of the previous year to 9.7%. In comparison with the previous year's quarter, depreciation and amortisation decreased by 9.7% to € 0.8 million.

The EBIT (earnings before interest and taxes) therefore increased by 27.3% to € 6.7 million, while the EBIT ratio improved from 7.8% to 8.7%. These profitability indicators make Drillisch one of the most profitable service providers in Germany.

The financial results fell by € 1.7 million to - 1.4 million because Drillisch took out a loan in the fourth quarter of 2006 which was used to finance the acquisition of an interest in the competitor mobilcom AG (now freenet AG). Before this acquisition, Drillisch had extensive cash and cash equivalents at its disposal, which contributed to a positive interest result. The EBT (earnings before taxes) thus fell by 5.6% to € 5.2 million. The EBT ratio declined from 8.3% to 6.8%. Taxes on income rose by 7.7% to 2.0 million, resulting in a Group surplus of € 3.2 million, 4.3% less than in the first quarter of 2006. Profit per share came to € 0.09 (previous year: € 0.10).

COMMERCIAL DEVELOPMENT

Assets, Liabilities and Financial Position/Future Corporate Growth Opportunities and Risks

Assets, Liabilities and Financial Position

The balance sheet total as per 31 March, 2007 increased in comparison with the last day of 2006 by € 63.8 million. The equity ratio rose to 46.7% (31/12/2006: 44.8%). Goodwill increased by € 42.1 million to € 76.6 million, the effect of the Telco acquisition on the balance sheet. The acquisition was financed by cash and cash equivalents, which therefore fell by € 6.9 million to € 2.1 million, a capital increase and by using the credit line. Moreover, the initial consolidation of Telco showed up in the increase in receivables and liabilities. Trade receivables rose by € 15.3 million to € 31.8 million.

The positive development in the price of the freenet stock was reflected in the Other financial assets, which rose by € 8.0 million to € 176.8 million.

On the equity and liabilities side, the capital increase was shown in subscribed capital, which increased by € 3.9 million to € 38.4 million. Capital reserves increased by € 20.1 million to € 43.4 million The unappropriated earnings rose by consolidated profits of € 3.2 million to € 9.2 million. The market revaluation provision, which rose by € 7.4 million to € 38.5 million, is the counter-position neutral for profits to the Other financial assets, which rose in value.

The vast majority of the increases in provisions by € 2.6 million to € 4.7 million, in trade payables by € 6.7 million to € 14.8 million and in short-term liabilities due to banks by € 17.4 million to € 32.2 million results from the Telco acquisition.

The cash flow from current business operations fell by € 5.4 million in comparison with the first quarter 2006 to - 5.6 million. Tax payments amounting to € 6.3 million played a decisive role in this area. Cash and cash equivalents during the current year decreased by € 6.9 million.

Outlook

For 2007 in its entirety, the Management Board expects an increase of turnover to about € 390 million from approximately 2.2 million customers and a rise in the EBITDA to about € 37 million. Since the synergies from the Telco acquisition will not be realised completely until 12 to 18 months have passed, profitability will also increase in 2008.

Risk Report

The Drillisch Group maintains a qualified risk management system. The goal of this system is to recognise at an early stage any developments which could endanger the existence of the Company. There were no changes in the risk situation during the first three months of fiscal year 2007 in comparison with the previous year. Adequate precautions have been taken to cover any probable risks.

Consolidated Income Statement

Consolidated Interim Accounts as per 31 March, 2007

	I/2007*	I/2006
	TEUR	TEUR
Sales	76,762	67,142
Other own work capitalized	523	414
Other operating income	634	1,000
Cost of materials/Expenditures for purchased services	-61,507	-54,635
Personnel expenses	-4,487	-4,169
Other operating expenses	-4,463	-3,629
Amortization and depreciation	-807	-894
Operating profit/loss	6,655	5,229
Financial result	-1,415	324
Profit before taxes	5,240	5,553
Taxes on income	-2,037	-2,206
Consolidated profit	3,203	3,347
Profit per share (in EUR)
Undiluted	0.09	0.10
Diluted	0.09	0.10
EBIT	6,655	5,229
EBITDA	7,462	6,123

* Q1 2007 figures include 1 month of Telco Services GmbH being acquired in March 2007.

Consolidated Balance Sheet

ASSETS
	31.03.2007	31.12.2006
	TEUR	TEUR
Fixed assets
Software	4,559	4,076
Goodwill	76,639	34,572
Tangible assets	2,581	2,005
Other financial assets	176,840	168,875
Deferred taxes	3,521	3,216
Fixed assets, total	264,140	212,744
Current assets
Inventories	5,961	5,812
Trade accounts receivable	31,793	16,533
Accounts due from affiliated companies	93	94
Tax reimbursement claims	5,102	4,924
Liquid assets	2,129	9,038
Other current assets	5,523	1,757
Current assets, total	50,601	38,158
ASSETS, TOTAL	314,741	250,902

Consolidated Balance Sheet

LIABILITIES
	31.03.2007	31.12.2006
	TEUR	TEUR
Shareholders' equity
Capital subscribed	38,446	34,510
Capital surplus	43,415	23,318
Earnings reserves	17,302	17,302
Revaluation reserve	38,531	31,180
Unappropriated retained earnings	9,232	6,029
Equity, total	146,926	112,339
Long-term liabilities
Deferred taxes	2,147	2,047
Bank loans and overdrafts	84,114	84,055
Leasing liabilities	923	1,059
Long-term liabilities, total	87,184	87,161
Short-term liabilities
Provisions	4,709	2,111
Tax liabilities	4,634	8,384
Bank loans and overdrafts	32,204	14,764
Trade accounts payable	14,763	8,110
Payments on account	16,414	12,180
Leasing liabilities	812	691
Other liabilities	7,095	5,162
Short-term liabilities, total	80,631	51,402
LIABILITIES, TOTAL	314,741	250,902

Consolidated Statement of Change in Capital

	Number of Shares	Capital subscribed	Capital surplus	Re- valuation	Earnings reserves	Unappro- priated retained	Total
		TEUR	TEUR	TEUR	TEUR	TEUR	TEUR
As per
01/01/2006	32,178,332	34,606	23,569	0	9,902	2,646	70,723
Change in
own shares	-136,996	-148	-473	0	0	0	-621
Consolidated profit		0	0	0	0	3,347	3,347
As per
31/03/2005	32,041,336	34,458	23,096	0	9,902	5,993	73,449
As per
01/01/2007	32,089,936	34,510	23,318	31,180	17,302	6,029	112,339
Change in
own shares	410,064	441	2,067	0	0	0	2,508
Market evaluation
of Other
financial assets		0	0	7,351	0	0	7,351
Kapitalerhöhung	3,249,995	3,495	18,030	0	0	0	21,525
Consolidated profit		0	0	0	0	3,203	3,203
As per
31/03/2007	35,749,995	38,446	43,415	38,531	17,302	9,232	146,926

Consolidated Capital Flow Statement

	I/2007	I/2006
	TEUR	TEUR
Earnings before interest and taxes on income	6,655	5,229
Interest paid	-1,664	-4
Interest received	283	329
Tax payments	-6,339	-548
Depreciation on intangible
and tangible assets	807	894
Increase in inventories	105	794
Change in receivables
and other assets	3,703	-2,427
Change in trade accounts
payable and other
liabilities and provisions	-13,276	-7,725
Change in payments received on account	4,096	3,302
Outflow of funds from current operations	-5,630	-156
Investments in tangible assets and software	-618	-429
Payments for acquisitions, less acquired
liquid assetsl	-41,420	0
Investments in financial assets	-465	0
Outflow of funds from investment activities	-42,503	-429
Change in own shares	2,508	-621
Capital increase	21,525	0
Change in bank loans	17,499	0
Change in investment liabilities	-308	-55
Inflow of funds from financing activities	41,224	-676
Change in cash	-6,909	-1,261
Cash at end of period	2,129	28,804
Cash at beginning of period	9,038	30,065
Change in cash	-6,909	-1,261

Consolidated Notes

Consolidated Interim Accounts as per 31 March, 2007

1 Applied accounting principles

The consolidated interim accounts were prepared in accordance with the International Financial Reporting Standard (IFRS). The same accounting and valuation methods were applied as with the consolidated annual accounts as per December 31, 2006.

2 Change in the consolidated group

During the course of the year, Drillisch AG acquired Telco Services GmbH (Telco), Idstein, which was incorporated into the consolidated interim accounts as per 31 March, 2007.

The effect of the change in the consolidated group in relation to the consolidated income statement for the first quarter 2007 is shown below:

	March	TEUR
Sales		10,927
Other operating income		12
Cost of materials/
Expenditures for purchased services		-8,673
Personnel expenses		-557
Other operating expenses		-965
Amortization and depreciation		-44
Operating profit/loss		700
Financial result		5
Profit before taxes		705
Taxes on income		-3
Consolidated profit		702

On 8 March, 2007, Drillisch AG took over 100% of the shares in Telco.

On the basis of the purchase price, this capital consolidation results in a difference amounting to € 42.1 million, which will be allocated to the individual assets and liabilities and goodwill when the purchaseprice allocation is completed. With the acquisition of Telco, cash funds amounting to TEUR 3,578 were also taken over the same time.

During the takeover of Telco, pension reserves were also taken over, whereby IAS 19 must now be taken into account for the first time.

Consolidated Notes

3 Capital increase

On 31 January, 2007, Drillisch AG successfully completed a private placement of 3,249,995 no-par shares (almost 10% of the capital stock) and placed all the shares with institutional investors in Europe at a price of € 6.75 per share. The company therefore increased its authorised capital stock by issuing 3,249,995 new no-par shares against a cash investment. The new shares are entitled to a profit share for the fiscal year 2006. A right of purchase for the shareholders was excluded.

Sale of own shares

On 15 January, 2007, Drillisch AG successfully completed the sale of all its own shares. Since the beginning of the year, it has sold 410,064 of its own shares on the stock exchange.

4 Contingent receivables

The contingent receivable shown in the consolidated annual accounts as per 31 December, 2006 hadincreased by € 7,464,000 to € 23,148,000 as per 31 March, 2007.

5 Segment presentation

The sales and the operating result can be presented by segment as follows:

	I / 2007	I / 2007	I / 2006	I / 2006
	Sales	Operating result	Sales	Operating result
Telecommunications	€ 76.8 million	€ 6,723	€ 67.1 million	€ 5,340
Software services	€ . million	€ -68	€ . million	€ -111

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Finance and Event Calendar · Publications Your Contacts

Finance and Event Calendar

Report on 1st Quarter	Tuesday, 15 May, 2007
Annual General Meeting	Friday, 18 May, 2007
German Corporate Conference, Deutsche Bank, Frankfurt	Wednesday, 20 June, 2007
Semi-Annual Report	Tuesday, 14 August, 2007
German Equity Forum	Monday, 12 to Wednesday, 14 November, 2007
9-Month Report	Tuesday, 13 November, 2007

Publications

The present report on the first quarter of 2007 is also available in an English version.

You can view and download our business and quarterly reports, ad-hoc announcements, press releases and other publications about Drillisch AG at www.drillisch.de.

Your Contacts

We will be glad to help with any questions about our publications or about Drillisch AG:

Paschalis Choulidis, Chairman of the Management Board at Drillisch AG

Oliver Keil, Head of Investor Relations

Drillisch AG Wilhelm-Röntgen-Straße 1-5 D – 63477 Maintal

Telephone: + 49 (0) 61 81 / 412 200 Fax: + 49 (0) 61 81 / 412 183

Iris Hauk, Corporate Communications

Drillisch AG Dießemer Bruch 100 D – 47805 Krefeld

Telephone: + 49 (0) 2151 / 5495 216 Fax: + 49 (0) 2151 / 5495 222

E-Mail: presse@drillisch.de www.drillisch.de

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Information and Order Service · Editorial Information

Information and Order Service

Please use our online order service under the heading Investor Relations on our website www.drillisch.de. Naturally, we would also be happy to send you the desired information by post or by fax. We will be glad to help you with any personal queries by telephone.

Editorial Information

Company Headquarters:

Wilhelm-Röntgen-Strasse 1-5 · D – 63477 Maintal Telephone: + 49 (0) 61 81 / 412 3 Fax: + 49 (0) 61 81 / 412 183

Responsible: Drillisch AG

Management Board: Paschalis Choulidis (Chairman) Vlasios Choulidis

Supervisory Board:

Dr Hartmut Schenk (Chairman) Johann Weindl (Deputy Chairman) Nico Forster Dr Horst Lennertz Michael Müller-Berg Dr. Bernd H. Schmidt

Investor Relations Contact:

Telephone: + 49 (0) 61 81 / 412 200 Fax: + 49 (0) 61 81 / 412 183 E-mail: ir@drillisch.de

Commercial Register Entry: HRB 7384 Hanau VAT ID No.: DE 812458592 Tax No.: 03522506037 Offenbach City Tax Office

Disclaimer:

The information provided in this publication is checked carefully. However, we cannot guarantee that all specifications are complete, correct and up to date at all times.

Future-oriented Statements:

This report contains certain statements oriented to the future and which are based on the current assumptions and projections of the management of the Drillisch Group. Various risks, uncertainties and other factors, both known and unknown, can cause the actual results, financial position, development or performance of the Company to deviate substantially from the assessments shown here. The factors described in our reports to the Frankfurt Stock Exchange and to the American Securities and Exchange Commission (incl. Form 20-F) are among such factors. The Company does not undertake any obligation to update such future-oriented statements and to adapt them to future events or developments.