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5 years ago

iesy Repository GmbH - Irish Stock Exchange

iesy Repository GmbH - Irish Stock Exchange

terminated several

terminated several nationwide carriage agreements administered by MSG under Term Sheet 4 with effect from December 31, 2005 and has announced its intention to terminate several others by the end of 2006. As a consequence of such termination, these agreements would no longer be administered by MSG under Term Sheet 4 and the scope of services rendered under this Term Sheet would therefore be largely reduced. Furthermore, ish, MSG and all other Level 3 operators have entered into an agreement under which MSG renders certain services related to the distribution of ish’s foreign-language programming packages in addition to the services provided under Term Sheet 1. This agreement expired on December 31, 2004 but has been prolonged for the purpose of the currently ongoing renegotiations of the digital platform services related to the foreign-language package. ish expects to be technically able to carry out such services in its NOC by the end of 2005. But see “Risk factors—We rely on MSG, a subsidiary of KDG, for the provision of certain digital playout services and because of changes in our relationship with MSG, our premium cable television services could be disrupted or become more expensive in the future.” In addition, ish and MSG entered into an agreement with respect to the transitional provision of certain additional conditional access services for existing MSG smart cards, especially the use of an “ish zone” on MSG smart cards which allows the individual activation and deactivation of ish’s digital offering. Unless the parties agree otherwise, this agreement will expire on July 31, 2005 and the “ish zone” will be removed from the MSG smart cards. ish expects to be technically able to carry out such services for ish or other adequate smart cards in its NOC by the end of 2005. But see “Risk factors—We rely on MSG, a subsidiary of KDG, for the provision of certain digital playout services and because of changes in our relationship with MSG, our premium cable television services could be disrupted or may lead to higher costs. Existing contracts of MSG with third parties, especially Premiere, as well as our current agreements with MSG could adversely affect the development of our digital strategy.” Other In addition, ish licenses the programs for its foreign language television offerings from Mediapool, a program provider who acquires content on its behalf, for a monthly fee that varies per program per subscriber. The initial term of ish’s contract with Mediapool expires on December 31, 2009. ish procures content for its other premium cable television offerings directly from broadcasters and procures its pay-per-view content from arrivo. ish pays a fixed amount per subscriber to these content providers. Pursuant to its agreement with arrivo, ish pays a minimum sum. ish’s programming costs may increase in the future with an enhancement or expansion of our premium cable television services. See “Risk Factors—Risks Relating to Our Business—We do not have guaranteed access to programs and are dependent on agreements with third parties for our content and carriage fees, which may adversely affect our business” and “Business of ish—Products and Services—Premium Cable Television—ish’s Programming Content and Payments.” Personnel Expenses Personnel expenses include salaries and wages, and social security, and other pension costs of the permanent staff. It also includes other forms of compensation such as overtime and stand-by pay, and does not include temporary staff costs, which are included as other operating expenses. In the three months ended March 31, 2005, personnel expenses were €14.5 million and €65.8 million for the year ended December 31, 2004. In 2002, ish began to restructure its business. This restructuring included significant headcount reductions in 2003 and 2002, which resulted in a decrease in personnel expenses in 2004 and the first three months of 2005. ish has negotiated various collective bargaining agreements directly with one of its labor unions. These collective bargaining agreements cover the general labor conditions of ish’s employees (other than executives), such as working hours, holidays, termination, redundancy protection and general payment schemes for wages. ish intends to negotiate new and renegotiate existing collective bargaining agreements in 2005 to simplify structures and to increase workforce flexibility as ish introduces new products and services. During 2004 and 2005, ish renegotiated a significant number of its works council agreements. See “Risk Factors—Risks Related to Our Business—Strikes or other industrial actions as well as the negotiation of a new collective bargaining agreement could disrupt our operations or make it more costly to operate our facilities” and “Business of ish—Employees.” Depreciation and Amortization ish records depreciation and amortization expenses relating to the annual charge for regular amortization and depreciation on the broadband cable network, leasehold improvements, and the co-utilization rights for cable ducts. Although ish’s depreciation and amortization has remained fairly stable, except for an extraordinary depreciation of €29.2 million in 2004 mainly relating to network construction in progress and leasehold improvements at technical sites, ish expects depreciation and amortization to decrease in the future as certain business expansion expenses capitalized in 2001 come to the end of their depreciation lives. 116

For accounting purposes, ish treats the ducts leased from DTAG as finance leases and amortizes these leases over 25 years. For information about how those duct leases will be accounted for following the ish Acquisition, see “Unaudited Pro Forma Condensed Consolidated Financial Statements of iesy.” Other Operating Expenses Other operating expenses include copyright license fees (GEMA and VG Media), legal and consulting fees, rental and leasing fees, advertising expenses, selling expenses and commissions, IT expenses, and miscellaneous other operating expenses. ish does not have substantial revenues, expenses or liabilities that are denominated in currencies other than the euro. At March 31, 2005, ish had interest rate swaps relating to €255 million of floating rate senior debt. The expense is included in the financial result together with the current interest expenses from the swap transactions. Copyright License Fees ish is required under German law to pay royalties to the holders of copyrights and related rights for the re-transmission of radio and television programs that include, among other things, literary, scientific or artistic works protected by copyright law. ish pays part of these fees pursuant to a collective agreement (Kabelglobalvertrag) between members of the cable television industry and GEMA (representing collecting societies), public broadcasters, and a few private broadcasters in television and radio. The agreement with GEMA covers analog and digital transmission and will remain in force until December 31, 2006. ish, the other Level 3 operators and VG Media, representing most private broadcasters, entered into an agreement regarding the acquisition of rights for the retransmission of radio and television programs that include, among other things, literary, scientific or artistic work protected by copyright law. This agreement covers analog transmission and came into force on January 1, 2003 and may be terminated by each party on December 31, 2005, at the earliest. The parties further agreed that all existing or potential claims of VG Media or the broadcasting companies for royalties in respect of the period prior to January 1, 2003 are deemed settled. In the three months ended March 31, 2005, total copyright fees paid by ish under the GEMA and the VG Media agreements amounted to €4.7 million and in the year ended December 31, 2004, amounted to €18.7 million. Some collecting societies represented by ARGE Kabel have claimed additional royalty payments from ish. See “Risk Factors—Risks Relating to Our Business—Uncertainties as to copyright laws may adversely affect our ability to conduct our business” and “Business—Legal Proceedings.” Rental and Leasing Fees ish leases all its offices, including its headquarters, and lease service vehicles and automobiles for certain employees. Total rent and lease payments recorded were €1.7 million in the three months ended March 31, 2005 and €7.2 million for the year ended December 31, 2004. Advertising Expenses Advertising expenses in the three months ended March 31, 2005 were €2.0 million and for the year ended December 31, 2004 were €10.9 million. ish expects its advertising costs to remain stable in the future given that ish does not expect to introduce new services in 2005 and will continue its marketing efforts at the same level as 2004. Selling Expenses and Commissions ish pays sales commissions for the sale of subscriptions of cable television products. In the three months ended March 31, 2005, sales commissions were €2.5 million and €7.8 million for the year ended December 31, 2004. Legal and Consulting Fees ish incurs legal and consulting fees as part of operating its business, as well as services commissioned during ish’s reorganization in 2002. In the three months ended March 31, 2005, legal and consulting fees were €1.5 million and for the year ended December 31, 2004, ish incurred legal and consulting fees of €9.6 million, including management fees of €6.9 million. 117

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    PROSPECTUS iesy Repository GmbH €

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    the market price of the Notes at a

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    which the issue or the offer of sec

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    “combined entity”, and “we”

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    “Tele Columbus” refers to the c

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    Revenue generating units, or “RGU

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    CURRENCY PRESENTATION AND EXCHANGE

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    end of 2005. Our subscribers can al

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    populations, with approximately 2.7

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    In April/May 2005, iesy entered int

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    Our Corporate and Financing Structu

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    THE OFFERING The summary below desc

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    Optional Redemption We may redeem a

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    SUMMARY FINANCIAL AND OPERATING INF

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    iesy Other Financial Data (unaudite

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    iesy Operational Data (unaudited) R

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    ish Income Statement Data Audited y

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    35 Three months ended Year ended De

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    37 As of December 31, As of March 3

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    RISK FACTORS You should carefully c

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    acquiring content, purchasing servi

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    agreements—MSG”). We cannot ass

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    In addition, most of our cable netw

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    Strikes or other industrial actions

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    acquisitions. In addition, any addi

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    provision and may not be abusive. S

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    €1,050.0 million would have been

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    We depend on payments from our subs

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    • Claims against the Issuer and s

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    Senior Credit Facilities before the

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    court rulings did not address the p

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    THE ISH ACQUISITION The description

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  • Page 73 and 74: (€m, except percentages) Pro form
  • Page 75 and 76: Income Statement Data 75 Audited Ye
  • Page 77 and 78: (7) Number of subscribers at the en
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  • Page 83 and 84: Risks Relating to Our Indebtedness
  • Page 85 and 86: Legal, Consulting and Management Fe
  • Page 87 and 88: Subscribers iesy classifies its cus
  • Page 89 and 90: 2003 to €8.20 per subscriber in t
  • Page 91 and 92: • the senior credit facilities we
  • Page 93 and 94: average installation fees from July
  • Page 95 and 96: Cash flow from investing activities
  • Page 97 and 98: In the three months ended March 31,
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  • Page 105 and 106: educed or increased by a material a
  • Page 107 and 108: Income Statement Data Audited year
  • Page 109 and 110: 109 As of December 31, As of March
  • Page 111 and 112: • ish’s premium cable televisio
  • Page 113 and 114: In addition, ish markets pay-per-vi
  • Page 115: Cost of Materials and Services Cost
  • Page 119 and 120: Subscribers ish classifies its cust
  • Page 121 and 122: Competition ish faces significant c
  • Page 123 and 124: This decrease was primarily due to
  • Page 125 and 126: Net Loss Net loss was €17.9 milli
  • Page 127 and 128: Pension Obligations As of March 31,
  • Page 129 and 130: Term Sheets with DTAG, BRN-ish agre
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  • Page 133 and 134: accrual for pending losses. The exp
  • Page 135 and 136: International Financial Reporting S
  • Page 137 and 138: Content Providers Basic Television
  • Page 139 and 140: Digital Home” and PrimaCom offers
  • Page 141 and 142: [GRAPHIC] [GRAPHIC] Level 4 is the
  • Page 143 and 144: shared access basis. In this case,
  • Page 145 and 146: The following table shows several k
  • Page 147 and 148: In the domestic market, the German
  • Page 149 and 150: BUSINESS Unless otherwise indicated
  • Page 151 and 152: Germany, with approximately 30.2 mi
  • Page 153 and 154: Prudently deploying capital. Our de
  • Page 155 and 156: iesy’s Current Basic Cable Televi
  • Page 157 and 158: amounted to €8.0 million or 5.9%
  • Page 159 and 160: within iesy’s upgraded areas and
  • Page 161 and 162: Supply The following chart shows th
  • Page 163 and 164: Term Sheet Service Duration Offer o
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    part of settling arbitration procee

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    Business of ish Products and Servic

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    ish’s Current Basic Cable Televis

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    In addition to the monthly subscrip

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    Customers who subscribe to Premiere

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    Sales ish’s sales team is divided

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    The following chart illustrates ish

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    Term Sheet Service Duration Co-use

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    Lease of space for broadband cable

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    Other Significant Supply Agreements

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    ights themselves. As an exception,

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    Competition The cable television an

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    Introduction REGULATION German law

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    We assume that we will be deemed to

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    The Amendment provides that provisi

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    • Providers who had a dominant po

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    in the Munich office of Apax Partne

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    Marketing for Germany and Austria,

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    Gerard Tyler is ish’s Treasurer.

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    CERTAIN RELATIONSHIPS AND RELATED P

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    Beneficial Ownership The following

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    DESCRIPTION OF OTHER INDEBTEDNESS T

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    period (unless the interest period

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    Subordinated Bridge Facility In con

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    • the ability of the Obligors (ot

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    owed by the Insolvent Obligor will

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    DESCRIPTION OF THE NOTES The Issuer

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    in London, the Bank of New York, Ne

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    Issuer have agreed that iesy Hessen

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    Subsidiary Guarantor outstanding wh

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    the amount of their secured claim.

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    provisions described under “—De

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    In addition, the Intercreditor Agre

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    Euro Note to and including February

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    circumstances referred to above exi

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    that it has unconditionally exercis

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    time outstanding not exceeding (i)

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    description of this covenant and no

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    Date of any Indebtedness that has b

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    (13) Investments in an aggregate am

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    supplement or other modification) t

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    (1) the assumption by the transfere

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    Reports Whether or not required by

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    of the European Union on January 1,

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    contemporaneously with any such act

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    25% in principal amount of the outs

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    (2) provide for the assumption by a

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    (6) an Officer’s Certificate stat

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    calculated based on the relevant cu

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    “Bank Indebtedness” means any a

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    Consolidated Net Income (excluding

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    (9) the impact of capitalized inter

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    “Exchange Act” means the U.S. S

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    (iii) for the avoidance of doubt, a

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    “Nationally Recognized Statistica

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    (2) Investments in another Person i

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    (15) Permitted Collateral Liens; (1

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    (5) in the case of Apollo and Golde

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    service level agreement as replaced

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    “Unrestricted Subsidiary” means

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    The Issuer and the Trustee and thei

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    Secondary Market Trading The Book-E

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    to trade tax. The taxable gain from

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    date). A U.S. Holder’s adjusted t

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    (c) for so long as the Notes are el

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    PLAN OF DISTRIBUTION We, the Subsid

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    LEGAL MATTERS Certain legal matters

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    WHERE YOU CAN FIND OTHER INFORMATIO

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    Listing LISTING AND GENERAL INFORMA

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    INDEX TO FINANCIAL STATEMENTS iesy

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    Assets iesy Hessen GmbH & Co. KG, W

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    I. Application of Legal Provisions

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    III. Explanation of Balance Sheet a

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    Last year’s extraordinary expense

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    INDEPENDENT AUDITORS’ REPORT We h

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    iesy Repository GmbH, Hamburg AMEND

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    and remaining useful life for the i

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    The movements in consolidated equit

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    iesy Repository GmbH, Hamburg AMEND

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    Assets iesy Repository GmbH, Hambur

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    I. Basis of Presentation The consol

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    V. Explanations to Material Items o

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    Network infrastructure, rental, lea

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    iesy Repository GmbH, Hamburg UNAUD

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    1. Basis of Presentation iesy Repos

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    5. Explanations to Material Items o

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    Shareholdings of iesy Repository Gm

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    iesy Hessen GmbH & Co. KG, Weiterst

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    (1) General COURTESY TRANSLATION FR

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    (3) Accounting and Valuation Princi

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    The following auditors’ report (B

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    Inventories COURTESY TRANSLATION FR

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    Goodwill COURTESY TRANSLATION FROM

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    COURTESY TRANSLATION FROM THE GERMA

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    Depreciation and Amortization COURT

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    (1) General COURTESY TRANSLATION FR

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    COURTESY TRANSLATION FROM THE GERMA

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    Cost of materials COURTESY TRANSLAT

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    [THIS PAGE INTENTIONALLY LEFT BLANK

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    Goodwill. Under German GAAP, the di

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    Under U.S. GAAP, loan origination f

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    IFRS requires a purchase price allo

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    financial liability incurred result

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    €235,000,000 10 1 /8% Senior Note

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