iesy Repository GmbH - Irish Stock Exchange

Term Sheets with DTAG, BRN-ish agreements and other agreements relating to customer care, billing and network systems.
ish’s most significant costs include payments under Term Sheets with DTAG and the BRN-ish agreements for the use of
assets which are shared between ish’s network and that of DTAG, and which are owned by DTAG, and for services provided
by DTAG.
Raw materials and supplies. Cost of raw materials and supplies increased by €1.7 million, or 56.7%, from €3.0
million in the year ended December 31, 2003 (€2.9 million in the audited year ended December 31, 2003 (including eleven
months of operations)) to €4.7 million in the year ended December 31, 2004. This increase was primarily due to the exchange
of set-top boxes resulting from changes to the Nagravision CAS encryption system. ish’s cost of raw materials and supplies
as a percentage of total revenues increased to 1.1% in the year ended December 31, 2004 compared to 0.7% in the year ended
December 31, 2003.
Purchased services. Cost of purchased services decreased by €4.6 million, or 8.4%, from €54.9 million in the year
ended December 31, 2003 (€50.8 million in the audited year ended December 31, 2003 (including eleven months of
operations)) to €50.4 million in the year ended December 31, 2004. This decrease was primarily due to renegotiations of
costs with MSG. ish’s cost of purchased services as a percentage of revenues decreased to 11.9% in the year ended December
31, 2004 compared to 12.5% in the year ended December 31, 2003.
Personnel Expenses
Personnel expenses include fixed and variable salaries and wages, social security, and other pension costs of the
permanent staff. It also includes other forms of variable compensation enjoyed by non-tariff employees in accordance with a
scheme that closely links this variable compensation to ish’s overall performance, historically measured by revenues and
EBITDA. Employees whose compensation is covered by collective bargaining agreements also receive variable
compensation; however, this generally makes up a smaller proportion of their total compensation when compared to nontariff
employees. Further, personnel expenses include other forms of compensation such as overtime, stand-by pay and
similar payments, but do not include temporary staff expenses, which are included as other operating expenses.
Wages and salaries. Wages and salaries decreased by €8.2 million, or 13.0%, from €64.6 million in the year ended
December 31, 2003 (€58.7 million in the audited year ended December 31, 2003 (including eleven months of operations)) to
€56.3 million in the year ended December 31, 2004. This decrease was primarily due to the lower average number of
employees as a consequence of the prior year’s redundancy plan and restructuring measures. ish’s wages and salaries as a
percentage of revenues decreased to 13.3% in the year ended December 31, 2004 compared to 14.7% in the year ended
December 31, 2003.
Social security, and other pension costs. Social security and other pension costs decreased by €1.6 million, or 14.4%,
from €11.1 million in the year ended December 31, 2003 (€10.0 million in the audited year ended December 31, 2003
(including eleven months of operations)) to €9.4 million in the year ended December 31, 2004. This decrease was primarily
due to the factors described above in “Wages and salaries.” ish’s social security and other pension costs as a percentage of
revenues decreased to 2.2% in the year ended December 31, 2004 compared to 2.5% in the year ended December 31, 2003.
Depreciation and Amortization
Depreciation and amortization expenses relate to property, plant and equipment, intangible assets and business
expansion expenses.
Depreciation and amortization increased by €24.5 million, or 12.3%, from €198.6 million in the year ended December
31, 2003 (€181.8 million in the audited year ended December 31, 2003 (including eleven months of operations)) to €223.1
million in the year ended December 31, 2004. This increase was primarily due to one-time charges for depreciation of €29.2
million (€13.8 million relating to network construction in progress, approximately €10.4 million relating to leasehold
improvements at technical sites, €3.6 million relating to radio relay links in connection with the AMTV project, and €0.4
million relating to software). In the near future, ish expects its capital expenditures to remain stable. ish’s depreciation and
amortization expenses as a percentage of revenues increased to 52.6% in the year ended December 31, 2004 compared to
45.3% in the year ended December 31, 2003.
Other Operating Expenses
Other operating expenses mainly include GEMA and VG Media fees, rent and leasing expenses, advertising expenses,
IT expenses and legal expenses and consulting fees. Sales commissions related to acquisitions of new subscribers are also
included in other operating expenses.
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