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5 years ago

iesy Repository GmbH - Irish Stock Exchange

iesy Repository GmbH - Irish Stock Exchange

populations, with

populations, with approximately 2.7 million foreign inhabitants, representing approximately 11.0% of the total population and an attractive target market for our foreign and English language programming packages. Established customer base generating stable cash flow. A large proportion of our residential customers pay via direct debit, and many of our housing association customers pay pursuant to multi-year contracts. These characteristics have historically helped reduce our churn rates and are indicators of a stable subscriber base with reliable revenues, which when combined with our relatively predictable cost base, have led to strong and stable operating cash flow. In addition, our billing policies contribute to our strong cash flow. We collect a significant proportion of our subscription fees on an annual basis in advance. This billing and collection system provides us with significant cash inflows in the first and fourth quarters of the year. Growth opportunities. Our attractive market demographics and high quality network offer growth opportunities for new products and services. We believe that we have the opportunity to win new customers and to sell additional products to existing customers by introducing premium cable television, high speed Internet services and telephony in our upgraded areas. We intend to introduce ish products in Hesse, and iesy products in North Rhine-Westphalia, as appropriate. In addition, we plan to expand our premium cable television offerings and to market our high speed Internet services more aggressively. Modern network with ability to deliver premium services. With over 1.5 million upgraded homes, iesy and ish have the largest number of homes upgraded to receive high speed Internet and telephony of the Level 3 operators in Germany. By the end of 2005, the Kerpen NOC should technically be able to provide premium cable television signals to the vast majority of homes connected to our network. This should allow us to reduce our reliance on MSG for certain services associated with distributing our television programs. Based upon current network usage, we have the ability to deliver additional television program streams without any significant network upgrades. Flexible capital expenditures. The capital expenditure requirements for maintaining our network and providing existing products and services are relatively low. Capital expenditures requirements for premium cable television services are limited, because our state-of-the-art NOC will have the capacity to provide premium cable television signals throughout the vast majority of our network by the end of 2005. Investments required for high speed Internet services are modular and can be based on the level of customer demand. Incremental capital expenditures, such as the upgrade of housing association Level 4 networks or the introduction of a new product, are designed to ensure that our return on investment thresholds are met. Proven management team. Our management team has significant experience in the German, European and U.S. cable television industries. Members of our management team have held positions at leading cable operators, including Telewest Communications, Liberty Media International and ntl. The management team mixes international cable experience with strong local expertise. We believe the combination of the iesy and ish management teams will benefit the combined entity with the sharing of best practices, cost reduction strategies and product development experiences. Our Strategies We aim to build on our existing subscriber base and improve cash flows through the following strategies: Enhancing customer satisfaction across all segments. We seek to enhance customer satisfaction through product innovation and service excellence. The key to this is segmentation, because a distinguishing feature of the German cable market is the need to address both business and consumer needs. We have therefore organized our business around a detailed segmentation of our customer base. Our strategic initiatives, investment decisions and product development are led by the demand of specific customer segments. Our specialized sales forces use tailored marketing techniques to address the needs of our customers within their specific segments. Our customer management and care operations as well are designed to handle the different needs of our particular customers. For example, we have a unit within our sales force and customer care function that caters to the needs of Level 4 operators and large housing associations. Introducing new services for existing customers and winning new customers. We intend to continue to enhance the value of our products and to develop our high value customer base, rather than increasing our subscriber base at any cost. We will introduce and market new services, such as an expanded premium cable television offering and high speed Internet access, as we see sufficient customer demand and willingness to pay for these new services. We also intend to introduce iesy services in North Rhine-Westphalia, and ish services in Hesse. We believe these services will assist our efforts to retain customers against competition from satellite and new technologies. No significant capital expenditures should be required to offer expanded premium television services. High speed Internet access and telephony services can be offered without substantial additional capital expenditures in places where our network and the local connections to our network are already upgraded. 152

Prudently deploying capital. Our demand-led capital expenditures are subject to rigorous return on investment criteria. To reduce the risks frequently associated with new product launches, we invest in proven products and technologies. We aim to use, where possible, technologies that operate on “open standards” in order to increase the compatibility of various network components. Controlling costs and improving operational efficiency. We have streamlined our operations, established a closer relationship with our sales agents, and in Hesse eliminated the outsourcing of our customer care. We have established key performance indicators, which we monitor to improve our operational processes, sales and marketing efficiency and infrastructure reliability. We are focused on the continued development of our sales forces and call center agents, so that we may efficiently provide the best possible service for our customers. Sharing best practices and products. The combination of iesy and ish will afford us the opportunity to combine best practices between our businesses and generate cost savings. We believe we will be able to optimize operations in areas such as customer management, marketing, call centers and network operations. We also have opportunities for sharing our product offerings, such as introducing ish’s premium cable television package in Hesse and iesy’s tv USA UK package in North Rhine-Westphalia. We also intend to introduce iesy’s Service Plus and iesy Multimedia-Anschluss products to housing association customers in North Rhine-Westphalia. The ish Acquisition will also enable us to introduce telephony services in Hesse. Business of iesy Products and Services iesy’s core business is the provision of basic cable television services in Hesse, Germany. iesy also offers a number of premium cable television services and, in the upgraded parts of our network, high speed Internet access. The following chart sets forth certain unaudited information related to iesy’s operations: As of and for the years As of and for three months ended December 31, ended March 31, 2003 2004 2004 2005 Subscriber information (’000s, except percentages) Homes passed (1) 1,902 1,919 1,908 1,921 Total basic cable subscribers 1,243 1,202 1,239 1,197 % penetration (2) 65.4% 62.6% 64.9% 62.3% Residential (3) 543 527 542 522 Housing associations (4) 450 437 450 433 Professional Level 4 operators (5) 250 238 246 242 Foreign language programming (6) 2.8 9.6 5.2 12.2 High speed Internet 0.5 0.6 0.5 2.3 Total RGUs (7) 1,246.3 1,211.9 1,244.7 1,211.1 Basic cable ARPU(€) (8) 7.86 8.20 8.06 8.32 (1) iesy calculates homes passed based on its estimate of the number of potential subscribers who are passed by its network and to whom it can offer its cable television services. (2) Number of subscribers at the end of the relevant period as a percentage of the number of homes passed by iesy’s network at the end of the relevant period. (3) Residential subscribers typically represent accounts of one to five dwelling units. (4) Housing associations typically represent accounts of six dwelling units and upwards and encompass professional property investors, public property owners, property management firms and financial investors. Housing associations include customers that not only own and operate their own Level 4 networks, but also operate and administer the networks of other housing associations and, accordingly, display certain characteristics of professional Level 4 operators. (5) Comprised of BN, EWT, PrimaCom and Tele Columbus, iesy’s largest Level 4 customers. (6) Includes subscribers to iesy’s English language programming, which iesy introduced in the fourth quarter of 2004, but does not include subscriber numbers from Premiere (Premiere’s Hesse subscribers are estimated at more than 100,000 as of March 31, 2005). 153

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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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    In addition to the warranties, spec

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    CAPITALIZATION The following table

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    Unaudited Pro Forma Condensed Conso

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    NOTES TO THE UNAUDITED PRO FORMA CO

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    (€m, except percentages) Pro form

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    Income Statement Data 75 Audited Ye

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    (7) Number of subscribers at the en

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    • iesy’s premium cable televisi

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    egulated pricing model. Fees are pa

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    Risks Relating to Our Indebtedness

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    Legal, Consulting and Management Fe

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    Subscribers iesy classifies its cus

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    2003 to €8.20 per subscriber in t

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    • the senior credit facilities we

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    average installation fees from July

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    Cash flow from investing activities

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    In the three months ended March 31,

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    eview and optimization of services

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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 and 116: Cost of Materials and Services Cost
  • Page 117 and 118: For accounting purposes, ish treats
  • 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: Germany, with approximately 30.2 mi
  • 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
  • Page 165 and 166: y the new fiber system. See “Oper
  • Page 167 and 168: part of settling arbitration procee
  • Page 169 and 170: Business of ish Products and Servic
  • Page 171 and 172: ish’s Current Basic Cable Televis
  • Page 173 and 174: In addition to the monthly subscrip
  • Page 175 and 176: Customers who subscribe to Premiere
  • Page 177 and 178: Sales ish’s sales team is divided
  • Page 179 and 180: The following chart illustrates ish
  • Page 181 and 182: Term Sheet Service Duration Co-use
  • Page 183 and 184: Lease of space for broadband cable
  • Page 185 and 186: Other Significant Supply Agreements
  • Page 187 and 188: ights themselves. As an exception,
  • Page 189 and 190: Competition The cable television an
  • Page 191 and 192: Introduction REGULATION German law
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  • Page 199 and 200: in the Munich office of Apax Partne
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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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