(1) General COURTESY TRANSLATION FROM THE GERMAN LANGUAGE FOR INTERPRETATION, THE GERMAN TEXT SHALL PREVAIL KABELNETZ NRW HoldCo GmbH, Cologne NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR FINANCIAL YEAR 2004 KABELNETZ NRW HoldCo GmbH ( “HoldCo”) is located in Cologne and registered in the commercial register in Cologne. As of the balance sheet date, KABELNETZ NRW Limited, Jersey, held all shares (EUR 25,100) in the Company. A year-on-year comparison of the consolidated financial statement as of December 31, 2004 with prior year is limited because the following companies, including the operating companies, were only acquired in an auction on January 31, 2003: • ish Verwaltungs-GmbH, Cologne • ish GmbH & Co. KG, Cologne (“ish KG”) • ish KS NRW Beteiligungs GmbH, Cologne • ish KS NRW GmbH & Co. KG, Cologne (“ish KS”) • Kabel-Service Gesellschaft des Handwerks mbH, Paderborn Only the non-operating subsidiaries KABELNETZ NRW Verwaltungs GmbH, Cologne, and KABELNETZ NRW GmbH & Co. KG, Cologne, were included in the consolidated group as of January 1, 2003. Accordingly, only 11 months of operating activities are included in the prior year financial statements. KABELNETZ NRW HoldCo GmbH prepared consolidated financial statements as of December 31, 2004 in accordance with the provisions of the HGB (“Handelsgesetzbuch”: German Commercial Code). The accounting and valuation principles applied by the companies included in the consolidation comply with German commercial and tax law. The consolidated income statement was prepared according to the cost summary method in accordance with Sec. 275 (2) HGB. In order to improve the clarity of the presentation, the following balance sheet items have been added to the consolidated balance sheet expanding the legal classification format: • Leasehold improvements and co-utilization rights for cable ducts • Broadband cable network • Capital lease liability (2) Disclosures on the Consolidated Group and Consolidation Principles Consolidated Group HoldCo was the parent company during the fiscal year. 362
COURTESY TRANSLATION FROM THE GERMAN LANGUAGE FOR INTERPRETATION, THE GERMAN TEXT SHALL PREVAIL KABELNETZ NRW HoldCo GmbH, Cologne NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR FINANCIAL YEAR 2004—(CONTINUED) As of December 31, 2004, HoldCo holds direct or indirect interests in the companies listed in the following table which are fully consolidated: Subsidiary Share in capital KABELNETZ NRW Verwaltungs GmbH, Cologne 100% KABELNETZ NRW GmbH & Co. KG, Cologne 100% ish Verwaltungs-GmbH, Cologne 100% ish GmbH & Co. KG, Cologne 100% ish KS NRW Beteiligungs GmbH, Cologne 100% ish KS NRW GmbH & Co. KG, Cologne 100% Kabel-Service Gesellschaft des Handwerks mbH, Paderborn 100% Consolidation Principles The group companies are consolidated for the first-time on the date of acquisition. The group companies were included in the consolidated financial statements for the first time as of the following balance sheet dates: Subsidiary 363 Date of first-time consolidation KABELNETZ NRW Verwaltungs GmbH, Cologne December 13, 2002 KABELNETZ NRW GmbH & Co. KG, Cologne December 20, 2002 ish Verwaltungs-GmbH, Cologne January 31, 2003 ish GmbH & Co. KG, Cologne January 31, 2003 ish KS NRW Beteiligungs GmbH, Cologne January 31, 2003 ish KS NRW GmbH & Co. KG, Cologne January 31, 2003 Kabel-Service Gesellschaft des Handwerks mbH, Paderborn January 31, 2003 As a rule, subscribed capital was offset in accordance with Sec. 301 (1) Sentence 2 No. 2 HGB (purchase method of accounting). Equity was therefore carried at the amount that corresponds to the value of the assets, liabilities, deferred items and special items included in the consolidated financial statements which was attributable to these items on the date of acquisition of the shares. Any remaining debit differences from capital consolidation after the recognition of any hidden reserves in the appropriate asset items are amortized over 15 years in accordance with Sec. 309 (1) Sentence 2 HGB. All loans, other receivables, accruals and liabilities between the companies included in consolidation have been offset. Revenue and other income from intercompany transactions have been offset against the appropriate expenses in the consolidated income statement. Deferred taxes are recognized for temporary valuation differences in the individual financial statements, for temporary differences from the adjustment of the individual financial statements to the uniform group accounting and valuation principles and for consolidation entries with an effect on the result.