iesy Repository GmbH - Irish Stock Exchange

ANNEX A
Summary of Certain Significant Differences Between
German GAAP and U.S. GAAP
The financial information included herein is prepared and presented in accordance with German GAAP. Certain
differences exist between German GAAP and U.S. GAAP which might be material to the financial information herein. The
matters described below summarize certain differences between German GAAP and U.S. GAAP that may be material. iesy
has not prepared a complete reconciliation of its consolidated financial statements and related footnote disclosures between
German GAAP and U.S. GAAP and has not quantified such differences. Accordingly, no assurance is provided that the
following Summary of differences between German GAAP and U.S. GAAP is complete. In making an investment decision,
investors must rely upon their own examination of the Issuer, the terms of the offering and the financial and other
information. Potential investors should consult their own professional advisors for an understanding of the differences
between German GAAP and U.S. GAAP, and how those differences might affect the financial information herein.
Basis of Presentation
German GAAP and U.S. GAAP differ in several fundamental respects. German companies apply more conservative
valuation methods in their financial statements reflecting a fundamental German GAAP principle called the “principle of
prudence”. In addition, German GAAP financial statements are generally prepared with creditor protection in mind, while
U.S. GAAP financial statements are prepared to provide information in a form that assists investor decision making and
comparability to other companies. Furthermore, German GAAP financial statements serve as the authoritative basis for the
tax accounts.
Financial Statement Presentation
Under German GAAP, the balance sheet and the income statement are classified differently than under U.S. GAAP. In
the balance sheet, German GAAP generally requires companies to classify assets as either fixed or current and liabilities
classified as either provisions or liabilities. In contrast, the balance sheet, according to U.S. GAAP, is based primarily on the
liquidity of the account balances, with the most liquid item being presented first. In addition, assets and liabilities are
classified into current and non-current depending on the nature of the account.
Under German GAAP, companies can present its income statement under the cost summary method, which classifies
revenues in a manner similar to U.S. GAAP, but classifies expenses into categories based on their nature, such as materials,
personnel, and depreciation.
Under U.S. GAAP, the income statement is presented on a transactional basis, which classifies revenues and expenses
based on their functional activities. The disclosures in the explanatory Notes to the financial statements are far more
extensive under U.S. GAAP compared to German GAAP.
Capital Leases
German GAAP does not explicitly specify the accounting treatment for leasing transactions. Measurement is generally
based on regulations issued by the German Tax Authorities. Taking into account the respective criteria for tax accounting,
lease agreements are generally structured so that the leased property must be recorded by the lessor, i.e. as operating leases.
Under U.S. GAAP, leased assets are to be capitalized if they meet specific criteria, and depreciated over the useful life
that would be assigned if (1) the asset were owned or (2) the lease term, depending on the type of capital lease. Capital leases
are recorded as assets and liabilities at the lower of (1) the present value of the minimum lease payments at the beginning of
the lease term or (2) the fair value of the leased property at the inception date.
Accounting for Acquisitions
Differences exist between German and U.S. GAAP in the valuation of assets and liabilities of acquired businesses due
to the valuation of underlying assets and liabilities (including deferred taxes), dates used to calculate consideration paid, as
well as the effective acquisition date.
Acquisition costs. Under German GAAP costs incurred in the decision making process such as legal fees, due
diligence fees, travel costs and similar items that meet the incremental and direct criteria, are not included in the purchase
price.
Under U.S. GAAP the purchase price includes certain incremental direct costs that have been incurred.
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