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5 years ago

iesy Repository GmbH - Irish Stock Exchange

iesy Repository GmbH - Irish Stock Exchange

Furthermore, ish entered

Furthermore, ish entered into the Betacrypt agreements concerning the licensing of software for the operation of our conditional access system. Our business operations and our revenues could be adversely affected if (i) Nagra or the parties of the Betacrypt agreements no longer license, supply or maintain our conditional access system and if we are not able to replace the existing conditional access system by another conditional access system; (ii) the Nagra or Betacrypt conditional access system is compromised by illegal piracy and access of non-subscribers to the system; and (iii) if the Nagra or Betacrypt conditional access system is incompatible with future broadband cable technologies or products we intend to use. We rely on DTAG and certain of its affiliates for a significant part of our network. Any disruption or termination of our arrangements with DTAG would materially and adversely affect our business and results of operations. We have entered into various long-term agreements with DTAG and certain of its affiliates that are significant to our business, including for the lease of cable duct space as well as the use of fiber optic transmission systems, tower and facility space. In addition, we purchase electrical power required for the operation of our network through DTAG. Our ability to offer our services to our customers depends on the performance of DTAG and its affiliates of their respective obligations under these arrangements. In particular, we rely on DTAG to provide us with timely access to co-located facilities, especially for the purposes of maintaining and repairing our network and avoiding or rectifying network outages. Our rights under the SLAs cannot be assigned without the consent of DTAG, other than in exceptional cases, as defined in the SLAs. DTAG has the right to terminate such arrangements in certain circumstances and under certain conditions. See “Business—Business of iesy—Supply—SLAs with DTAG” and “Business—Business of ish—Supply—SLAs with DTAG.” For example, if DTAG decides to discontinue using cable ducts carrying our cable without replacing the ducts it may terminate our rights to use the ducts under certain limited conditions. Otherwise DTAG must use reasonable efforts to provide iesy and/or ish, as the case may be, with a replacement duct. iesy and ish both entered into the BRN-agreements with DTAG under which DTAG is to install, make available and operate fixed-line broadband and broadcasting distribution networks. These networks, which are made up of optical leased lines, replace the AMTV technology and analog lines as well as, in the case of iesy, the Diamant system. DTAG has the right to terminate such BRN-agreements in certain circumstances and under certain conditions. In the event we fail to fulfill our payment obligations or are otherwise in breach of contract under the SLAs or the BRN-agreements, DTAG would be entitled to terminate the SLAs or the BRN-agreements, respectively. The termination of any material portion or all of the SLAs or the BRN-agreements by DTAG would seriously affect the value of our network or business. Continuing our business upon such termination would, if possible at all, require a sizeable payment to purchase the relevant facility from DTAG or a sizeable investment to replicate the lost facilities or services and could have a material adverse effect on our business, financial condition or results of operations. In many cases we would not be able to find suitable alternative service providers at comparable cost, or within a reasonable timeframe. We depend on equipment and service suppliers that may discontinue their products or seek to charge us prices that are not competitive, either of which may adversely affect our business and profitability. We have important relationships with several suppliers of hardware and services that we use to operate our cable television network and systems. In many cases, we have made substantial investments in the equipment or software of a particular supplier, making it difficult for us in the short-term to change supply and maintenance relationships in the event that our initial supplier refuses to offer us favorable prices or ceases to produce equipment or provide the support that our cable television network and systems require. For example, ish relies on third party suppliers such as Nagra, which provides the conditional access system and smart cards for its premium cable television services, and Convergys Information Management Group Inc., which provides ish a license to use the “Cablemaster” software for its customer support and billing operations. If equipment or service suppliers were to discontinue their products or seek to charge us prices that are not competitive, our business and profitability could be materially adversely affected. Our assumptions about the low cost of upgrading selected parts of our network to provide high speed Internet services may be inaccurate. Failure to maintain our cable television network or make other network improvements could have a material adverse effect on our operations and impair our financial condition. Our current assumptions regarding the costs associated with maintenance and upgrades of our cable television network may prove to be inaccurate. In particular, both iesy and ish intend to compete in providing high speed Internet services on the basis of technologies that may be implemented with low costs and without extensive upgrades to its existing network, which may not prove to be feasible. If capital expenditures exceed our projections, for example because of the need to replace ageing network components, our costs will increase. 44

In addition, most of our cable network consists of coaxial cable that was laid by DTAG and its predecessors. Because our network has been in service for a number of years, it may be susceptible to increased network disturbances and technological problems, and such difficulties may increase over time. If we fail to modernize our network or otherwise upgrade our technology as our network ages, the quality of service that we deliver to our subscribers may decline, thereby reducing our subscriber base. In such a case, our business and results of operations would be adversely affected. Furthermore, a failure of professional Level 4 operators or housing associations to maintain their own networks could have adverse reputational consequences for us, as customers may assume that we are responsible for maintenance of these networks and may terminate their subscriptions. Any new or enhanced products or services we introduce may require an upgrade of these local and in-house networks. The occurrence of events beyond our control could result in damage to our network, which could have a material adverse effect on our operations and impair our financial condition. If any part of our network is subject to a flood, fire or other natural disaster, terrorism, a power loss or other catastrophe, our operations and customer relations could be materially adversely affected. Disaster recovery, security and service continuity protection measures that we have or may in the future undertake, and our monitoring of network performance, may be insufficient to prevent losses. A substantial part of our cable network is not insured. Any catastrophe or other damage that affects our network could result in substantial uninsured losses. In addition, our business is dependent on certain sophisticated critical systems, including our NOC and billing and customer service systems. The hardware supporting those systems is housed in a relatively small number of locations and if damage were to occur to any such locations, or if those systems develop other problems, it could have a material adverse effect on our business. Certain of iesy’s financial information may not be representative of its actual results and its subscriber and operating data may not be accurate. It has not provided any discussion or analysis of the iesy Predecessor’s financial results or condition. The financial information included herein as of and for the three months ended March 31, 2004 and 2005 and as of and for the years ended December 31, 2003 and 2004 relate to iesy Repository. We have also included the financial information as of and for the year ended December 31, 2002 relating to the iesy Predecessor. The iesy Predecessor’s financial information is generally comparable to the historical financial information of iesy Repository for the year ended December 31, 2003 and 2004, except in relation to the classification of certain expenses and a reduction in goodwill and other intangible assets in 2002, resulting in decreased amortization expenses following the iesy Acquisition. Furthermore, the level of senior debt at iesy Hessen prior to December 31, 2002 only reflects a proportion of the total senior debt of the group which is fully consolidated thereafter. We have included certain subscriber and other operating data in this Prospectus. Such data is, however, not available for iesy prior to 2002 because certain systems to track subscribers and other information were only installed in 2001. In addition, the installation of a new information technology system and changes to iesy’s financial accounting system during the course of 2002 revealed inconsistencies in iesy’s subscriber data necessitating data cleansing and subscriber data corrections throughout 2002 and 2003, which may affect the accurateness of subscriber and other operating data for such periods. In addition, the period after the iesy Acquisition has involved significant changes in iesy’s strategic direction. Among other things, iesy has significantly enhanced its management information and financial processes and systems. Prior to the iesy Acquisition, certain deficiencies existed with respect to iesy’s operating and financial data. Accordingly, we have not included in this Prospectus a discussion or analysis of the iesy Predecessor’s financial results or condition. We have included only limited financial and other information about ish, and its financial performance may differ significantly from ours. Historical information for ish. We have not included in this Prospectus audited financial statements for ish for any period other than periods ending December 31, 2003 and December 31, 2004. You should not rely on ish’s audited annual financial statements for the periods ended December 31, 2003 and December 31, 2004 as indicative of its past financial performance, given the restructuring, insolvency and other transactions and events that have occurred in relation to ish. In addition, there may be significant differences among the accounting policies of iesy and ish. For example, ish has historically capitalized its obligations under its duct lease agreements with DTAG as capital leases, instead of treating them as operating expenses as iesy does. Although we have made adjustments for some of these differences in our unaudited pro forma presentation, this may not show the full effect of all such differences on a financial and operational level. In addition, ish’s audited annual financial statements for the periods ended December 31, 2003 and December 31, 2004 do not necessarily 45

  • Page 1 and 2: PROSPECTUS iesy Repository GmbH €
  • Page 3 and 4: the market price of the Notes at a
  • Page 5 and 6: which the issue or the offer of sec
  • Page 7 and 8: “combined entity”, and “we”
  • Page 9 and 10: “Tele Columbus” refers to the c
  • Page 11 and 12: Revenue generating units, or “RGU
  • Page 13 and 14: CURRENCY PRESENTATION AND EXCHANGE
  • Page 15 and 16: end of 2005. Our subscribers can al
  • Page 17 and 18: populations, with approximately 2.7
  • Page 19 and 20: In April/May 2005, iesy entered int
  • Page 21 and 22: Our Corporate and Financing Structu
  • Page 23 and 24: THE OFFERING The summary below desc
  • Page 25 and 26: Optional Redemption We may redeem a
  • Page 27 and 28: SUMMARY FINANCIAL AND OPERATING INF
  • Page 29 and 30: iesy Other Financial Data (unaudite
  • Page 31 and 32: iesy Operational Data (unaudited) R
  • Page 33 and 34: ish Income Statement Data Audited y
  • Page 35 and 36: 35 Three months ended Year ended De
  • Page 37 and 38: 37 As of December 31, As of March 3
  • Page 39 and 40: RISK FACTORS You should carefully c
  • Page 41 and 42: acquiring content, purchasing servi
  • Page 43: agreements—MSG”). We cannot ass
  • Page 47 and 48: Strikes or other industrial actions
  • Page 49 and 50: acquisitions. In addition, any addi
  • Page 51 and 52: provision and may not be abusive. S
  • Page 53 and 54: €1,050.0 million would have been
  • Page 55 and 56: We depend on payments from our subs
  • Page 57 and 58: • Claims against the Issuer and s
  • Page 59 and 60: Senior Credit Facilities before the
  • Page 61 and 62: court rulings did not address the p
  • Page 63 and 64: THE ISH ACQUISITION The description
  • Page 65 and 66: In addition to the warranties, spec
  • Page 67 and 68: CAPITALIZATION The following table
  • Page 69 and 70: Unaudited Pro Forma Condensed Conso
  • Page 71 and 72: NOTES TO THE UNAUDITED PRO FORMA CO
  • 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
  • Page 79 and 80: • iesy’s premium cable televisi
  • Page 81 and 82: egulated pricing model. Fees are pa
  • 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
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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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    Cash Flow from Operating Activities

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    oadcasters in television and radio.

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    educed or increased by a material a

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    Income Statement Data Audited year

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    109 As of December 31, As of March

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    • ish’s premium cable televisio

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    In addition, ish markets pay-per-vi

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    Cost of Materials and Services Cost

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    For accounting purposes, ish treats

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    Subscribers ish classifies its cust

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    Competition ish faces significant c

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    This decrease was primarily due to

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    Net Loss Net loss was €17.9 milli

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    Pension Obligations As of March 31,

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    Term Sheets with DTAG, BRN-ish agre

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    estructuring liabilities, while 200

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    accrual for pending losses. The exp

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    International Financial Reporting S

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    Content Providers Basic Television

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    Digital Home” and PrimaCom offers

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    [GRAPHIC] [GRAPHIC] Level 4 is the

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    shared access basis. In this case,

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    The following table shows several k

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    In the domestic market, the German

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    BUSINESS Unless otherwise indicated

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    Germany, with approximately 30.2 mi

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    Prudently deploying capital. Our de

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    iesy’s Current Basic Cable Televi

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    amounted to €8.0 million or 5.9%

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    within iesy’s upgraded areas and

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    Supply The following chart shows th

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    Term Sheet Service Duration Offer o

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    y the new fiber system. See “Oper

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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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