iesy Repository GmbH - Irish Stock Exchange

Comparison of Results of Operations
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
Sales
Sales increased by €3.0 million, or 2.4%, from €126.2 million in the year ended December 31, 2003 to €129.3 million
in the year ended December 31, 2004. Sales represent 95.1% of total revenues in the year ended December 31, 2004 and
91.6% of total revenues in the year ended December 31, 2003. This increase was primarily due to price increases and the
enforcement of disconnection policies for non-payment, offset in part by the loss of low ARPU professional Level 4 operator
subscribers.
With respect to the basic cable television business, basic cable subscription fees increased by €2.6 million, or 2.2%,
from €115.9 million in the year ended December 31, 2003 to €118.5 million for the year ended December 31, 2004. This
increase was primarily due to iesy’s price increase and the correction of other smaller pricing anomalies. Basic cable carriage
fees increased by €0.4 million, or 5.3%, from €7.6 million in the year ended December 31, 2003 to €8.0 million in the year
ended December 31, 2004. This increase was primarily due to increased revenues from shopping channels such as HSE and
QVC. Installation fees decreased by €0.5 million, or 19.2%, from €2.6 million in the year ended December 31, 2003 to €2.1
million for the year ended December 31, 2004. This decrease was primarily due to lower levels of new homes connected and
a decrease in the average installation fees from July 1, 2004. In total, the basic cable television business contributed €128.5
million, or 94.6%, of total revenues in the year ended December 31, 2004 compared to €126.1 million, or 91.4%, of total
revenues in the year ended December 31, 2003.
iesy launched its foreign language programming as part of its premium cable television business in late 2003.
Subscription fees from its premium cable television business contributed €0.6 million, or 0.4%, of total revenues in the year
ended December 31, 2004. iesy launched its high speed Internet business during 2004. The high speed Internet business
contributed €0.1 million, or 0.1%, of total revenues in the year ended December 31, 2004.
Own Work Capitalized
Own work capitalized as fixed assets increased by €0.6 million, or 93.3%, from €0.7 million in the year ended
December 31, 2003 to €1.3 million in the year ended December 31, 2004 reflecting an increase in the level of network
projects staffed by in-house employees.
Other Operating Income
Other operating income decreased by €5.6 million, or 51.0%, from €11.0 million in the year ended December 31, 2003
to €5.4 million in the year ended December 31, 2004. This decrease was primarily due to lower income resulting from the
release of certain accruals in the financial statements for the year ended December 31, 2003. Premium cable television
program carriage fees decreased from €2.2 million in the year ended December 31, 2003 to €1.9 million in the year ended
December 31, 2004.
Cost of Materials
Cost of materials consists of cost of raw materials and consumables, and cost of purchased services. The former is
comprised mainly of repairs and maintenance and the latter of network infrastructure services, which include costs under
Term Sheets with DTAG and the BRN-iesy agreement as well as under other agreements relating to customer care, billing
and network systems. iesy’s most significant costs include payments under Term Sheets with DTAG and the BRN-iesy
agreement for the use of assets which are shared between iesy’s network and that of DTAG, and which are owned by DTAG,
and for services provided by DTAG. Network infrastructure services are mainly provided by DTAG under Term Sheets
which were favorably renegotiated by iesy in 2002.
Raw materials and consumables. Cost of raw materials and consumables decreased by €0.1 million, or 4.0%, from
€2.7 million in the year ended December 31, 2003 to €2.6 million in the year ended December 31, 2004. This decrease was
primarily due to the better cost control over civil works contracts for iesy’s repairs and maintenance, as well as the need for
fewer repairs and maintenance in relation to certain of iesy’s equipment in the year ended December 31, 2004 as compared to
the prior period. iesy’s cost of raw materials and consumables as a percentage of total revenues remained constant at 1.9% in
the years ended December 31, 2003 and 2004.
Purchased services. Cost of purchased services decreased by €1.9 million, or 7.5%, from €25.1 million in the year
ended December 31, 2003 to €23.2 million in the year ended December 31, 2004. This decrease was primarily due to iesy’s
98