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To the Stock Exchanges in	April 28, 2005
Copenhagen and New York	Release 8/2005

TDC adopts IFRS

Copenhagen, Denmark - TDC is changing accounting policies to comply with the requirements under the International Financial Reporting Standards (IFRS) and its quarterly report for 1Q 2005 will be based on changed accounting policies. This stock exchange release explains the primary IFRS implications for TDC and presents comparative historical figures.

The primary changes resulting from the adoption of IFRS are:

•	goodwill is no longer amortized
•	recognition of pensions is changed
•	share-based compensations are expensed
•	indirect production costs related to development projects are expensed
•	presentation of financial data is changed.

TDC has decided to apply IFRS retroactively and to disclose adjusted comparative figures for the TDC Group for 2001-2004¹.

Goodwill
IFRS prohibits the amortization of goodwill. However, goodwill is subject to impairment reviews. Previously, goodwill was amortized on a straight-line basis over the estimated economic life² and was subject to impairment reviews.

Goodwill amortizations are ceased with retroactive effect from January 1, 2002. Since this date, TDC has performed impairment reviews in accordance with US GAAP requirements^3,4.

 

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TDC A/S	Internet:
Noerregade 21	www.tdc.com
DK-0900 Copenhagen C	E-mail:
Denmark	iinvestorrelations@tdc.dk
Tel. +45 33 43 76 80
Fax +45 33 43 76 78

TDC A/S CVR-nr. 14 77 39 08 Copenhagen

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April 28, 2005	TDC adopts IFRS	Page 2
Release 8-2005

Pensions
Pension costs relating to defined benefit plans are calculated in accordance with IAS 19⁵. Previously, such costs were calculated in accordance with US GAAP FAS Nos. 87-88⁶. The previous and the new accounting policies are both based on the following fundamental principles: Pension costs for defined benefit plans are calculated on the basis of the development in the actuarially determined pension obligations and on the basis of the expected long-term yield on the pension funds’ assets. Differences between assumptions and actual events, and effects of changes in actuarial assumptions, i.e. actuarial gains and losses, are allocated over the expected average remaining service periods of employees, if the differences exceed a defined corridor. Actuarial gains and losses within the defined corridor are not recognized.

The previous accounting policy included recognition of a transition obligation⁷. Such recognition is not prescribed by IAS 19. The adoption of IAS 19 reduces pension costs compared with the previous accounting policy, as pension costs no longer include amortization of the FAS 87 transition obligation.

The recognition of pensions is changed with retroactive effect from January 1, 2004. In accordance with IFRS 1, unrecognized gains and losses as of that date are recognized directly in equity. Accordingly, total equity is negatively impacted due primarily to the recognition of actuarial gains and losses as well as recognition of the FAS 87 transition obligation.

Share-based compensation
The fair value of share-based compensation provided for employees in exchange for services received is considered an expense and is recognized as such over the vesting period. Previously, the statement of income was not impacted by the share compensation plans owing to hedging of the commitments by acquisition of treasury shares.

Indirect production costs related to development projects
Certain indirect production costs associated with developments projects, including computer software, are expensed. Previously, such costs were capitalized and amortized.

 

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April 28, 2005	TDC adopts IFRS	Page 3
Release 8-2005

Other minor changes
In accordance with IFRS, jubilee benefits provided for employees are recognized in the year in which the associated services are rendered by the employees. Previously, such costs were expensed as incurred.

Furthermore, the accounting for property sale and leaseback agreements with the pension funds⁸ related to TDC is changed. Gains from the sale of property and subsequent lease expenses resulting from such agreements are not recognized. The properties are included as assets and the amount payable to the pension funds as liabilities in the balance sheet. Previously, the resulting gains were recognized in the statement of income at the date of the sales agreement, and the lease payments were expensed.

Presentation of financial data
The primary changes to the presentation of the statement of income are:

•	‘Work performed for own purposes and capitalized’ is no longer included as revenues. The relevant cost items are reduced correspondingly.
•	A new item ‘Other income and expenses’ is now included. This item includes income, which was earlier included in ‘Other operating income’, as well as losses from e.g. the sale of property, plant and equipment, which were earlier included in ‘Other external charges’.
•	‘Income from associates’ is now shown net after corporate income taxes and now includes one-time items related to associates. Previously, income taxes in associates were classified as income taxes. Furthermore, one-time items related to associates were included in the separate item ‘One-time items’.

The balance sheet categorization of assets and liabilities in non-current and current items, respectively, is changed. Net interest-bearing debt is impacted by the changed accounting for sale and leaseback agreements with TDC’s pension funds, cf. above.

In the cash flow statement the definition of ‘Cash and cash equivalents’ no longer includes marketable securities.

 

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April 28, 2005	TDC adopts IFRS	Page 4
Release 8-2005

Comparative figures
Adjusted historical figures, in accordance with the new accounting policies and the new presentation, are included in the following unaudited historical figures:

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April 28, 2005	TDC adopts IFRS	Page 5
Release 8-2005

Table 1: Selected financial and operational data, 2001-2004

TDC Group1		2001		2002		2003		2004
Statements of Income	DKKm
Net revenues		42,008		42,011		41,413		43,570
Earnings before interest, taxes, depreciation and
amortization (EBITDA)		9,393		10,591		11,550		12,446
Depreciation, amortization and impairment losses		(6,687	)	(6,107	)	(6,241	)	(6,696	)
Operating income (EBIT), excluding one-time items		2,706		4,484		5,309		5,750
One-time items		(3,264	)	(346	)	(1,119	)	385
Operating income (EBIT), including one-time items		(558	)	4,138		4,190		6,135
Income from associates		525		1,295		779		5,643
Net financials		(563	)	1,636		(565	)	(723	)
Income before income taxes		(596	)	7,069		4,404		11,055
Total income taxes		(464	)	(1,217	)	(1,193	)	(1,145	)
Net income		(1,060	)	5,852		3,211		9,910
Attributable to:
- Shareholders of the Parent Company		(526	)	6,079		3,203		9,912
- Minority interests		(534	)	(227	)	8		(2	)
Net income, excluding one-time items and fair value
adjustments
Operating income (EBIT), excluding one-time items		2,706		4,484		5,309		5,750
Income from associates		371		1,540		1,340		577
Net financials		(1,186	)	(1,621	)	(1,152	)	(901	)
Income before income taxes		1,891		4,403		5,497		5,426
Total income taxes		(1,187	)	(1,074	)	(1,439	)	(1,483	)
Net income		704		3,329		4,058		3,943
Balance Sheets	DKKbn
Total assets		86.4		85.0		92.6		90.3
Net interest-bearing debt		33.1		26.0		28.8		20.1
Total equity		32.7		36.0		35.9		38.9
Shares outstanding2 (million)		216.5		216.5		216.5		204.6
Statements of Cash Flow	DKKm
Operating activities		4,003		9,900		10,679		11,084
Investing activities		(18,025	)	(2,102	)	(12,618	)	2,889
Financing activities		11,034		(6,771	)	4,932		(12,573	)
Change in cash and cash equivalents		(2,988	)	1,027		2,993		1,400
Capital expenditures	DKKbn
Excluding share acquisitions		9.3		6.3		5.5		5.2
Including share acquisitions		21.5		7.4		13.5		10.0
Key financial ratios
Reported EPS3	DKK	(4.9	)	27.1		14.9		48.3
Adjusted EPS4	DKK	3.3		15.4		18.8		19.2
Dividend per share	DKK	11.0		11.5		12.0		12.5
EBITDA margin5	%	22.4		25.2		27.9		28.6
Capex-to-net revenues ratio6	%	22.1		14.9		13.2		11.9
Return on capital employed (ROCE)7	%	7.2		12.6		13.6		12.5
Subscriber base (end of year)	(1,000)
Landline8		3,913		3,598		3,631		3,483
Mobile8		4,575		4,939		6,199		7,126
Internet		1,403		1,285		1,696		1,814
Cable TV		828		885		924		982
Total subscribers		10,719		10,707		12,450		13,405
Number of employees9		22,485		22,263		21,125		20,573

 

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April 28, 2005	TDC adopts IFRS	Page 6
Release 8-2005

Table 2: Statements of Income

TDC Group (DKKm)	2003		1Q 2004		2Q 2004		3Q 2004		4Q 2004		2004
Net revenues
TDC Solutions	18,585		4,587		4,552		4,462		4,988		18,590
- domestic	17,297		4,278		4,241		4,175		4,366		17,061
TDC Mobile International	13,175		3,336		3,716		4,007		4,047		15,105
- domestic	5,613		1,469		1,596		1,697		1,742		6,503
- Talkline etc.	6,692		1,664		1,898		2,059		2,054		7,675
- Bité	870		203		222		251		251		927
TDC Switzerland	9,471		2,409		2,408		2,440		2,435		9,692
TDC Cable TV	1,524		421		430		446		469		1,766
TDC Directories	1,463		213		370		394		459		1,436
Others1	(2,805	)	(707	)	(704	)	(727	)	(881	)	(3,019	)
Net revenues	41,413		10,259		10,772		11,022		11,517		43,570
Transmission costs and cost of goods sold	(14,819	)	(3,725	)	(3,894	)	(4,060	)	(4,508	)	(16,187	)
Other external expenses	(7,751	)	(2,030	)	(2,012	)	(1,934	)	(1,940	)	(7,916	)
Wages, salaries and pension costs	(7,525	)	(1,741	)	(1,888	)	(1,769	)	(1,837	)	(7,235	)
Total operating expenses before depreciation etc.	(30,095	)	(7,496	)	(7,794	)	(7,763	)	(8,285	)	(31,338	)
Other income and expenses	232		31		85		40		58		214
Earnings before interest, taxes, depreciation and
amortization (EBITDA)
TDC Solutions	5,686		1,422		1,479		1,484		1,487		5,872
- Domestic	5,752		1,422		1,478		1,491		1,488		5,879
TDC Mobile International	2,364		553		667		754		703		2,677
- Domestic	1,662		440		546		563		486		2,035
- Talkline etc.	513		65		78		125		183		451
- Bité	189		48		43		66		34		191
TDC Switzerland	2,205		579		605		632		641		2,457
TDC Cable TV	170		63		88		90		110		351
TDC Directories	412		(7	)	112		171		183		459
Others 1	713		184		112		168		166		630
Earnings before interest, taxes, depreciation and
amortization (EBITDA)	11,550		2,794		3,063		3,299		3,290		12,446
Depreciation, amortization and impairment losses	(6,241	)	(1,577	)	(1,627	)	(1,608	)	(1,884	)	(6,696	)
Operating income (EBIT), excluding one-time
items	5,309		1,217		1,436		1,691		1,406		5,750
One-time items	(1,119	)	(558	)	-		943		-		385
Operating income (EBIT), including one-time
items	4,190		659		1,436		2,634		1,406		6,135
Income from associates	779		5,421		64		74		84		5,643
- Income from associates, excluding one-time items	1,340		355		64		74		84		577
- One-time items related to associates	(561	)	5,066		-		-		-		5,066
Net financials	(565	)	(272	)	(181	)	(278	)	8		(723	)
- Fair value adjustments	594		12		22		(44	)	188		178
- Financial expenses, net	(1,159	)	(284	)	(203	)	(234	)	(180	)	(901	)
Income before income taxes	4,404		5,808		1,319		2,430		1,498		11,055
Income taxes	(1,193	)	(168	)	(343	)	(468	)	(166	)	(1,145	)
- Income taxes related to income, excluding one-time
	(1,445	)	(333	)	(337	)	(471	)	(342	)	(1,483	)
items and fair value adjustments
- Income taxes related to one-time items	306		167		-		(10	)	218		375
- Income taxes related to fair value adjustments	(54	)	(2	)	(6	)	13		(42	)	(37	)
Net income	3,211		5,640		976		1,962		1,332		9,910
Attributable to:
Shareholders of the Parent Company	3,203		5,640		976		1,962		1,334		9,912
Minority interests	8		-		-		-		(2	)	(2	)
Excluding one-time items and fair value adjustments
Operating income (EBIT), excluding one-time
items	5,309		1,217		1,436		1,691		1,406		5,750
Income from associates, excluding one-time items	1,340		355		64		74		84		577
Net financials	(1,152	)	(284	)	(203	)	(234	)	(180	)	(901	)
Income before income taxes	5,497		1,288		1,297		1,531		1,310		5,426
Income taxes	(1,439	)	(333	)	(337	)	(471	)	(342	)	(1,483	)
Net income	4,058		955		960		1,060		968		3,943

 

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April 28, 2005	TDC adopts IFRS	Page 7
Release 8-2005

Table 3: Balance Sheets

TDC Group (DKKm)	2003		1Q 2004		2Q 2004		3Q 2004		4Q 2004
Assets
Intangible assets	30,514		30,590		31,463		30,673		33,495
Property, plant and equipment	25,297		25,320		24,678		24,295		26,252
Pension assets	6,509		4,882		4,955		5,345		5,435
Other non-current assets	10,809		4,579		4,417		4,762		5,126
Total non-current assets	73,129		65,371		65,513		65,075		70,308
Trade and other receivables	10,492		8,846		8,628		8,355		8,374
Marketable securities	2,028		2,024		2,718		2,703		3,412
Cash and cash equivalents	5,430		16,382		11,238		10,702		6,838
Other current assets	1,527		1,402		1,176		1,221		1,332
Total current assets	19,477		28,654		23,760		22,981		19,956
Total assets	92,606		94,025		89,273		88,056		90,264
- of which interest-bearing receivables	148		126		107		81		83
Equity and liabilities
Equity attributable to shareholders of the Parent Company	35,929		37,745		35,528		37,388		38,823
Minority interests	2		2		1		1		27
Total equity	35,931		37,747		35,529		37,389		38,850
Long-term debt	33,110		32,432		32,317		29,086		29,142
Deferred tax liabilities	4,885		4,531		4,373		4,503		4,677
Deferred income	968		973		980		974		1,052
Pension liabilities	152		258		254		252		264
Other non-current liabilities	515		977		1,222		912		1,651
Total non-current liabilities	39,630		39,171		39,146		35,727		36,786
Current maturities of long-term debt	2,792		1,941		1,938		2,079		609
Short-term bank loans	533		331		519		448		728
Trade and other payables	10,436		9,286		8,635		9,046		9,535
Deferred income	2,286		2,452		2,449		2,368		2,573
Other current liabilities	998		3,097		1,057		999		1,183
Total current liabilities	17,045		17,107		14,598		14,940		14,628
Total liabilities	56,675		56,278		53,744		50,667		51,414
Total equity and liabilities	92,606		94,025		89,273		88,056		90,264
Net interest-bearing debt	28,829		16,172		20,711		18,127		20,146

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April 28, 2005	TDC adopts IFRS	Page 8
Release 8-2005

Table 4: Statements of Cash Flow

TDC Group (DKKm)	2003		1Q 2004		2Q 2004		3Q 2004		4Q 2004		2004
EBITDA	11,550		2,794		3,063		3,299		3,290		12,446
Change in working capital	525		401		(1,128	)	(246	)	(117	)	(1,090	)
Other	125		(456	)	1,136		245		388		1,313
Cash flow from operating activities before net financials	12,200		2,739		3,071		3,298		3,561		12,669
Interest paid, net	(826	)	(475	)	(707	)	(80	)	22		(1,240	)
Realized currency adjustments	(151	)	13		67		(40	)	68		108
Cash flow from operating activities before tax	11,223		2,277		2,431		3,178		3,651		11,537
Corporate income tax paid	(544	)	(274	)	(9	)	(238	)	68		(453	)
Cash flow from operating activities	10,679		2,003		2,422		2,940		3,719		11,084
Investments in subsidiaries	(7,904	)	(179	)	(10	)	(5	)	(4,567	)	(4,761	)
Investments in property, plant and equipment	(4,132	)	(1,137	)	(964	)	(905	)	(1,437	)	(4,443	)
Investments in intangible assets	(820	)	(129	)	(266	)	(275	)	(268	)	(938	)
Investments in other non-current assets	(556	)	(3	)	(25	)	(51	)	(34	)	(113	)
Investments in marketable securities	(2,049	)	0		(707	)	0		(1,734	)	(2,441	)
Divestments of subsidiaries	(30	)	0		0		1,152		0		1,152
Sale of property, plant and equipment	268		55		72		(53	)	46		120
Sale of intangible assets and other investments	1,220		842		27		81		812		1,762
Divestments of marketable securities	962		3		6		9		1,008		1,026
Dividends received from associates	423		11,416		108		1		0		11,525
Cash flow from investing activities	(12,618	)	10,868		(1,759	)	(46	)	(6,174	)	2,889
Proceeds from long-term loans	9,860		3		26		(2	)	28		55
Repayments of long-term debt	(1,400	)	(1,639	)	(22	)	(3,359	)	(1,687	)	(6,707	)
Change in short-term bank loans	(704	)	(201	)	187		(71	)	236		151
Change in minorty interests	0		0		0		0		14		14
Dividends paid	(2,453	)	0		(2,555	)	0		0		(2,555	)
Acquisition of treasury shares, net	(371	)	(126	)	(3,407	)	2		0		(3,531	)
Cash flow from financing activities	4,932		(1,963	)	(5,771	)	(3,430	)	(1,409	)	(12,573	)
Increase/(decrease) in cash and cash equivalents	2,993		10,908		(5,108	)	(536	)	(3,864	)	1,400
Cash and cash equivalents, end of period	5,430		16,382		11,238		10,702		6,838		6,838

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April 28, 2005	TDC adopts IFRS	Page 9
Release 8-2005

Table 5: Capital expenditures, excluding share acquisitions

TDC Group (DKKm)	2003		1Q 2004		2Q 2004		3Q 2004		4Q 2004		2004
TDC Solutions	2,412		557		639		564		687		2,447
- of which domestic	2,327		544		624		553		593		2,314
TDC Mobile International	934		200		193		262		368		1,023
- domestic	669		171		125		186		265		747
- Talkline etc.	61		7		26		38		41		112
- Bité	204		22		42		38		62		164
TDC Switzerland	1,675		230		314		362		290		1,196
TDC Cable TV	275		52		59		43		69		223
TDC Directories	35		7		7		15		25		54
Others 1	120		22		36		21		171		250
Capex	5,451		1,068		1,248		1,267		1,610		5,193

 

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April 28, 2005	TDC adopts IFRS	Page 10
Release 8-2005

Table 6: 1Q 2004 – effect of changes

	1Q 2004
	Previous		Reclassi-				1Q 2004
DKKm	Accounting		fications1		Effect		IFRS
	policies
EBITDA	2,783		0		11		2,794
Goodwill amortization					-
Pensions					32
Indirect production costs					(14	)
Share-based compensation					(11	)
Other minor changes					4
Net income, excluding one-time items and
fair value adjustments	602		0		353		955
Goodwill amortization					349
Pensions					24
Indirect production costs					0
Share-based compensation					(23	)
Divestments of enterprises2					0
Other minor changes					3
Net income	5,626		0		14		5,640
Goodwill amortization					349
Pensions					62
Indirect production costs					0
Share-based compensation					(23	)
Divestments of enterprises2					(379	)
Other minor changes					5
Total equity	36,033		2		1,712		37,747
Goodwill amortization					3,013
Pensions					(1,077	)
Indirect production costs					(77	)
Share-based compensation					27
Other minor changes					(174	)
Net interest-bearing debt	16,028		0		144		16,172
Sale and lease back agreements					144
Increase/(decrease) in cash and cash equivalents	10,905		3		0		10,908

 

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April 28, 2005	TDC adopts IFRS	Page 11
Release 8-2005

Table 7: 2004 – effect of changes

	1Q 2004
	Previous		Reclassi-				2004
DKKm	Accounting		fications1		Effect		IFRS
	policies
EBITDA	12,432		(18	)	32		12,446
Goodwill amortization					-
Pensions					128
Indirect production costs					(61	)
Share-based compensation					(52	)
Other minor changes					17
Net income, excluding one-time items and
fair value adjustments	2,411		(2	)	1,534		3,943
Goodwill amortization					1,507
Pensions					92
Indirect production costs					(5	)
Share-based compensation					(62	)
Divestments of enterprises2					(9	)
Other minor changes					11
Net income	8,742		(2	)	1,170		9,910
Goodwill amortization					1,507
Pensions					130
Indirect production costs					(5	)
Share-based compensation					(62	)
Divestments of enterprises2					(413	)
Other minor changes					13
Total equity	35,963		27		2,860		38,850
Goodwill amortization					4,082
Pensions					(1,009	)
Indirect production costs					(78	)
Share-based compensation					31
Other minor changes					(166	)
Net interest-bearing debt	20,010		0		136		20,146
Sale and lease back agreements					136
Increase/(decrease) in cash and cash equivalents	2,815		(1,415	)	0		1,400

 

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April 28, 2005	TDC adopts IFRS	Page 12
Release 8-2005

For further information please contact TDC Investor Relations at +45 3343 7680.

TDC is a Danish-based provider of communications solutions with significant presence in selected markets in Northern and Central Europe. TDC has six main business lines; TDC Solutions, TDC Mobile International, TDC Switzerland, TDC Cable TV, TDC Directories and TDC Services. TDC was partly privatized in 1994 and fully privatized in 1998. The shares are primarily held by institutional investors and private individuals in Europe and the USA.

TDC listings

Shares: Copenhagen Stock Exchange
Reuters TDC.CO
Bloomberg TDC DC
Nominal value DKK 5
ISIN DK0010 253335
Sedol 5698790

Shares: New York Stock Exchange
Reuters TLD.N
Bloomberg TLD US
One ADS represent one half common share
ISIN US8723 6N1028
Sedol 2883094