Appendix I
Figure A I‐I Fixed line telephony, as of ultimo June 2011 ...89 Figure A I‐II VoIP, as of ultimo June 2011...89 Figure A I‐III Fixed line Internet, as of ultimo June 2011...90 Figure A I‐IV Mobile broadband, as of ultimo June 2011 ...90 Figure A I‐V IPTV, as of ultimo June 2011...91 Figure A I‐VI Bundles, as of ultimo June 2011...91 Figure A I‐VII Mobile telephony subscriptions in total ...92 Figure A I‐VIII IPTV subscriptions by type ...92 Appendix II
Figure A II‐I Churn rate for TDC Consumer mobile voice customers ...94 Figure A II‐II TDC RGUs, fixed line telephony...94 Figure A II‐III TDC RGUs, Mobile telephony...95 Figure A II‐IV TDC RGUs, Fixed line internet and mobile BB...95 Figure A II‐V TDC RGUs, TV...96 Figure A II‐VI TDC RGUs, bundles...96
Table A II‐I Households, Denmark ...93 Table A II‐II Reported numbers, FTE, Revenue, and EBITDA...97 Table A II‐III Growth in EBITDA/Employee...98 Table A II‐IV Growth in Revenue/Employee ...98 Table A II‐V Boston model input...99 Table A II‐VI Notes for Boston model input ...99 Appendix III
Figure A III‐I TDC Consumer revenue split by product... 108 Figure A III‐II TDC Business revenue split by product... 109 Figure A III‐III TDC Nordic revenue split by product... 109 Figure A III‐IV YouSee revenue split by product... 110 Figure A III‐V Operations & Wholesale revenue split by product ... 110
Table A III‐I Income Statement... 100 Table A III‐II Balance Sheet ... 101 Table A III‐III Analytical Income Statement... 102 Table A III‐IV Analystical Balanca Sheet... 103
Table A III‐V Return on Equity, Parent... 104 Table A III‐VI Common size and index, Income Statement... 106 Table A III‐VII Common‐size and index, Balance Sheet ... 107 Table A III‐VIII Revenue split by business units, and total revenue growth... 108
Equation A III‐I Tax on Net Financial Expenses ... 104 Equation A III‐II Retur non Equity, Group ... 104 Equation A III‐III Return on Equity, Parent... 104 Equation A III‐IV Return on Equity, ratio based... 104 Equation A III‐V Return on Invested Capital... 104 Equation A III‐VI Minority Interests Share... 105 Equation A III‐VII Net Borrowing Costs... 105 Equation A III‐VIII Financial Leverage ... 105 Equation A III‐IX Profit Margin... 105 Equation A III‐X Turnover rate, Invested Capital ... 105 Appendix IV
Table A IV‐I Most Likely Scenario... 111 Table A IV‐II Best Case Scenario... 111 Table A IV‐III Worst Case Scenario ... 111 Table A IV‐IV Pro forma statements, most likely scenario ... 112 Table A IV‐V Best case ... 113 Table A IV‐VI Worst case ... 114 Table A IV‐VII Financial ratios, pro forma ... 115 Appendix V
Figure A V‐I RI versus DCF... 118
Table A V‐I Zero‐coupon on 10‐year Danish Government Bond... 116 Table A V‐II Valuation – Best case scenario ... 116 Table A V‐III Valuation – Worst case scenario ... 117
Equation A V‐I Residual Income to Equity ‐ two stage model... 117 Equation A V‐I Discounted Cash Flow to Equity ‐ two stage model... 117
I. Company Presentation
Figure A I‐I Fixed line telephony, as of ultimo June 2011
116
Figure A I‐II VoIP, as of ultimo June 2011
117
116 NITA. (2011). Fixed network telephony.xls.
117 NITA. (2011). Fixed network telephony.xls.
79,7%
0,1%
4,6%
5,9%
5,6% 4,0%
Fixed line telephony subscriptions
TDC
Dansk Kabel TV DLG Tele Telenor Telia Others
39,4%
0,7%
0,7%
4,2%
3,8%
8,5%
0,4%
10,3%
4,4%
27,6%
VoIP subscriptions
TDC Canal Digital Company Mobile Dansk KabelTV FirstCom Fullrate Onfone Telenor YouSee Others
Figure A I‐III Fixed line Internet, as of ultimo June 2011
118
Figure A I‐IV Mobile broadband, as of ultimo June 2011
119
118 NITA. (2011). Internet.xls.
119 NITA. (2011). Internet.xls.
35,4%
1,0%
0,1%
5,9%
1,5%
5,7%
7,1%
10,8%
2,5%
0,7%
12,9%
16,40%
Broadband subscriptions
TDC Canal Digital Company Mobile Dansk Kabel TV DLG Tele Fullrate Stofa Telenor Telia Telmore YouSee Others
28,9%
5,5%
1,5%
0,8%
10,9%
3,4%
4,0%
16,6%
18,9%
7,9% 1,6%
Mobile broadband subscriptions
TDC CBB Mobil Company Mobile DLG Tele Hi3G M1 Onfone Telenor Telia Telmore Others
Figure A I‐V IPTV, as of ultimo June 2011
120
Figure A I‐VI Bundles, as of ultimo June 2011
121
120 NITA. (2011). Other.xls.
121 NITA. (2011). Other.xls.
59,3%
7,1%
6,9%
0,3%
4,2%
4,2%
4,8% 13,1%
Fixed IPTV subscriptions
TDC
Dansk Bredbånd EnergiMidt Fullrate SE
TRE‐FOR Bredbånd Waoo
Others
61,2%
4,8%
1,2%
12,3%
2,6%
3,4% 14,4%
Triple play subscriptions
TDC
Dansk Bredbånd DLG Tele Stofa Telia Waoo Others
Figure A I‐VII Mobile telephony subscriptions in total
122
Figure A I‐VIII IPTV subscriptions by type
123
122 NITA. (2011). Mobile.xls.
123 NITA. (2011). Other.xls 0
1.000.000 2.000.000 3.000.000 4.000.000 5.000.000 6.000.000 7.000.000 8.000.000
1H11 2H10 1H10 2H09 1H09 2H08 1H08 2H07 1H01 2H06 1H06 2H05 1H05
Mobile telephony subscriptions
0 50.000 100.000 150.000 200.000 250.000
1H11 2H10 1H10 2H9
1H09 2H08 1H08 2H07
IPTV subscriptions
Fixed network IPTV
Mobile IPTV
II. Strategic analysis
Table A II‐I Households, Denmark
124'86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97
1 person (1000) 720,4 738,2 751,7 769,4 784,4 802,4 818,4 830,1 840,7 854,9 865,7 876,6 2 persons (1000) 705,2 716,4 727,1 737,4 745,9 752,8 759,7 765,5 770,4 776,4 780,7 785,6 3 persons (1000) 334,3 336,1 336,8 337,3 338,0 338,5 338,2 337,2 335,1 332,4 329,2 326,9 4 persons (1000) 316,4 312,2 308,5 303,1 298,3 294,3 291,7 289,6 288,4 286,2 287,0 286,5 5 persons (1000) 91,9 88,7 86,5 84,2 83,0 82,1 81,6 82,4 83,4 84,5 86,5 88,5 6 persons (1000) 20,0 19,2 18,8 18,4 18,3 18,5 18,7 18,9 19,4 19,9 20,8 21,5
7 persons (1000) 5,1 5,0 5,1 5,0 5,0 4,9 5,1 5,4 5,4 5,7 5,8 6,0
8+ (1000) 5,5 5,6 5,5 5,4 5,3 5,3 5,3 5,3 5,3 5,3 5,4 5,5
Total (1000) 2.199 2.221 2.240 2.260 2.278 2.299 2.319 2.334 2.348 2.365 2.381 2.397 Population (1000) 5.059 5.067 5.075 5.078 5.086 5.099 5.117 5.136 5.154 5.173 5.204 5.232
Average 2,30 2,28 2,27 2,25 2,23 2,22 2,21 2,20 2,19 2,19 2,19 2,18
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11
1 person (1000) 899,7 906,1 911,5 918,6 925,4 936,3 951,8 967,5 978,2 985,9 994,0 994,8 998,9 2 persons (1000) 800,6 807,2 813,3 816,9 821,2 824,0 828,8 832,1 834,6 840,0 842,7 847,2 849,6 3 persons (1000) 315,0 309,8 305,4 302,8 300,3 298,3 295,4 292,9 291,7 292,2 295,1 298,1 300,5 4 persons (1000) 287,2 287,2 288,1 288,7 288,7 289,3 288,9 289,8 291,4 292,0 293,3 293,8 295,4 5 persons (1000) 91,8 93,6 95,3 96,4 97,7 98,6 99,5 99,7 100,8 101,6 103,0 103,6 104,2 6 persons (1000) 22,3 23,0 23,1 23,7 24,1 24,0 23,7 23,8 23,9 24,2 24,3 24,5 24,4
7 persons (1000) 6,1 6,2 6,4 6,5 6,5 6,5 6,6 6,5 6,5 6,6 6,6 6,6 6,7
8+ (1000) 5,4 5,3 5,5 5,5 5,4 5,2 5,0 4,9 4,9 4,9 5,0 4,8 4,8
Total (1000) 2.428 2.438 2.448 2.459 2.469 2.482 2.500 2.517 2.532 2.547 2.564 2.573 2.584 Population (1000) 5.273 5.290 5.310 5.330 5.346 5.361 5.377 5.396 5.420 5.449 5.485 5.509 5.534
Average 2,17 2,17 2,17 2,17 2,16 2,16 2,15 2,14 2,14 2,14 2,14 2,14 2,14
124 Statistics Denmark
Figure A II‐I Churn rate for TDC Consumer mobile voice customers
125
Figure A II‐II TDC RGUs, fixed line telephony
126
125 TDC A/S. (2011). TDC Fact Sheet 2010.
126 TDC A/S. (2011). TDC Fact Sheet 2010.
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10
Churn rate ‐ mobile voice
‐ 200 400 600 800 1.000 1.200 1.400 1.600 1.800 2.000
PSTN/ISDN ‐ Retail
PSTN/ISDN ‐ Wholesale
VoIP
Figure A II‐III TDC RGUs, Mobile telephony
127
Figure A II‐IV TDC RGUs, Fixed line internet and mobile BB
128
127 TDC A/S. (2011). TDC Fact Sheet 2010.
128 TDC A/S. (2011). TDC Fact Sheet 2010.
‐ 500 1.000 1.500 2.000 2.500 3.000
Thousands
Mobile‐ Prepaid cards
Mobile ‐ Subscriptions (incl. Telmore/
M1) Mobile ‐
Wholesale voice
‐ 200 400 600 800 1.000 1.200 1.400
Mobile broadband
Broadband, retail
Broadband, wholesale
Non‐broadband
Figure A II‐V TDC RGUs, TV
129
Figure A II‐VI TDC RGUs, bundles
130
129 TDC A/S. (2011). TDC Fact Sheet 2010.
130 TDC A/S. (2011). TDC Fact Sheet 2010.
‐ 200 400 600 800 1.000 1.200 1.400
‐ YouSee Clear
‐ YouSee Plus
‐ TDC TV
‐ 50 100 150 200 250 300 350
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10
Dual‐play bundles
Triple‐play bundles
Table A II‐II Reported numbers, FTE, Revenue, and EBITDA
FTE
2007 2008 2009 2010
Consumer 2.681 2.212 2.160 2.037
TDC Business 2.212 1.620 1.528 1.476 TDC Nordic 1.596 1.619 1.437 1.388 Operations & Wholesale 5.557 4.406 4.409 3.868
YouSee 1.110 1.174 1.265 1.231
Reported Revenue
2007 2008 2009 2010
Consumer 10.115 9.901 9.711 9.389
TDC Business 8.864 8.546 7.926 7.546 TDC Nordic 3.863 3.854 3.515 4.087 Operations & Wholesale 3.601 2.748 2.582 2.550
YouSee 2.829 3.188 3.597 4.012
Reported EBITDA
2007 2008 2009 2010
Consumer 3.717 3.902 3.995 4.041
TDC Business 3.495 3.659 3.721 3.644
TDC Nordic 425 458 497 564
Operations & Wholesale 1.420 1.500 1.413 1.114
YouSee 814 954 1.141 1.353
EBITDA/Employee
2007 2008 2009 2010
Consumer 1,39 1,76 1,85 1,98
TDC Business 1,58 2,26 2,44 2,47
TDC Nordic 0,27 0,28 0,35 0,41
Operations & Wholesale 0,26 0,34 0,32 0,29
YouSee 0,73 0,81 0,90 1,10
Revenue/Employee
2007 2008 2009 2010
Consumer 3,77 4,48 4,50 4,61
TDC Business 4,01 5,28 5,19 5,11
TDC Nordic 2,42 2,38 2,45 2,94
Operations & Wholesale 0,65 0,62 0,59 0,66
YouSee 2,55 2,72 2,84 3,26
Table A II‐III Growth in EBITDA/Employee
Growth in EBITDA/Employee
Growth in EBITDA/Employee 2009 2010 Average
Consumer 5% 7% 6,05%
TDC Business 8% 1% 4,60%
TDC Nordic 22% 17% 19,87%
Operations & Wholesale -6% -10% -8,00%
YouSee 11% 22% 16,43%
Table A II‐IV Growth in Revenue/Employee
Growth in Revenue/Employee
2009 2010 Average
Consumer 0% 3% 1,48%
TDC Business -2% -1% -1,56%
TDC Nordic 3% 20% 11,57%
Operations & Wholesale -6% 13% 3,23%
YouSee 5% 15% 9,67%
Table A II‐V Boston model input
Input for Boston modelMarket growth Note Relative MS Note Revenue Note
Largest com-petitor Fixed telephony -13,1% 1 13,6 4 4.355 5 Telenor Mobile telephony 0,9% 2 2,5 4 6.591 5 Telenor
Fixed broadband 1,4% 1 5,6 4 7.021 Telenor
Mobile broadband 14,3% 1 2,4 4 584 5 Telia
IPTV 15,4% 1 9,6 4 628 6 Energi Midt
VoIP 15,8% 1 5,6 4 4.355 5 Telenor
Cable TV 5,0% 3 2,5 3 2.670 6 N/A
Terminal equipment, etc. 2.428
Other 562
Total 29.194
Table A II‐VI Notes for Boston model input
Note Base Source
1 Growth in total subscriptions in market 1H2010-1H2011 (Telestatistik første halvår 2011)
2 Growth in total market revenue 2009-2010. (Økonomiske nøgletal 2010)
3
An estimate, market share is disclosed as 50% in the Annual Report. Closest competitors market share is est.
to 20 percent.
(TDC Annual Report 2010)
4
Includes subsidiaries, to the extent that they are not disclosed in the group of 'others'.
5
The split is calculated based on RGUs on each product line as of ultimo 2010, naturally somewhat distorted, as revenue per RGU is unlikely to be equal.
(TDC Fact Sheet 2010)
6
IPTV is calculated as TDC Business' activities and
YouSee's contribution, and Cable TV becomes a residual (TDC Annual Report 2010)
Calculations for note 5
PSTN/ISDN 1.407 76,6%
VOIP 429 23,4%
Mobile 2.903 91,9%
Mobile BB 257 8,1%
III. Financial statement analysis
Table A III‐I Income Statement
131TDC - Income Statements 2010
TDC Group (DKKm) 2007 2008 2009 2010
Revenue 27.951 26.917 26.079 26.167
Transmission costs and cost of goods sold -7.945 -7.239 -6.444 -6.747 O
Gross profit 20.006 19.678 19.635 19.420
Other external expenses -5.246 -4.909 -4.731 -4.517 O Wages, salaries and pension costs -5.659 -5.185 -4.598 -4.327 O
Other income and expenses 275 470 230 196 O
EBITDA 9.376 10.054 10.536 10.772
Depreciation -2.455 -2.433 -2.385 -2.660 O
Amortization -2.294 -1.937 -2.170 -2.603 O
Impairment losses -1.027 -177 -104 -93 O
Depreciation, amortization and impairment losses -5.776 -4.547 -4.659 -5.356 O Operating profit (EBIT), excluding special items 3.600 5.507 5.877 5.416
Special items 664 -3.212 -1.119 -1.347
Operating profit (EBIT) 4.264 2.295 4.758 4.069
Profit from joint ventures and associates 266 200 76 13 O
-of which special items -76 -22 77 10 S
Fair value adjustments 388 -686 -253 115 F
Currency translation adjustments 216 770 -257 -20 F
Financial income 1.515 2.160 825 401 F
Financial expenses -4.882 -4.292 -2.379 -1.992 F
Net financials -2.763 -2.048 -2.064 -1.496
Profit before income taxes 1.767 447 2.770 2.586
Income taxes related to profit, excluding special items 321 -722 -1.085 -1.035 O Income taxes related to special items 198 284 276 253 F
Total income taxes 519 -438 -809 -782
Profit for the period from continuing operations 2.286 9 1.961 1.804 Profit for the period from discontinued operations 1.346 548 422 1.203 N
- of which special items 1.148 196 -153 790 S
Profit for the period 3.632 557 2.383 3.007
131 TDC A/S. (2011). TDC Fact Sheet 2010, sheet ’Income Statement’ . Retrieved from Investor Relations - Financial Reports: http://investor.tdc.com/annuals.cfm
Table A III‐II Balance Sheet
132TDC - Balance sheet, December 31th 2010
TDC Group (DKKm) 2007 2008 2009 2010
Intangible assets 55.365 53.361 49.550 34.799 O
Property, plant and equipment 21.227 22.396 19.998 15.531 O Investments in joint ventures and
associ-ates
5.897 171 168 137 O
Other investments 7 9 7 7 O
Deferred tax assets 125 65 52 66 O
Pension assets 5.270 7.030 7.606 7.487 O
Receivables 95 96 231 241 O
Derivative financial instruments 39 11 0 0 O
Prepaid expenses 147 211 243 270 O
Total non-current assets 88.172 83.350 77.855 58.538 O
Inventories 641 489 323 307 O
Receivables 7.575 8.282 6.758 4.404 O
Income tax receivables 14 9 2 0 O
Derivative financial instruments 781 372 49 91 F
Prepaid expenses 665 785 673 615 O
Cash 8.297 6.718 763 831 F
Assets held for sale 0 0 0 0 F
Total current assets 17.973 16.655 8.568 6.248
Total assets 106.145 100.005 86.423 64.786
Share capital 992 992 992 992
Reserves 263 -1.295 -644 -621
Retained earnings 30.130 29.887 26.730 20.484
Proposed dividends 636 2.035 0 0
Equity attributable to Company share-holders
32.021 31.619 27.078 20.855
Minority interests 189 61 0 0
Total equity 32.210 31.680 27.078 20.855
Deferred tax liabilities 7.666 7.430 7.313 6.486 O
Provisions 1.275 1.355 1.519 974 O
Pension liabilities 296 365 244 73 O
Loans 45.667 37.037 30.611 23.428 F
Derivative financial instruments 141 23 0 0 F
Deferred income 956 1.350 1.245 971 O
Total non-current liabilities 56.001 47.560 40.932 31.932
Loans 4.146 4.713 3.787 216 F
Trade and other payables 8.080 8.691 8.004 6.141 O
Income tax payable 1.856 820 1.270 861 O
Derivative financial instruments 312 2.007 1.205 659 O
Deferred income 2.953 3.449 3.183 3.072 O
Provisions 587 1.085 964 1.050 O
Total current liabilities 17.934 20.765 18.413 11.999
Total liabilities 73.935 68.325 59.345 43.931
Total equity and liabilities 106.145 100.005 86.423 64.786
132 TDC A/S. (2011). TDC Fact Sheet 2010, sheet ’Balance Sheet’. Retrieved from Investor Relations - Financial Reports: http://investor.tdc.com/annuals.cfm
Table A III‐II Analytical Income Statement
TDC - Analytical Income Statement
TDC Group DKKm 2007 2008 2009 2010
Revenue 27.951 26.917 26.079 26.167
Transmission costs and cost of goods sold -7.945 -7.239 -6.444 -6.747
Gross profit 20.006 19.678 19.635 19.420
Other external expenses -5.246 -4.909 -4.731 -4.517 Wages, salaries and pension costs -5.659 -5.185 -4.598 -4.327
Other income and expenses 275 470 230 196
(EBITDA) 9.376 10.054 10.536 10.772
Profit from joint ventures and associates 266 200 76 13
- of which special items 76 22 -77 -10
Restructuring costs(from special items) -461 -1.238 -982 -1.172 Operating profit before special items 9.257 9.038 9.553 9.603
Special items 664 -3.212 -1.119 -1.347
- of which restructuring costs 461 1.238 982 1.172 Special items (Profit from JV and assoc) -76 -22 77 10
EBITDA 10.306 7.042 9.493 9.438
Depr., amortisation and impairment losses -5.776 -4.547 -4.659 -5.356
EBIT 4.530 2.495 4.834 4.082
Tax on operating profit -172 -950 -1.325 -1.156
NOPAT 4.358 1.545 3.509 2.926
Fair value adjustments 388 -686 -253 115
Currency translation adjustments 216 770 -257 -20
Financial income 1.515 2.160 825 401
Financial expenses -4.882 -4.292 -2.379 -1.992
NFE before tax -2.763 -2.048 -2.064 -1.496
Tax on net finansial expenses 691 512 516 374
Net financial expenses -2.072 -1.536 -1.548 -1.122 Profit for the period from continuing
operations
2.286 9 1.961 1.804
- of which Minority interests 280 151 41
Profit for the period from disc. operations 1.346 548 422 1.203
Group profit after tax 3.632 557 2.383 3.007
Table A III‐IV Analystical Balanca Sheet
133TDC – Analytical Balance sheet
DKKm 2007 2008 2009 2010
Non-current assets
Intangible assets 55.365 53.361 49.550 34.799
Property, plant and equipment 21.227 22.396 19.998 15.531 Intangible & tangible assets 76.592 75.757 69.548 50.330 Investments in jJV and associates 5.897 171 168 137
Other investments 7 9 7 7
Deferred tax assets 125 65 52 66
Receivables 95 96 231 241
Prepaid expenses 147 211 243 270
Pension assets 5.270 7.030 7.606 7.487
Current assets
Inventories 641 489 323 307
Receivables 7.575 8.282 6.758 4.404
Income tax receivables 14 9 2 0
Prepaid expenses 665 785 673 615
Total operating assets 97.028 92.904 85.611 63.864 Deferred tax liabilities 7.666 7.430 7.313 6.486
Provisions 1.275 1.355 1.519 974
Deferred income 956 1.350 1.245 971
Trade and other payables 8.080 8.691 8.004 6.141
Income tax payable 1.856 820 1.270 861
Deferred income 2.953 3.449 3.183 3.072
Provisions 587 1.085 964 1.050
Pension liabilities 296 365 244 73
Total operating liabilities 23.669 24.545 23.742 19.628 Net working capital -3.233 -7.398 -7.679 -6.094
Net operating assets 73.359 68.359 61.869 44.236
Total equity 32.210 31.680 27.078 20.855
- of which Minority interests 189 61
Loans 45.667 37.037 30.611 23.428
Derivative financial instruments 141 23 0 0
Loans 4146 4.713 3.787 216
Derivative financial instruments 312 2.007 1.205 659 Interest bearing debt 50.266 43.780 35.603 24.303
Derivative financial instruments 39 11 0 0
Cash 8297 6.718 763 831
Derivative financial instruments 781 372 49 91
Interest bearing assets 9.117 7.101 812 922
.
Net interest bearing debt 41.149 36.679 34.791 23.381
Invested capital 73.359 68.359 61.869 44.236
Table A III‐V Return on Equity, Parent
2007 2008
2008
2009 2010
ROE Group 7,10% 0,03% 6,67% 7,53%
ROE Parent 6,26% -0,45% 6,54% 7,53%
ROIC 5,94% 2,18% 5,39% 5,52%
M.I. share of profit 0,88 -15,81 0,98 1,00
NBC 5,04% 3,95% 4,33% 3,86%
Leverage 1,28 1,22 1,22 1,21
PM 15,59% 5,74% 13,46% 11,18%
AT 0,38 x 0,38 x 0,40 x 0,49 x
Equation A III‐I Tax on Net Financial Expenses
€
Tax on NFE=25%⋅NFE
Tax on NFE2010=25%⋅1.122=374
Equation A III‐I Retur non Equity, Group
€
Return on EquityGroup = Profit for the periodGroup Average EquityGroup Return on EquityGroup2010= 1.804
27.078+20.855 2
=7,53%
Equation A III‐II Return on Equity, Parent
€
Return on EquityParent =Profit for the periodParent Average EquityParent Return on EquityParent2009= 1.920
31.619+27.078 2
=6,54%
Equation A III‐III Return on Equity, ratio based
€
Return on EquityParent=(ROIC+(ROIC−NBC)⋅Leverage)⋅Minority Interests Share Return on EquityParent2009=(5,39%+(5,39%−4,33%)⋅0,979=6,54%
Equation A III‐IV Return on Invested Capital
€
Return on Invested Capital= NOPAT
Average Invested Capital Return on Invested Capital2010= 2.026
61.869+44.236 2
=5,52%
Equation A III‐V Minority Interests Share
Equation A III‐VI Net Borrowing Costs
€
Net Borrowing Costs= Net Financial Expenses Average Net Interest Bearing Debt Net Borrowing CostsNet Borrowing Costs2010= 1.122
34.791+23.381 2
=3,86%
Equation A III‐VII Financial Leverage
€
Financial Leverage= Average Net Interest Bearing Debt Average Equity
Financial Leverage2010=
34.791+23.381 2
27.078+20.855 2
=1,21
Equation A III‐VIII Profit Margin
€
Profit Margin= NOPAT Revenue Profit Margin2010= 2.026
26.167 =7,74%
Equation A III‐IX Turnover rate, Invested Capital
€
Turnover Rate on Invested Captial= Revenue
Average Invested Captial Turnover Rate on Invested Captial2010= 26.167
61.869+44.236 2
=0,49x
!
Minority Interests Share=
Net Earings after MI Net Earings before MI
Equity parent Equity group
Minority Interests Share 2009=
1.920 1.961 27.078 27.078
= 0,979
Table A III‐VI Common size and index, Income Statement
Common-size Index
2007 2008 2009 2010 2007 2008 2009 2010
Revenue 100,0% 100,0% 100,0% 100,0% 100,0 96,3 93,3 93,6
TC and COGS -28,4% -26,9% -24,7% -25,8% 100,0 91,1 81,1 84,9
Gross profit 71,6% 73,1% 75,3% 74,2% 100,0 98,4 98,1 97,1
Other external expenses -18,8% -18,2% -18,1% -17,3% 100,0 93,6 90,2 86,1 Wages and salaries -20,2% -19,3% -17,6% -16,5% 100,0 91,6 81,3 76,5 Other income and expenses 1,0% 1,7% 0,9% 0,7% 100,0 170,9 83,6 71,3 Profit from joint ventures and associates 1,2% 0,8% 0,0% 0,0% 100,0 64,9 -0,3 0,9 Restructuring costs(from special items) -1,6% -4,6% -3,8% -4,5% 100,0 268,5 213,0 254,2 Operating profit before special items 33,1% 33,6% 36,6% 36,7% 100,0 97,6 103,2 103,7
Special items 4,0% -7,3% -0,5% -0,7% 100,0 -175,5 -12,2 -15,6
Special items (Profit from JV and assoc) -0,3% -0,1% 0,3% 0,0% 100,0 28,9 -101,3 -13,2
EBITDA 36,9% 26,2% 36,4% 36,1% 100,0 68,3 92,1 91,6
Depr., amort. and imp. losses -20,7% -16,9% -17,9% -20,5% 100,0 78,7 80,7 92,7
EBIT 16,2% 9,3% 18,5% 15,6% 100,0 55,1 106,7 90,1
Tax on operating profit -0,6% -3,5% -5,1% -4,4% N/A N/A N/A N/A
NOPAT 15,6% 5,7% 13,5% 11,2% 100,0 35,5 80,5 67,1
NFE before tax -9,9% -7,6% -7,9% -5,7% 100,0 74,1 74,7 54,1
Tax on net finansial expenses 2,5% 1,9% 2,0% 1,4% 100,0 74,1 74,7 54,1
Net Earnings 8,2% 0,0% 7,5% 6,9% 100,0 0,4 85,8 78,9
Table A III‐VII Common‐size and index, Balance Sheet
Common-size Index
2007 2008 2009 2010 2007 2008 2009 2010
ASSETS
Intangible and tangible assets 104,4% 110,8% 112,4% 113,8% 100,0 98,9 90,8 65,7
Intangible assets 75,5% 78,1% 80,1% 78,7% 100,0 96,4 89,5 62,9
Property, plant and equipment 28,9% 32,8% 32,3% 35,1% 100,0 105,5 94,2 73,2
Net working capital -4,4% -10,8% -12,4% -13,8% 100,0 228,8 237,5 188,5 OPERATING ASSETS
Investments in JV and associates 8,0% 0,3% 0,3% 0,3% 100,0 2,9 2,8 2,3
Other investments 0,0% 0,0% 0,0% 0,0% 100,0 128,6 100,0 100,0
Deferred tax assets 0,2% 0,1% 0,1% 0,1% 100,0 52,0 41,6 52,8
Receivables 0,1% 0,1% 0,4% 0,5% 100,0 101,1 243,2 253,7
Prepaid expenses 0,2% 0,3% 0,4% 0,6% 100,0 143,5 165,3 183,7
Inventories 0,9% 0,7% 0,5% 0,7% 100,0 76,3 50,4 47,9
Receivables 10,3% 12,1% 10,9% 10,0% 100,0 109,3 89,2 58,1
Income tax receivables 0,0% 0,0% 0,0% 0,0% 100,0 64,3 14,3 0,0
Prepaid expenses 0,9% 1,1% 1,1% 1,4% 100,0 118,0 101,2 92,5
Pension assets 7,2% 10,3% 12,3% 16,9% 100,0 133,4 144,3 142,1
OPERATING LIABILITIES
Deferred tax liabilities -10,4% -10,9% -11,8% -14,7% 100,0 96,9 95,4 84,6
Provisions -1,7% -2,0% -2,5% -2,2% 100,0 106,3 119,1 76,4
Deferred income -1,3% -2,0% -2,0% -2,2% 100,0 141,2 130,2 101,6
Trade and other payables -11,0% -12,7% -12,9% -13,9% 100,0 107,6 99,1 76,0
Income tax payable -2,5% -1,2% -2,1% -1,9% 100,0 44,2 68,4 46,4
Deferred income -4,0% -5,0% -5,1% -6,9% 100,0 116,8 107,8 104,0
Provisions -0,8% -1,6% -1,6% -2,4% 100,0 184,8 164,2 178,9
Pension liabilities -0,4% -0,5% -0,4% -0,2% 100,0 123,3 82,4 24,7
Invested capital (Net operating assets) 100,0% 100,0% 100,0% 100,0% 100,0 93,2 84,3 60,3
LIABILITIES
Total equity 43,9% 46,3% 43,8% 47,1% 100,0 98,4 84,1 64,7
Net interest bearing debt 56,1% 53,7% 56,2% 52,9% 100,0 89,1 84,5 56,8 INTEREST BEARING LIABILITIES
Loans 62,3% 54,2% 49,5% 53,0% 100,0 81,1 67,0 51,3
Derivative financial instruments 0,2% 0,0% 0,0% 0,0% 100,0 16,3 0,0 0,0
Loans 5,7% 6,9% 6,1% 0,5% 100,0 113,7 91,3 5,2
Derivative financial instruments 0,4% 2,9% 1,9% 1,5% 100,0 643,3 386,2 211,2
INTEREST BEARING ASSETS
Derivative financial instruments -0,1% 0,0% 0,0% 0,0% 100,0 28,2 0,0 0,0
Cash -11,3% -9,8% -1,2% -1,9% 100,0 81,0 9,2 10,0
Derivative financial instruments -1,1% -0,5% -0,1% -0,2% 100,0 47,6 6,3 11,7 Invested capital (Equity + NIBD) 100,0% 100,0% 100,0% 100,0% 100,0 93,2 84,3 60,3
Table A III‐VIII Revenue split by business units, and total revenue growth
134DKKm 2006 2007 2008 2009 2010
TDC Consumer 10.115 9.901 9.711 9.389
TDC Business 8.864 8.546 7.926 7.546
TDC Nordic 3.863 3.854 3.515 4.087
Operations & Wholesale 3.601 2.748 2.582 2.550
YouSee 2.829 3.188 3.597 4.012
Other, incl. eliminations -1.321 -1.320 -1.252 -1.417
Total 29.200 27.951 26.917 26.079 26.167
Revenue growth -4,28% -3,70% -3,11% 0,34%
Figure A III‐I TDC Consumer revenue split by product
135
134 TDC A/S. (2011). TDC Fact Sheet 2010.
135 TDC A/S. (2011). TDC Fact Sheet 2010.
3.414 3.094 2.675 2.341 4.082 4.207 4.418 4.449 1.589 1.621 1.734 1.632
14 55 166 374
1.016 924 718 593
0 2.000 4.000 6.000 8.000 10.000 12.000
2007 2008 2009 2010
Other
TV
Internet and network Mobility services Landline telephony
Figure A III‐II TDC Business revenue split by product
136
Figure A III‐III TDC Nordic revenue split by product
137
136 TDC A/S. (2011). TDC Fact Sheet 2010.
137 TDC A/S. (2011). TDC Fact Sheet 2010.
2.218 2.072 1.968 1.826
2.308 2.346 2.251 2.290
2.604 2.569 2.526 2.307
1.734 1.559
1.181
1.123
0 1.000 2.000 3.000 4.000 5.000 6.000 7.000 8.000 9.000 10.000
2007 2008 2009 2010
Other
Internet and network Mobility services Landline telephony
1.038 937 852 984
69 62 106 190
1.395 1.424 1.385
1.523 1.361 1.431
1.172
1.390
- 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 4.500
2007 2008 2009 2010
Other
Internet and network
Mobility services
Landline telephony
Figure A III‐IV YouSee revenue split by product
138
Figure A III‐V Operations & Wholesale revenue split by product
139
138 TDC A/S. (2011). TDC Fact Sheet 2010.
139 TDC A/S. (2011). TDC Fact Sheet 2010.
1.912 2.211 2.433 2.646 90
100 150 197
582
640
725
817 47
54
72
98
198
183
217
254
- 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 4.500
2007 2008 2009 2010
Other
Landline telephony Internet services
YouSee Plus
YouSee Clear
1.489
990
599 550 652
551
658 590 983
982
945 941 477
225 380 469
- 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000
2007 2008 2009 2010
Other
Internet and network Mobility services Landline telephony
IV. Forecasting
Table A IV‐I Most Likely Scenario
Forecast assaumptioans
Historical period Explicit forecasting period Terminal
Assumptions 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E Revenue Growth I -3,7% -3,1% 0,3% -0,89% -0,98% -0,73% -0,51% -0,20% 0,07% 0,47% 0,80% 0,96% 0,99% 0,27%
TDC Consumer -2,1% -1,9% -3,3% -3,5% -4,0% -3,5% -3,0% -2,5% -2,0% -1,0% 0,0% 0,5% 1,0% 0,0%
TDC Business -3,6% -7,3% -4,8% -3,5% -3,0% -2,5% -2,0% -1,0% 0,0% 0,5% 0,5% 0,5% 0,0% 0,0%
TDC Nordic -0,2% -8,8% 16,3% 3,0% 2,5% 2,4% 2,4% 2,3% 2,3% 2,0% 2,0% 2,0% 2,0% 2,0%
YouSee 12,7% 12,8% 11,5% 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 2,0% 2,0% 2,0% 2,0% 0,0%
Oper. & Wholesale -23,7% -6,0% -1,2% -1,7% -1,5% -1,5% -1,5% -1,5% -1,5% -1,5% -1,5% -1,5% -1,5% -1,5%
Other incl. elimin. -0,1% -5,2% 13,2% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0%
II TC and COGS 26,9% 24,7% 25,8% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0%
III Other external exp. 18,2% 18,1% 17,3% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5%
IV Wages, salaries and pension costs (% of revenue)
19,3% 17,6% 16,5% 16,4% 16,3% 16,2% 16,1% 16% 16% 16% 16% 16% 16% 16%
V Other inc and (exp) 1,7% 0,9% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7%
Profit from JV and ass. 0,8% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0%
VI Restructuring costs 4,6% 3,8% 4,5% 4,0% 4,0% 3,0% 3,0% 3,0% 3,0% 3,0% 3,0% 3,0% 3,0% 3,0%
Special items
ex-crestructuring costs (7,4%) (0,2%) (0,6%) 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0%
VII Depr/(Int+tang.) 6,0% 6,7% 10,6% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0%
VIII Interest rate (av NIBD) 5,3% 5,8% 5,1% 6,0% 6,0% 6,0% 6,0% 6,0% 6,0% 6,0% 6,0% 6,0% 6,0% 6,0%
IX Tax rate N/A N/A N/A 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0%
X (Int. + tang. Ass.)/Rev 281% 267% 192% 195% 195% 195% 195% 195% 195% 195% 195% 195% 195% 195%
XI NWC/Revenue 27% 29% 23% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
XII NIBD/INV CAP 54% 56% 53% 53% 53% 53% 53% 53% 53% 53% 53% 53% 53% 53%
Table A IV‐II Best Case Scenario
Forecast assaumptioans
Historical period Explicit forecasting period Terminal
Assumptions 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E Revenue Growth I -3,7% -3,1% 0,3% 0,05% 1,00% 1,00% 1,50% 1,50% 2,00% 2,00% 2,00% 2,00% 2,00% 2,00%
II TC and COGS 26,9% 24,7% 25,8% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0%
III Other external exp. 18,2% 18,1% 17,3% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5% 16,5%
IV Wages, salaries and pension costs (% of revenue)
19,3% 17,6% 16,5% 16,4% 16,3% 16,2% 16,1% 16,0% 16,0% 16,0% 16,0% 16,0% 16,0% 16,0%
V Other inc and (exp) 1,7% 0,9% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7% 0,7%
Profit from JV and ass. 0,8% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0%
VI Restructuring costs 4,6% 3,8% 4,5% 4,0% 4,0% 1,0% 1,0% 1,0% 1,0% 1,0% 1,0% 1,0% 1,0% 1,0%
Special items
ex-crestructuring costs (7,4%) (0,2%) (0,6%) 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0%
VII Depr/(Int+tang.) 6,0% 6,7% 10,6% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0% 9,0%
VIII Interest rate (av NIBD) 5,3% 5,8% 5,1% 5,2% 5,2% 5,2% 5,2% 5,2% 5,2% 5,2% 5,2% 5,2% 5,2% 5,2%
IX Tax rate N/A N/A N/A 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0% 26,0%
X (Int. + tang. Ass.)/Rev 281% 267% 192% 190,0% 190,0% 190,0% 190,0% 190,0% 190,0% 190,0% 190,0% 190,0% 190,0% 190,0%
XI NWC/Revenue 27% 29% 23% 25,0% 25,0% 25,0% 25,0% 25,0% 25,0% 25,0% 25,0% 25,0% 25,0% 25,0%
XII NIBD/INV CAP 54% 56% 53% 53,0% 53,0% 53,0% 53,0% 53,0% 53,0% 53,0% 53,0% 53,0% 53,0% 53,0%
Table A IV‐III Worst Case Scenario
Forecast assaumptioans
Historical period Explicit forecasting period Terminal
Assumptions 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E Revenue Growth I -3,7% -3,1% 0,3% 0,05% -1,00% -1,00% -1,00% -0,50% -0,50% -0,50% -0,50% -0,50% -0,50% -0,50%
II TC and COGS 26,9% 24,7% 25,8% 27,00% 27,00% 27,00% 27,00% 27,00% 27,00% 27,00% 27,00% 27,00% 27,00% 27,00%
III Other external exp. 18,2% 18,1% 17,3% 16,50% 16,50% 16,50% 16,50% 16,50% 16,50% 16,50% 16,50% 16,50% 16,50% 16,50%
IV Wages, salaries and pension costs (% of revenue)
19,3% 17,6% 16,5% 16,40% 16,30% 16,20% 16,10% 16,00% 16,00% 16,00% 16,00% 16,00% 16,00% 16,00%
V Other inc and (exp) 1,7% 0,9% 0,7% 0,70% 0,70% 0,70% 0,70% 0,70% 0,70% 0,70% 0,70% 0,70% 0,70% 0,70%
Profit from JV and ass. 0,8% 0,0% 0,0% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00%
VI Restructuring costs 4,6% 3,8% 4,5% 4,00% 4,00% 3,00% 3,00% 3,00% 3,00% 3,00% 3,00% 3,00% 3,00% 3,00%
Special items
ex-crestructuring costs (7,4%) (0,2%) (0,6%) 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00%
VII Depr/(Int+tang.) 6,0% 6,7% 10,6% 9,00% 9,00% 9,00% 9,00% 9,00% 9,00% 9,00% 9,00% 9,00% 9,00% 9,00%
VIII Interest rate (av NIBD) 5,3% 5,8% 5,1% 6,00% 6,00% 6,00% 6,00% 6,00% 6,00% 6,00% 6,00% 6,00% 6,00% 6,00%
IX Tax rate N/A N/A N/A 26,00% 26,00% 26,00% 26,00% 26,00% 26,00% 26,00% 26,00% 26,00% 26,00% 26,00%
X (Int. + tang. Ass.)/Rev 281% 267% 192% 195,00
% 200,00
% 205,00
% 210,00
% 215,00
% 220,00
% 225,00
% 230,00
% 235,00
% 235,00
% 235,00%
XI NWC/Revenue 27% 29% 23% 25,00% 25,00% 25,00% 25,00% 25,00% 25,00% 25,00% 25,00% 25,00% 25,00% 25,00%
XII NIBD/INV CAP 54% 56% 53% 53,00% 53,00% 53,00% 53,00% 53,00% 53,00% 53,00% 53,00% 53,00% 53,00% 53,00%
Table A IV‐IV Pro forma statements, most likely scenario
Historical period Explicit forecasting period Terminal
2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Income
Statement -2 -1 0 1 2 3 4 5 6 7 8 9 10 11
Revenue 26.917 26.079 26.167 25.933 25.680 25.492 25.361 25.309 25.326 25.446 25.648 25.894 26.149 26.219 TC and COGS -7.239 -6.444 -6.747 -6.743 -6.677 -6.628 -6.594 -6.580 -6.585 -6.616 -6.668 -6.732 -6.799 -6.817 Gross profit 19.678 19.635 19.420 19.191 19.003 18.864 18.767 18.729 18.741 18.830 18.979 19.161 19.350 19.402 Other external exp. -4.909 -4.731 -4.517 -4.279 -4.237 -4.206 -4.185 -4.176 -4.179 -4.199 -4.232 -4.272 -4.315 -4.326 Wages and salaries -5.185 -4.598 -4.327 -4.253 -4.186 -4.130 -4.083 -4.049 -4.052 -4.071 -4.104 -4.143 -4.184 -4.195
Other inc and exp. 470 230 196 182 180 178 178 177 177 178 180 181 183 184
Profit from JV 222 -1 3 0 0 0 0 0 0 0 0 0 0 0
Restructuring costs -1.238 -982 -1.172 -1.037 -1.027 -765 -761 -759 -760 -763 -769 -777 -784 -787
Special items -1.996 -60 -165 0 0 0 0 0 0 0 0 0 0 0
EBITDA 7.042 9.493 9.438 9.803 9.733 9.942 9.916 9.921 9.928 9.975 10.054 10.150 10.250 10.278
Depr., amort. and il. -4.547 -4.659 -5.356 -4.551 -4.507 -4.474 -4.451 -4.442 -4.445 -4.466 -4.501 -4.544 -4.589 -4.601
EBIT 2.495 4.834 4.082 5.251 5.226 5.468 5.465 5.479 5.483 5.509 5.553 5.606 5.661 5.676
Tax on EBIT -950 -1.325 -1.156 -1.365 -1.359 -1.422 -1.421 -1.425 -1.426 -1.432 -1.444 -1.458 -1.472 -1.476
NOPAT 1.545 3.509 2.926 3.886 3.867 4.046 4.044 4.055 4.057 4.077 4.109 4.148 4.189 4.200
NFE before tax -2.048 -2.064 -1.496 -1.402 -1.395 -1.383 -1.375 -1.370 -1.369 -1.372 -1.381 -1.393 -1.407 -1.415
Tax on NFE 512 516 374 365 363 360 357 356 356 357 359 362 366 368
Net Earnings 9 1.961 1.804 2.848 2.835 3.023 3.027 3.041 3.045 3.061 3.087 3.117 3.148 3.153
Earnings (disc oper.) 548 422 1.203 0 0 0 0 0 0 0 0 0 0 0
Other compr. Income -665 1.075 -371 0 0 0 0 0 0 0 0 0 0 0
Balance
Sheet -2 -1 0 1 2 3 4 5 6 7 8 9 10 11
Int. and tang assets 75.757 69.548 50.330 50.570 50.075 49.709 49.454 49.353 49.385 49.619 50.013 50.492 50.990 51.126
Net working capital -7.398 -7.679 -6.094 -6.483 -6.420 -6.373 -6.340 -6.327 -6.331 -6.361 -6.412 -6.473 -6.537 -6.555
Inv. Capital (NOA) 68.359 61.869 44.236 44.087 43.655 43.336 43.113 43.025 43.054 43.257 43.601 44.019 44.453 44.572
Total equity 31.680 27.078 20.855 20.721 20.518 20.368 20.263 20.222 20.235 20.331 20.493 20.689 20.893 20.949
Total equity, primo 32.210 31.680 27.078 20.855 20.721 20.518 20.368 20.263 20.222 20.235 20.331 20.493 20.689 20.893 + compr. Income -108 3.458 2.636 2.656 2.645 2.834 2.839 2.854 2.857 2.873 2.897 2.926 2.955 2.959 Trans. with owners -422 -8.060 -8.859 -2.791 -2.847 -2.984 -2.944 -2.895 -2.844 -2.777 -2.736 -2.730 -2.751 -2.903 Total Equity, ultimo 31.680 27.078 20.855 20.721 20.518 20.368 20.263 20.222 20.235 20.331 20.493 20.689 20.893 20.949
NIBD 36.679 34.791 23.381 23.366 23.137 22.968 22.850 22.803 22.818 22.926 23.109 23.330 23.560 23.623
Inv ca (Equ + NIBD) 68.359 61.869 44.236 44.087 43.655 43.336 43.113 43.025 43.054 43.257 43.601 44.019 44.453 44.572
Cash flow
statement -2 -1 0 1 2 3 4 5 6 7 8 9 10 11
NOPAT 1.545 3.509 2.926 3.886 3.867 4.046 4.044 4.055 4.057 4.077 4.109 4.148 4.189 4.200
Depr., amor and il 4.547 4.659 5.356 4.551 4.507 4.474 4.451 4.442 4.445 4.466 4.501 4.544 4.589 4.601
+/- ΔNWC 4.165 281 -1.585 389 -63 -47 -33 -13 4 30 51 61 64 17
+/- Net investments -3.712 1.550 13.862 -4.791 -4.012 -4.107 -4.196 -4.341 -4.477 -4.699 -4.896 -5.023 -5.087 -4.737
FCFF 6.545 9.999 20.559 4.036 4.298 4.366 4.267 4.143 4.029 3.873 3.765 3.731 3.755 4.082
+/- New net fin. obl. -4.470 -1.888 -11.410 -15 -228 -169 -118 -47 15 108 182 221 230 63
- NFE after tax -1.536 -1.548 -1.122 -1.038 -1.032 -1.024 -1.017 -1.014 -1.013 -1.016 -1.022 -1.031 -1.041 -1.047
FCFE 539 6.563 8.027 2.983 3.037 3.173 3.132 3.083 3.031 2.965 2.925 2.921 2.944 3.097
- Dividends -636 -8.071 -9.000 -2.983 -3.037 -3.173 -3.132 -3.083 -3.031 -2.965 -2.925 -2.921 -2.944 -3.097
Of which own 1 141 0 0 0 0 0 0 0 0 0 0 0
Capital infusion 213 11
Table A IV‐V Best case
Historical period Explicit forecasting period Terminal
2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Income
Statement -2 -1 0 1 2 3 4 5 6 7 8 9 10 11
Revenue 26.917 26.079 26.167 26.179 26.441 26.705 27.106 27.513 28.063 28.624 29.197 29.781 30.376 30.984 TC and COGS -7.239 -6.444 -6.747 -6.807 -6.875 -6.943 -7.048 -7.153 -7.296 -7.442 -7.591 -7.743 -7.898 -8.056 Gross profit 19.678 19.635 19.420 19.373 19.566 19.762 20.058 20.359 20.767 21.182 21.605 22.038 22.478 22.928 Other external exp. -4.909 -4.731 -4.517 -4.320 -4.363 -4.406 -4.472 -4.540 -4.630 -4.723 -4.817 -4.914 -5.012 -5.112 Wages and salaries -5.185 -4.598 -4.327 -4.293 -4.310 -4.326 -4.364 -4.402 -4.490 -4.580 -4.671 -4.765 -4.860 -4.957
Other inc and exp. 470 230 196 183 185 187 190 193 196 200 204 208 213 217
Profit from JV 222 -1 3 0 0 0 0 0 0 0 0 0 0 0
Restructuring costs -1.238 -982 -1.172 -1.047 -1.058 -267 -271 -275 -281 -286 -292 -298 -304 -310
Special items -1.996 -60 -165 0 0 0 0 0 0 0 0 0 0 0
EBITDA 7.042 9.493 9.438 9.896 10.021 10.949 11.141 11.335 11.562 11.793 12.029 12.270 12.515 12.765 Depr., amort. and il. -4.547 -4.659 -5.356 -4.477 -4.521 -4.567 -4.635 -4.705 -4.799 -4.895 -4.993 -5.092 -5.194 -5.298
EBIT 2.495 4.834 4.082 5.419 5.500 6.383 6.505 6.631 6.763 6.898 7.036 7.177 7.321 7.467
Tax on EBIT -950 -1.325 -1.156 -1.409 -1.430 -1.659 -1.691 -1.724 -1.758 -1.794 -1.829 -1.866 -1.903 -1.941
NOPAT 1.545 3.509 2.926 4.010 4.070 4.723 4.814 4.907 5.005 5.105 5.207 5.311 5.417 5.526
NFE before tax -2.048 -2.064 -1.496 -1.203 -1.196 -1.208 -1.224 -1.242 -1.264 -1.289 -1.315 -1.341 -1.368 -1.395
Tax on NFE 512 516 374 313 311 314 318 323 329 335 342 349 356 363
Net Earnings 9 1.961 1.804 3.120 3.184 3.829 3.909 3.988 4.070 4.151 4.234 4.319 4.405 4.493
Earnings (disc oper.) 548 422 1.203 0 0 0 0 0 0 0 0 0 0 0
Other compr. Income -665 1.075 -371 0 0 0 0 0 0 0 0 0 0 0
Balance
Sheet -2 -1 0 1 2 3 4 5 6 7 8 9 10 11
Int. and tang assets 75.757 69.548 50.330 49.741 50.238 50.740 51.501 52.274 53.319 54.386 55.474 56.583 57.715 58.869
Net working capital -7.398 -7.679 -6.094 -6.545 -6.610 -6.676 -6.777 -6.878 -7.016 -7.156 -7.299 -7.445 -7.594 -7.746
Inv. Capital (NOA) 68.359 61.869 44.236 43.196 43.628 44.064 44.725 45.396 46.304 47.230 48.174 49.138 50.121 51.123
-553
Total equity 31.680 27.078 20.855 20.302 20.505 20.710 21.021 21.336 21.763 22.198 22.642 23.095 23.557 24.028
Total equity, primo 32.210 31.680 27.078 20.855 20.302 20.505 20.710 21.021 21.336 21.763 22.198 22.642 23.095 23.557 + compr. Income -108 3.458 2.636 3.120 3.184 3.829 3.909 3.988 4.070 4.151 4.234 4.319 4.405 4.493 Trans. with owners -422 -8.060 -8.859 -3.673 -2.981 -3.624 -3.598 -3.672 -3.643 -3.716 -3.790 -3.866 -3.943 -4.022 Total Equity, ultimo 31.680 27.078 20.855 20.302 20.505 20.710 21.021 21.336 21.763 22.198 22.642 23.095 23.557 24.028
NIBD 36.679 34.791 23.381 22.894 23.123 23.354 23.704 24.060 24.541 25.032 25.532 26.043 26.564 27.095
Inv ca (Equ + NIBD) 68.359 61.869 44.236 43.196 43.628 44.064 44.725 45.396 46.304 47.230 48.174 49.138 50.121 51.123
Cash flow
statement -2 -1 0 1 2 3 4 5 6 7 8 9 10 11
NOPAT 1.545 3.509 2.926 4.010 4.070 4.723 4.814 4.907 5.005 5.105 5.207 5.311 5.417 5.526
Depr., amor and il 4.547 4.659 5.356 4.477 4.521 4.567 4.635 4.705 4.799 4.895 4.993 5.092 5.194 5.298
+/- ΔNWC 4.165 281 -1.585 451 65 66 100 102 138 140 143 146 149 152
+/- Net investments -3.712 1.550 13.862 -3.887 -5.019 -5.069 -5.396 -5.477 -5.844 -5.961 -6.080 -6.202 -6.326 -6.452
FCFF 6.545 9.999 20.559 5.050 3.638 4.287 4.153 4.236 4.097 4.179 4.262 4.348 4.435 4.523
+/- New net fin. obl. -4.470 -1.888 -11.410 -487 229 231 350 356 481 491 501 511 521 531
- NFE after tax -1.536 -1.548 -1.122 -890 -885 -894 -905 -919 -935 -954 -973 -992 -1.012 -1.032
FCFE 539 6.563 8.027 3.673 2.981 3.624 3.598 3.672 3.643 3.716 3.790 3.866 3.943 4.022
- Dividends -636 -8.071 -9.000 -3.673 -2.981 -3.624 -3.598 -3.672 -3.643 -3.716 -3.790 -3.866 -3.943 -4.022
Of which own 1 141 0 0 0 0 0 0 0 0 0 0 0
Capital infusion 213 11
Table A IV‐VI Worst case
Historical period Explicit forecasting period Terminal
2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Income
Statement -2 -1 0 1 2 3 4 5 6 7 8 9 10 11
Revenue 26.917 26.079 26.167 26.179 25.917 25.658 25.402 25.275 25.148 25.023 24.897 24.773 24.649 24.526 TC and COGS -7.239 -6.444 -6.747 -7.068 -6.998 -6.928 -6.858 -6.824 -6.790 -6.756 -6.722 -6.689 -6.655 -6.622 Gross profit 19.678 19.635 19.420 19.111 18.920 18.731 18.543 18.451 18.358 18.266 18.175 18.084 17.994 17.904 Other external exp. -4.909 -4.731 -4.517 -4.320 -4.276 -4.234 -4.191 -4.170 -4.149 -4.129 -4.108 -4.088 -4.067 -4.047 Wages and salaries -5.185 -4.598 -4.327 -4.293 -4.225 -4.157 -4.090 -4.044 -4.024 -4.004 -3.984 -3.964 -3.944 -3.924
Other inc and exp. 470 230 196 183 181 180 178 177 176 175 174 173 173 172
Profit from JV 222 -1 3 0 0 0 0 0 0 0 0 0 0 0
Restructuring costs -1.238 -982 -1.172 -1.047 -1.037 -770 -762 -758 -754 -751 -747 -743 -739 -736
Special items -1.996 -60 -165 0 0 0 0 0 0 0 0 0 0 0
EBITDA 7.042 9.493 9.438 9.634 9.564 9.750 9.678 9.655 9.607 9.559 9.511 9.463 9.416 9.369
Depr., amort. and il. -4.547 -4.659 -5.356 -4.594 -4.665 -4.734 -4.801 -4.891 -4.979 -5.067 -5.154 -5.239 -5.213 -5.187
EBIT 2.495 4.834 4.082 5.040 4.898 5.016 4.877 4.764 4.627 4.492 4.357 4.224 4.203 4.182
Tax on EBIT -950 -1.325 -1.156 -1.310 -1.274 -1.304 -1.268 -1.239 -1.203 -1.168 -1.133 -1.098 -1.093 -1.087
NOPAT 1.545 3.509 2.926 3.729 3.625 3.712 3.609 3.526 3.424 3.324 3.224 3.126 3.110 3.094
NFE before tax -2.048 -2.064 -1.496 -1.409 -1.429 -1.455 -1.482 -1.511 -1.543 -1.575 -1.607 -1.639 -1.650 -1.642
Tax on NFE 512 516 374 366 371 378 385 393 401 410 418 426 429 427
Net Earnings 9 1.961 1.804 2.687 2.568 2.635 2.513 2.408 2.282 2.158 2.035 1.913 1.889 1.879
Earnings (disc oper.) 548 422 1.203 0 0 0 0 0 0 0 0 0 0 0
Other compr. Income -665 1.075 -371 0 0 0 0 0 0 0 0 0 0 0
Balance
Sheet -2 -1 0 1 2 3 4 5 6 7 8 9 10 11
Int. and tang assets 75.757 69.548 50.330 51.049 51.835 52.599 53.344 54.341 55.326 56.301 57.264 58.216 57.925 57.636
Net working capital -7.398 -7.679 -6.094 -6.545 -6.479 -6.415 -6.350 -6.319 -6.287 -6.256 -6.224 -6.193 -6.162 -6.131
Inv. Capital (NOA) 68.359 61.869 44.236 44.505 45.356 46.185 46.993 48.022 49.039 50.045 51.040 52.023 51.763 51.504
62
Total equity 31.680 27.078 20.855 20.917 21.317 21.707 22.087 22.570 23.048 23.521 23.989 24.451 24.329 24.207
Total equity, primo 32.210 31.680 27.078 20.855 20.917 21.317 21.707 22.087 22.570 23.048 23.521 23.989 24.451 24.329 + compr. Income -108 3.458 2.636 2.687 2.568 2.635 2.513 2.408 2.282 2.158 2.035 1.913 1.889 1.879 Trans. with owners -422 -8.060 -8.859 -2.624 -2.168 -2.245 -2.133 -1.924 -1.804 -1.685 -1.567 -1.451 -2.011 -2.001 Total Equity, ultimo 31.680 27.078 20.855 20.917 21.317 21.707 22.087 22.570 23.048 23.521 23.989 24.451 24.329 24.207
NIBD 36.679 34.791 23.381 23.587 24.038 24.478 24.906 25.452 25.991 26.524 27.051 27.572 27.434 27.297
Inv ca (Equ + NIBD) 68.359 61.869 44.236 44.505 45.356 46.185 46.993 48.022 49.039 50.045 51.040 52.023 51.763 51.504
Cash flow
statement -2 -1 0 1 2 3 4 5 6 7 8 9 10 11
NOPAT 1.545 3.509 2.926 3.729 3.625 3.712 3.609 3.526 3.424 3.324 3.224 3.126 3.110 3.094
Depr., amor and il 4.547 4.659 5.356 4.594 4.665 4.734 4.801 4.891 4.979 5.067 5.154 5.239 5.213 5.187
+/- ΔNWC 4.165 281 -1.585 451 -65 -65 -64 -32 -32 -31 -31 -31 -31 -31
+/- Net investments -3.712 1.550 13.862 -5.314 -5.451 -5.499 -5.545 -5.888 -5.965 -6.042 -6.117 -6.192 -4.922 -4.898
FCFF 6.545 9.999 20.559 3.461 2.774 2.883 2.801 2.497 2.407 2.318 2.230 2.142 3.370 3.353
+/- New net fin. obl. -4.470 -1.888 -11.410 206 451 440 428 545 539 533 527 521 -138 -137
- NFE after tax -1.536 -1.548 -1.122 -1.043 -1.057 -1.077 -1.096 -1.118 -1.142 -1.166 -1.189 -1.213 -1.221 -1.215
FCFE 539 6.563 8.027 2.624 2.168 2.245 2.133 1.924 1.804 1.685 1.567 1.451 2.011 2.001
- Dividends -636 -8.071 -9.000 -2.624 -2.168 -2.245 -2.133 -1.924 -1.804 -1.685 -1.567 -1.451 -2.011 -2.001
Of which own 1 141 3.729 3.625 3.712 3.609 3.526 3.424 3.324 3.224 3.126 3.110 3.094
Capital infusion 213 11
Table A IV‐VII Financial ratios, pro forma
2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E Most likely
ROE ML 13,70% 13,75% 14,79% 14,90% 15,02% 15,05% 15,09% 15,12% 15,14% 15,14% 15,07%
ROIC 8,80% 8,81% 9,30% 9,36% 9,41% 9,43% 9,45% 9,46% 9,47% 9,47% 9,44%
PM 15,0% 15,1% 15,9% 15,9% 16,0% 16,0% 16,0% 16,0% 16,0% 16,0% 16,0%
AT 0,59x 0,59x 0,59x 0,59x 0,59x 0,59x 0,59x 0,59x 0,59x 0,59x 0,59x
r -4,4% -4,4% -4,4% -4,4% -4,4% -4,4% -4,4% -4,4% -4,4% -4,4% -4,4%
Leverage 1,12 1,13 1,13 1,13 1,13 1,13 1,13 1,13 1,13 1,13 1,13
Best case
ROE BC 15,07% 15,61% 18,58% 18,73% 18,83% 18,89% 18,89% 18,89% 18,89% 18,89% 18,89%
ROIC 9,13% 9,37% 10,77% 10,84% 10,89% 10,92% 10,92% 10,92% 10,92% 10,92% 10,92%
PM 15,3% 15,4% 17,7% 17,8% 17,8% 17,8% 17,8% 17,8% 17,8% 17,8% 17,8%
AT 0,60x 0,61x 0,61x 0,61x 0,61x 0,61x 0,61x 0,61x 0,61x 0,61x 0,61x
r -3,8% -3,8% -3,8% -3,8% -3,8% -3,8% -3,8% -3,8% -3,8% -3,8% -3,8%
Leverage 1,12 1,13 1,13 1,13 1,13 1,13 1,13 1,13 1,13 1,13 1,13
Worst case
ROE WC 12,78% 12,16% 12,25% 11,48% 10,78% 10,01% 9,27% 8,57% 7,90% 7,74% 7,74%
ROIC 8,37% 8,07% 8,11% 7,75% 7,42% 7,06% 6,71% 6,38% 6,07% 5,99% 5,99%
PM 14,2% 14,0% 14,5% 14,2% 13,9% 13,6% 13,3% 13,0% 12,6% 12,6% 12,6%
AT 0,59x 0,58x 0,56x 0,55x 0,53x 0,52x 0,51x 0,49x 0,48x 0,47x 0,47x
r -4,4% -4,4% -4,4% -4,4% -4,4% -4,4% -4,4% -4,4% -4,4% -4,4% -4,4%
Leverage 1,12 1,13 1,13 1,13 1,13 1,13 1,13 1,13 1,13 1,13 1,13
V. Valuation
Table A V‐I Zero‐coupon on 10‐year Danish Government Bond
140’10-10 ’10-11 ’10-12 ’11-01 ’11-02 ’11-03 ’11-04 ’11-05 ’11-06 ’11-07 ’11-08 ’11-09
End of month 2,613 2,822 2,981 3,151 3,173 3,39 3,27 3,03 2,98 2,8 2,35 2,06
Average 2,885
Table A V‐II Valuation – Best case scenario
Valuation of TDC as of 30th September 2011
Joint input values
re 8,28%
G 2%
Number of sshares, millions 825
RI model 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
NOPAT 3.120 3.184 3.829 3.909 3.988 4.070 4.151 4.234 4.319 4.405 4.493
Equity, primo 20.855 20.302 20.505 20.71
0 21.02
1 21.33
6
21.763 22.198 22.64 2
23.095 23.55
COC 1.726 1.680 1.697 1.714 1.739 1.766 1.801 1.837 1.874 1.911 1.949 7
Residual income 1.394 1.504 2.132 2.195 2.248 2.304 2.350 2.397 2.445 2.494 2.544
PV of RI 1.288 1.283 1.680 1.597 1.511 1.430 1.347 1.269 1.195 1.126
Book value of equity, primo 20.855 PV of RI in forecast horizon 13.726 PV of RI in terminal period 18.307
Estimated market value of Equity0 52.888 Price per share 01/01/2011 64,106 DKK
DCF model 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
FCFE 3.673 2.981 3.624 3.598 3.672 3.643 3.716 3.790 3.866 3.943 4.022
PV of FCFE 3.392 2.543 2.855 2.618 2.468 2.261 2.130 2.006 1.890 1.781
PV of FCFE in forecast horizon 23.944
PV of terminal period 28.944
Estimated market value of Equity0 52.888 Price per share 01/01/2011 64,106 DKK
Discounting forward
Share price 30/09/2011 64,106*((1+8,28%)^(273/365))= Price, 30/09/2011 68,034 DKK
140 Danmarks Nationalbank. (2011). Nationalbankens Statistikbank. Retrieved November 2011 from Rentestatistikker : http://nationalbanken.statistikbank.dk/statbank5a/default.asp?w=1280
Table A V‐III Valuation – Worst case scenario
Valuation of TDC as of 30th September 2011
Joint input values
re 8,28%
G -0,5%
Number of sshares, millions 825
RI model 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
NOPAT 2.687 2.568 2.635 2.513 2.408 2.282 2.158 2.035 1.913 1.889 1.879
Equity, primo 20.85
5
20.917 21.317 21.70 7
22.08 7
22.57 0
23.048 23.521 23.98 9
24.451 24.32
COC 1.726 1.731 1.764 1.796 1.828 1.868 1.907 1.946 1.985 2.023 2.013 9
Residual income 961 837 871 716 580 414 251 88 -72 -134 -134
PV of RI 887 714 686 521 390 257 144 47 -35 -61
Book value of equity, primo 20.85 PV of RI in forecast horizon 3.550 5 PV of RI in terminal period -689 Estimated market value of Equity0 23.71
6
Price per share 01/01/2011 28,747 DKK
DCF model 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
FCFE 2.624 2.168 2.245 2.133 1.924 1.804 1.685 1.567 1.451 2.011 2.001
PV of FCFE 2.424 1.849 1.769 1.552 1.293 1.120 966 830 709 908
PV of FCFE in forecast horizon 13.41 PV of terminal period 10.299 Estimated market value of Equity0 23.717 6
Price per share 01/01/2011 28,747 DKK
Discounting forward
Share price 30/09/2011 28,747*((1+8,28%)^(273/365))= Price, 30/09/2011 30,508 DKK
Equation A V‐I Residual Income to Equity ‐ two stage model
€
Market value of Equity0 =Book value of Equity0+ RIt
(1+re)t + RIn+1 re−g⋅ 1
(1+re)n
t=1 n
∑
Equation A V‐II Discounted Cash Flow to Equity ‐ two stage model
€
Market value of Equity0 = FCFEt
(1+re)t + FCFEn+1 re−g ⋅ 1
(1+re)n
t=1 n