NOTE 19
IMPLEMENTATION OF IFRS

As stated in Note 1, the 2005 financial statements are the Group’s first consolidated financial statements prepared in accordance with IFRS.

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31 December 2005, the comparative information presented in these financial statements for the year ended 31 December 2004 and in the preparation of an opening balance sheet as of 1 January 2004 (the Group’s date of transition).

In preparing its opening IFRS balance sheet, the Group has adjusted amounts reported previously in financial statements prepared in accordance with Norwegian Accounting Standards (NGAAP). An explanation of how the transition from NGAAP to IFRS has affected the Group’s financial position, financial performance and cash flow is set out in the following tables and the notes that accompany the tables.

The impact on deferred tax on the adjustments described below is set out in Note f.

a) The Group has applied IFRS 3 to all business combinations that have occurred since 1 January 2004 (the date of transition). The Group has elected not to apply IFRS 3 retrospectively to business combinations that took place before the date of transition. As a result, in the opening balance sheet, goodwill arising from past business combinations (USDm 24.1) remains stated as under NGAAP as of 31 December 2003. Additionally, from 1 January 2004, goodwill is no longer amortized under IFRS but is tested annually for impairment.

b) In accordance with IFRS 1, the cumulative actuarial gains and losses existing at 1 January 2004 amounting to USDm 1.9 have been recognized for all defined benefit plans.

c) The Group applied IFRS 2 to its active share-based compensation arrangements at 1 January 2004, except for equity-settled share-based payment arrangements granted before 7 November 2002. The Group has granted equity- settled share-based payments in 2004 and 2005. The Group accounted for these share-based compensation arrangements at intrinsic value under NGAAP. This has been adjusted to fair value to be consistent with the Group’s policies. The adoption of IFRS 2 is equity-neutral for equity-settled transactions. The expense recognized for the consumption of employee services received as consideration for share options granted will not be deductible for tax purposes when the share options are exercised. The effect of accounting for share options at fair value is to increase Wages and social costs by USDm 2.9 for the year ended 31 December 2004.

d) IAS 10 requires that dividends declared after the balance sheet date should not be recognized as a liability at the balance sheet date as the liability does not represent a present obligation as defined by IAS 37. As of 1 January 2004 and 31 December 2004 the amount reclassified to equity amounted to USDm 8.0 and USDm 12.2, respectively.

e) Translation differences that arose prior to the date of transition to IFRS in respect of foreign entities have been presented as a separate component of equity.

f) The above changes increased (decreased) the deferred tax liability as follows based on a tax rate of 28 percent:



g) IAS 38 “Intangible assets” requires that direct costs related to development activities to be capitalized and depreciated over their expected useful life if it is probable that these costs will provide future economic benefits. Development costs amounting to USDm 5.7 have been capitalized during 2004 under IFRS, of which USDm 4.3 and USDm 1.4 has been deducted from Wages and social costs and Other operating expenses, respectively.

The Group considers that a useful life of 2 years is appropriate given the rapid technology developments in the visual communications industry. The depreciation for development projects was USDm 1.7 for the year ended 31 December 2004.

IAS 38 has not been applied retroactively prior to 1 January 2004. RECONCILIATION OF PROFIT FOR 2004

RECONCILIATION OF PROFIT FOR 2004

EXPLANATION OF MATERIAL ADJUSTMENTS TO THE CASH FLOW STATEMENT FOR 2004 As certain salary and operating costs related to development costs have been capitalized, profit before taxes has increased, while investments in fixed assets have increased correspondingly. There are no other material differences between cash flow statements presented under IFRS and the cash flow statement presented under NGAAP.