English

TRANSCOM ASSESSING TAX EXPOSURE IN ONE EU COUNTRY

The company was recently notified that the Court of Appeal has issued an adverse ruling regarding a FY2003 tax dispute in one of the EU jurisdictions where it operates.

In December 2008, in this jurisdiction, the tax auditor reassessed FY2003 through to FY2006. This tax audit resulted in a total tax reassessment notification of €27.3 million (including penalties and accrued late payment interest).

The Group believes its tax position overall and in this jurisdiction in particular, to be fully compliant with EU law and regulation. Since 2009, the Group has been in dispute with the tax authorities with respect to this tax reassessment. The total net amount provided in 2009 to cover this tax exposure amounted to €1.5 million.

Management, together with its legal advisors, consider that the whole reassessment is not justified from a legal standpoint, and even more so in regards to the Withholding tax amounts claimed (€11.7 million) because the EU regulation grants Withholding tax exemption on royalties.

Transcom management considers its case to be robust and has decided to lodge an appeal in front of the Supreme Court. However, following the recent notification of this adverse ruling, Transcom had to reassess its provision and is considering increasing the existing tax provision by €14.1 million in the quarter ended September 30, 2011.

Management is uncertain about the timing and the ultimate financial exposure that may result out of the resolution of the ongoing tax litigation in this jurisdiction. Only FY2003 and FY2004 cases are currently in front of the courts. FY2005 and FY2006 are not yet judged.

The short term cash exposure resulting from the current rulings is estimated to be €8.8 million. Transcom is requesting to pay in installments over 72 months, which would reduce the cash outlay to €0.4 million per quarter. Should Transcom ultimately succeed in its Appeals, these amounts would be paid back.

Transcom will host a conference call at 11.00 am CET (10:00 am UK time) today, October 12, 2011. The conference call will be held in English.

Dial-in information

To ensure that you are connected to the conference call, please dial in a few minutes before the start in order to register your attendance.

   
Luxembourg +352 3420808245
   
Sweden +46 858536853
   
United Kingdom +44 2073650698
United States +1 7183541168 (East coast)
United States +1 4089160666 (West coast)

 Passcode: 11503328#

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For further information, please contact:

Pablo Sanchez–Lozano, President and CEO           +352 27 755 000

Aïssa Azzouzi, CFO                                                  +352 27 755 021

Stefan Pettersson, Head of Investor Relations        +46 70 776 80 88