FINANCIAL STATEMENTS - KPN

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Other significant cash-generating units For other significant cash-generating units the recoverable amount is based on their value-in-use. The future expected cash flows are discounted at the pre-tax weighted average cost of capital. The key long-term assumptions used in the impairment test are summarized in the table below: Sales growth Capex intensity EBITDA margin Discount rate 2012 0% 20%-22% 40%-45% 6.5%-7.0% 2011 0% 20%-22% 45%-50% 7.3%-7.8% Sensitivity to changes in key assumptions The expected future cash flows used in the impairment analysis are based on management’s estimates. Events amongst others in technology and telecommunications markets as well as the financial markets and the overall economy may have an adverse impact on the estimated future cash flows of KPN’s businesses. The following table gives an indication of value change of Germany and Corporate Market as per year end 2012, if key assumptions had changed adversely and would have been used in the impairment testing of Germany and Corporate Market. Sales growth Capex intensity EBITDA margin Discount rate -0.5pps +0.5pps -1pps +1pps -1pps +1pps -0.5pps +0.5pps Value change Germany -335 375 280 -280 -280 280 525 -475 Value change Corporate Market -10 11 60 -60 -60 60 25 -22 Considering the relatively small margin between the recoverable and carrying amount of Germany, the negative sensitivities above would have resulted in an impairment. Any adverse change in a key assumption underpinning the fair value less cost to sell calculation of Corporate market would cause further impairment losses to be recognized. The outcome of sensitivity analysis for the other cash-generating units would not have resulted in a different outcome of the impairment test. Statement of changes in intangible fixed assets with finite lives Computer Software in Customer Amounts in millions of EUR Licenses software development relationships Trade names Other Total Balance as of January 1, 2011 2,818 698 121 219 83 83 4,022 Investments 16 463 -1 4 – 12 494 Disposals – -1 – – – – -1 Exchange rate difference – – – – 1 -1 – Changes in consolidation – – – 7 2 – 9 Reclassification – – 7 – – – 7 Amortization -339 -429 – -64 -11 -16 -859 Impairment – -3 -3 -10 -19 – -35 Closing net book value 2,495 728 124 156 56 78 3,637 Cost 9,378 2,110 124 412 116 161 12,301 Accumulated amortization/ impairments -6,883 -1,382 – -256 -60 -83 -8,664 Balance as of December 31, 2011 2,495 728 124 156 56 78 3,637 Investments 15 388 41 – – 8 452 Disposals – -2 – – – – -2 Changes in consolidation 28 4 – 48 8 – 88 Reclassification – 3 -1 – – – 2 Amortization -346 -437 – -56 -9 -15 -863 Impairment – -3 -4 – – -2 -9 Transfer to held for sale (net) -1 -2 -1 – – – -4 Closing net book value 2,191 679 159 148 55 69 3,301 Cost 9,425 2,190 159 476 118 149 12,517 Accumulated amortization/ impairments -7,234 -1,511 – -328 -63 -80 -9,216 Balance as of December 31, 2012 2,191 679 159 148 55 69 3,301 KPN | Annual Report 2012 113
Consolidated Financial Statements Notes to the Consolidated Statement of Financial Position continued Licenses Amounts in millions of EUR December 31, 2012 December 31, 2011 Germany 1,853 2,066 NetCo 250 335 Belgium 87 94 Other 1 – Total 2,191 2,495 In December 2012, KPN was assigned a combination of spectrum licenses in the Netherlands which was reported as off balance sheet obligation as at December 31, 2012. Refer to the Note 31 ’Commitments, contingencies and legal proceedings’. As at the end of 2012, the book value of Computer software and Software in development comprised internally generated software for EUR 360 million (2011: EUR 260 million). [11] Property, plant and equipment Statement of changes in property, plant and equipment Other tangible Assets under Amounts in millions of EUR Land and buildings Plant and equipment non-current assets construction Total Balance as of January 1, 2011 875 5,619 130 890 7,514 Investments 78 1,348 57 128 1,611 Disposals -15 -19 -1 – -35 Depreciation -89 -1,242 -65 -4 -1,400 Impairments and retirements -73 -55 -9 -3 -140 Exchange rate differences – 1 – -1 – Reclassifications -65 55 5 -2 -7 Change in consolidation – 3 -1 – 2 Other changes – -6 – – -6 Transfer to held for sale (net) -6 – – – -6 Closing net book value 705 5,704 116 1,008 7,533 Cost 1,954 15,519 334 1,022 18,829 Accumulated depreciation/ impairments -1,249 -9,815 -218 -14 -11,296 Balance as of December 31, 2011 705 5,704 116 1,008 7,533 Investments 57 2,254 49 -432 1,928 Disposals -16 -105 -1 -2 -124 Depreciation -80 -1,336 -56 – -1,472 Impairments and retirements -1 -29 -2 -15 -47 Reclassifications 2 12 -15 -1 -2 Change in consolidation – 76 4 1 81 Transfer to held for sale (net) 4 -3 -1 –2 –2 Closing net book value 671 6,573 94 557 7,895 Cost 1,972 16,822 327 582 19,703 Accumulated depreciation/ impairments -1,301 -10,249 -233 -25 -11,808 Balance as of December 31, 2012 671 6,573 94 557 7,895 As of January 1, 2012 KPN extended the economic life of fiber from 20 to 30 years. This resulted in EUR 40 million lower depreciation charges in 2012. Furthermore, in 2012 assets under construction in relation to the mobile network in Germany were reclassified to plant and equipment for EUR 451 million. As a result, a one-off additional depreciation charge of EUR 74 million was recorded, of which EUR 61 million related to prior years. Property, plant and equipment primarily concerns assets located in the Netherlands (2012: approximately 61%; 2011: approximately 61%) and Germany (2012: approximately 33%; 2011: approximately 33%). Assets under construction mainly relate to the construction of mobile networks. The book value of property, plant and equipment of which KPN as the lessee is the beneficial owner under financial lease programs amounted EUR 256 million (2011: EUR 205 million). 114 KPN | Annual Report 2012
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FINANCIAL STATEMENTS - KPN

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