FINANCIAL STATEMENTS - KPN

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The book value of property, plant and equipment of which KPN is the lessor under operating lease programs amounted to EUR 454 million (2011: EUR 151 million). The increase in the book value of property, plant and equipment of which KPN is the lessor under operating lease programs is caused by introduction of mobile handsets leasing propositions in the Netherlands and Germany. The future minimum lease payments receivable related to these operating leases is EUR 148 million (2011: EUR 102 million) in total of which EUR 94 million (2011: EUR 64 million) matures within one year and the remaining EUR 54 million (2011: EUR 38 million) matures within one to five years. Sensitivity analysis At the end of 2012 the book value for Copper and Fiber cables is EUR 2,124 million, which is included in plant and equipment. The current depreciation rates for these investments are based on estimates and judgment about the useful lives of these assets. For Copper cables KPN estimates that the current useful life ends in year 2023, if the useful life was set at 20 years, the depreciation charge for 2013 would be EUR 57 million lower. For the Fiber cables KPN estimates that the current useful life is 30 years. If the useful life was set at 40 years, the depreciation charge for 2013 would be EUR 11 million lower. [12] Investments in associates and joint ventures Amounts in millions of EUR 2012 2011 Balance as of January 1 261 284 Additions 88 3 Income from associates and joint ventures -13 -24 Dividend received -1 -1 Other changes -9 -1 Total changes 65 -23 Balance as of December 31 326 261 Reggefiber KPN has a stake of 51% in Reggefiber Group B.V. (‘Reggefiber’), a strategic partnership with Reggeborgh B.V. for the rollout of the Fiber- to- the- Home network. Reggeborgh owns 49% of Reggefiber. Under the arrangements in the joint venture agreement with Reggeborgh, KPN will only obtain control over Reggefiber as from 60% ownership of the shares in the company. In October 2012, the first call/put option under the amended arrangements vested upon reaching the milestone of 1.0 million Homes Connected. As a result of the exercise of this option, KPN acquired an additional 10% of the shares in Reggefiber, increasing its share to 51%, for an amount of EUR 99 million on November 8, 2012. The details of the remaining call/put arrangement between KPN and Reggeborgh as at December 31, 2012, are as follows: Option 2 Additional 9% Leading to 60% ownership Ownership stake Option trigger Exercise price Conditions for exercise Call/put vest earliest of: ýý 1.5 million Homes Connected ýý January 1, 2014 EUR 116 – 161 million, depending on Capex efficiency at Reggefiber i) Exercise of option 1 required ii) NMa approval required Furthermore, Reggeborgh holds an option to sell the remaining 40% of its shares to KPN. This option can be exercised three and a half years after the second option has been exercised over a period of one and a half years, for an amount of EUR 647 million. Alternatively, this option can also be exercised at fair value for a period of seven years after the second option has been exercised. KPN | Annual Report 2012 115
Consolidated Financial Statements Notes to the Consolidated Statement of Financial Position continued Book value The book value of KPN’s 51% share in Reggefiber as at December 31, 2012 amounted to EUR 293 million (2011: EUR 234 million), including EUR 131 million of goodwill. The movement of the book value of the investment in Reggefiber is presented in the table below: Amounts in millions of EUR Cash contribution 174 Contribution in assets 16 Call/put arrangements valuation in the purchase price allocation 58 Total initial investment by KPN for 41% 248 Share in the 2009 results -11 Balance as of December 31, 2009 237 Capital contribution 44 Share in the 2010 results -26 Balance as of December 31, 2010 255 Share in the 2011 results -20 Other changes -1 Balance as of December 31, 2011 234 Acquisition 74 Share in the 2012 results -7 Other changes -8 Balance as of December 31, 2012 293 In addition to the 51% share in Reggefiber, KPN provided shareholder loans to Reggefiber. These shareholder loans are recorded under loans to associates and joint ventures for EUR 227 million (2011: EUR 127 million). The shareholder loans bear interest of 6.00% – 6.75% and have a final maturity date of January 1, 2019. Reggeborgh provided similar shareholder loans to Reggefiber on a pro-rata basis for its share in the partnership. The call/put arrangements are valued at fair value and recorded as a derivative financial instrument of EUR 278 million (2011: EUR 203 million), which is recorded as a liability. The change in the fair value of the call/put arrangements during the year of EUR 100 million (2011: EUR 55 million) is recorded in the consolidated statement of income as a loss under other financial results. Refer to Note 29 for further details on the call/put arrangements. At the end of 2012, Reggefiber had capital commitments (100%) for EUR 285 million (2013: EUR 261 million and 2014: EUR 24 million). The total capital commitments as at December 31, 2011 amounted to EUR 223 million. For rental and operational lease contracts Reggefiber had commitments for EUR 15 million as at December 31, 2012 (less than 1 year: EUR 3 million, 1 to 5 years EUR 5 million, more than 5 years: EUR 7 million). At the end of 2011, Reggefiber’s commitments under rental and operational lease contracts were EUR 15 million. Other As of December 31, 2012, investments in associates and joint ventures also include NTT Data Getronics (30%) for an amount of EUR 16 million (2011: EUR 16 million). In the table below, the amounts of certain financial data with respect to Reggefiber and the other joint ventures and associates are summarized, based on KPN’s share. Amounts in millions of EUR Reggefiber Other December 31, 2012 December 31, 2011 Current assets 57 84 141 56 Non-current assets 1 708 17 725 464 Current liabilities 63 75 138 68 Non-current liabilities 453 45 498 256 Total revenues 37 127 164 71 Total operating expenses -10 -127 -137 -59 Profit or loss after taxes -7 -6 -13 -24 1) Including EUR 47 million goodwill at Reggefiber. The difference in value between the assets and liabilities of the table above and the investment value is the goodwill paid by KPN which is included in the book value of the associates and joint ventures. 116 KPN | Annual Report 2012
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FINANCIAL STATEMENTS - KPN

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