FINANCIAL STATEMENTS - KPN

Consolidated Financial Statements
GENERAL NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
General information
KPN is the leading telecommunications and ICT service
provider in the Netherlands, offering wireline and wireless
telephony, internet and TV to consumers and end-to-end
telecom and ICT services to business customers. KPN
Corporate Market operates an ICT services company with
a market-leading position in the Netherlands, offering
end-to-end solutions in infrastructure and network-related
IT. In Germany and Belgium, KPN pursues a challenger
strategy in its wireless operations and holds number three
market positions through E-Plus and KPN Group Belgium.
KPN provides wholesale network services to third parties
and operates an efficient IP-based infrastructure with
global scale in international wholesale through iBasis.
Koninklijke KPN N.V. (KPN or the Company) was
incorporated in 1989 and is domiciled in the Netherlands.
The address of its registered office is Maanplein 55,
2516 CK, The Hague. KPN’s shares are listed on Euronext
Amsterdam. Following the delisting of KPN’s shares on
the New York Stock Exchange (NYSE) in 2008, KPN’s shares
can be traded in the United States, only as American
Depository Receipts on the over-the-counter market.
The Financial Statements as of and for the year ended
December 31, 2012 of Koninklijke KPN N.V. were approved
for issue by both the Supervisory Board and the Board
of Management on February 26, 2013.
The Financial Statements are subject to adoption by the
Annual General Meeting of Shareholders on April 10, 2013.
Significant accounting policies
The significant accounting policies applied in the
preparation of these Consolidated Financial Statements
are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
Basis of preparation
KPN applies International Financial Reporting Standards
(‘IFRS’) as adopted by the European Union.
As the corporate financial information of KPN is included
in the Consolidated Financial Statements, the Corporate
Income Statement is presented in abbreviated format in
accordance with Section 402, Book 2 of The Netherlands
Civil Code.
The Consolidated Financial Statements have been prepared
under the historical cost convention, as modified for the
revaluation of available-for-sale financial assets, and the
accounting of financial assets and financial liabilities
(including derivative instruments) at fair value through
profit or loss.
Comparative figures 2011
Following changes in 2012 to KPN’s internal structure and
reporting to the CEO, who is the chief operating decision
maker, the segment reporting has been changed, including
the comparative figures as at December 31, 2011. Refer to
Note 34 for further details.
Changes in accounting policies and disclosures
There are no IFRSs, IFRIC interpretations or amendments
that were effective for the first time for the financial year
beginning on or after January 1, 2012 that had a material
impact on KPN.
Consolidation
Subsidiaries
Subsidiaries are all entities over which KPN has the power
to govern the financial and operating policies, generally
accompanying a shareholding of more than half of the
voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are
considered when assessing whether KPN controls another
entity. Subsidiaries are fully consolidated from the date on
which control is transferred to KPN and are deconsolidated
from the date on which KPN’s control ceases.
KPN uses the acquisition method of accounting to account
for business combinations. The consideration paid is
measured at the fair value of the assets transferred, equity
instruments issued and liabilities incurred or assumed
at the date of exchange. The consideration paid includes
the fair value of any asset or liability resulting from a
contingent consideration arrangement. Acquisition-related
costs are expensed as incurred. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair
values at the acquisition date. On an acquisition-byacquisition
basis, KPN recognizes any non-controlling
interest in the acquiree either at fair value or at the
non-controlling interest’s proportionate share of
the acquiree’s net assets.
The excess of the consideration paid, the amount
of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest
in the acquiree over the fair value of the Group’s share of
the identifiable net assets acquired is recorded as goodwill.
If this is less than the fair value of the net assets of the
subsidiary acquired in the case of a bargain purchase,
the difference is recognized directly in the Consolidated
Statement of Income.
Intercompany transactions, balances and unrealized results
on transactions with subsidiaries are eliminated.
Consolidated financial information, including subsidiaries,
associates and joint ventures, has been prepared using
uniform accounting policies for similar transactions
and other events in similar circumstances.
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KPN | Annual Report 2012