Koninklijke KPN N.V. (KPN) Earnings Call Transcript & Summary

[Presentation] [Interpreted] Ladies and gentlemen, a warm welcome to you all at the Annual Shareholders' Meeting of KPN. And on account of all the corona measures this year, we have this very minor setting here at our headquarters in Rotterdam. But still, there are many online participants at home or elsewhere. And so a warm welcome to all these online participants, and thank you for hearing our call to participate via a webcast in this meeting. And here in the room, we have a few shareholders. And as announced, KPN, in line with the prevailing health measures, we have chosen to limit the presence of our Board of Management and Board of Supervisors to just a few members of both. And as Chair of the Supervisory Board, I will chair this meeting. And I appoint Mr. Spanbroek, who's Secretary of the company, here beside me to be the secretary of the meeting. And I'm happy also to introduce everybody else here. Beside me are the Chair of the Board of Management, Mr. Farwerck; and the Chief Financial Officer, Mr. Figee; and again, as said, the Secretary, Mr. Spanbroek. And online, we have, on behalf of the Supervisory Board, the Chair of the Remuneration Committee, Mr. Hartman; and the Chair of the Audit Committee, Mr. van Bommel. Then online, we have participants, and that is Mr. Blenderman of EY Accountants. He will give explanations to our item on the agenda #3. And then we have Ms. Guillouard, who's an intended member of the Supervisory Board. She is not present, but we will introduce her later in the meeting via video. Ms. Leemrijse, notary, connected to Allen & Overy, is here in the room with us, and she will take the minutes of the meeting. And then finally, I know that the other members of the Board of Management, the Supervisory Board, our Central Works Council and many others are following this meeting via the webcast. So once again, welcome, everyone. And what a good thing, that in these times, technique and technology can bring us as close together and make it possible to hold this meeting. And as the one network of the Netherlands, we stand for connections. We always did, but definitely today. Now this meeting was convened in timely fashion and in according with the formalities by placing the convocation and the agenda on the website of KPN on 4th March 2020. And then a few practical points, if I may. Like last year, this meeting is a hybrid shareholders meeting, and it means that our shareholders can also take part and vote via the Internet. Then the voting procedure, like last year, throughout the meeting. So even now, you can let us know your vote for all the various voting items. And this is whether you're online or present with us in the room. And only at the end of the meeting, before any other business, we will close the vote for all the voting items. And then the results for all these voting items will be made known after the -- any other business item. And this is a way in which to have the least disturbances in the order of the meeting and to avoid any possible delays in the Internet connection for online participants, and the secretary will also explain this again later on in the meeting. Now to ask questions, like we said on our website, there are 2 extra options to ask questions. Shareholders could give us our questions prior to the meeting, sending them to us via e-mail, and the answers to those questions have already been published on the website of KPN. They are part of the meeting documents. And these questions and answers will be included in the report of the meeting and, per each item, I will come back to those questions. Now for virtual participants who are taking part through the e-voting system, it is possible during this meeting electronically to ask further questions in response to the answers that were given to questions prior to the meeting. And for the sake of clarity, let me stress that these are further questions concerned here, further questions to questions already answered. If you did not ask questions prior to the meeting about a subject, then you cannot ask questions about that subject now. Shareholders physically present with us here in Rotterdam may ask questions simply by raising their hand and asking questions from their seats or, please, to move to a microphone, if that is not close enough. Now to help those who take the minutes, please state your name, your place in residence, type it in the chatting system or say it outright, and please keep your question or comment as brief and as specific as possible. That is, of course, something that applies to everybody. And also for the minutes, we are making tape recordings. And again, this meeting can be followed online over a webcast. Our working language here is in -- is Dutch. The meeting will be translated in English. Questions can be asked in English. Answers will be given in Dutch and translated then into English. [Interpreted] I wish you have a very informative and interesting meeting. Let me move on to the second item, and that is the report of the Board of Management over the financial year 2019. And in the presentations that follow, we will go into the year 2019. And I'm happy to give the floor first to the CEO, Joost Farwerck, and then to the CFO, Chris Figee. And then we will go into the various questions that were asked, in abbreviated form, of course, and there will be also some space and time for clarifying questions. Joost?

[Interpreted] Thank you, Duco. Welcome, everyone. What a special extraordinary period, I should say, and it's a very different meeting. And of course, an almost completely digital meeting fits and suits KPN like a T, but of course, we miss the personal conversation and contact with you. Let me just go back to telling you about 2019, but first, update you about the situation around the coronavirus and how we deal with that. And I saw various questions have been asked about this also prior to this meeting. Now the outbreak of the coronavirus is a very serious situation for companies, people, businesses, society as a whole. And despite the fact that we have to keep our distance, perhaps more than ever before, we feel connected. And KPN, with the quintessential network in the Netherlands, plays a crucial part in this. The safety of our employees and clients are first priority. In addition, the continuity of our services, of course, is the most important spearhead. And linking into the various measures of the government to try and break, decelerate the outbreak of the virus, we took measures. In February, based on our pandemic's script, we have a crisis procedure and a team that coordinates this and puts it to the Board of Management. And from the second half of March, at least half of our staff was working from home. And a couple of days later, almost everybody, we decided, should work from home. And they are doing that to date. Our shops throughout the Netherlands have been closed. But even within a few days, the 16 XL stores were reopened with quickly implemented additional measures for safety so that everybody can keep a distance and a safe distance also between our staff and clients. And to ensure the safety of our engineers, we looked critically at any planned maintenance and how to do it. It is continuing to be done. And in-home work with clients is limited to very urgent reports of faults and stops. We're focusing on broadband. And only if it's absolutely necessary do engineers go to the home. They do this voluntarily under special security measures to keep sufficient distance from our clients. Our sales staff, at this time, do no physical appointments with clients. They do everything digitally via Skype, Teams or Zoom or any other platforms available for that sort of work. Concerning the health of our people, officially, we seem to have 65 people in the company who are infected, 41 already recovered. So 24 ill still, very likely may -- a few more because a couple more people were ill. But all in all, we've got to say that for a company with 11,000 staff and more, if we look at everybody who's working temporarily for us, then those figures are not all that high. We've also taken measures to further support our people. We decided for advisory requests that would lead to the loss of jobs will be postponed or suspended until 1 June. And to combine work and private lives, we offer people extra space to take leave. And there is a vitality program that we set up to support people who work from home. And for our clients, where we can, for our iTV clients, there are a number of extra channels to make staying at home not so onerous. Our meeting numbers have been made available to our business customers for free. There are free antivirus scanners which we offer, all to improve working from home safely. And for our business clients, mobile calls outside the bundle will not be charged because we are aware that necessarily, people will have to call more from their mobile and set up to do this. And to keep everybody connected, we show great courtesy to people who, because of the crisis, have maybe payment arrears and the like. We will look at those on a situation-by-situation basis. Finally, small suppliers who offer us products and services can be sure that their bills will be paid very quickly. KPN does everything to support society and also the health care sector. And it's very, very important, of course. Where necessary, we roll out network capacity in accelerated fashion to get things operational as quickly as we can. We monitor hospitals for possible security incidents and also to avoid any stoppage when we can. We have advice and technical support for the initiative called wehelphospitals.nl, and Dutch cybersecurity companies work together there to prevent that there are cyber crisis and cyberattacks in the hospitals that we need so much. And there are some 1,000 extra secure connections for GPs, which we will not invoice for in the first period. And besides support to health care, we also make initiatives to help vulnerable groups, children who have no WiFi at home, for example, and cannot follow lessons from school digitally. We have made routers available for those groups so that they can do their school work online. The coronavirus has made digitization in the Netherlands accelerate from one day to the next, and the robustness of our digital infrastructure plays an important part in this. And we continue to maintain it and further build on it. And we'll continue the rollout of glass fiber, future-proof technologies. And together with our main engineers, there are some 3,000 jobs that do that outroll, which we want to protect and retain to keep that expertise in-house. Asset. The network is robust. And since the moment that everybody was advised to work from home, we've seen a great increase in the use of our network. And with the shift from a traffic pattern, if you will, we see very clearly on our network, there is a lot more traffic from the homes so far, less from the offices, of course. And so much more busy than usual. However, we are well able to deal with that capacity because our network was built for peak moments. And then on top, there is some -- some 100% extra reserve capacity. The busiest moment in the network is usually in the weekend and the evening hours between 7 and 9, which is when there's a lot of video streaming taking place and a lot of television is watched normally. And those levels are also achieved through the week and throughout the day. But once again, we can cope with that. And the past weeks, we've seen a doubling of mobile calls and a lot more of broadband traffic. In short, we monitor our networks, and the network has been able to cope with this in the past 5 weeks. We will do everything to make sure that that continues. Now in the first quarter, we see not a lot of adverse wind because of the situation caused by COVID-19. And recent predictions of the CVB and the IMF for the Dutch economy, of course, are not very positive. But exactly what that is going to mean for us, our business customers, for example, mainly cannot predict it very well at this point. We are a company with a relatively crisis-proof operational management and a strong balance sheet. And hence, we are not very worried about our financial situation, but we are alert. We cannot rule out that this might touch and affect us at some point if it affects our customers and clients, and we expect to give you a better idea of what is going to happen in the second quarter. Well, that was a short update of our measures for the coronavirus, and let's go back then to the report of the year 2019. 2019 was a turbulent year in which we made a really good start with our new strategy and where our financial targets were achieved. And Chris will tell you a little more about this later. The network constitutes one of the fundaments of our strategy. We build and manage the network of the Netherlands and have started our glass fiber outroll strategy, the modernization of our mobile network, and we're saying goodbye to old technologies and are switching to All IP. In the consumer market, in 2019, we marked the start of strategic activity around our new brand strategy and our new KPN, also the proposition focused on households. And in the Business market, we take strategic action, which in the short term, might have an impact that is negative on our turnover. But at the same time, it will enable us to simplify our activities and to digitize them. In Wholesale, we are extending our wholesale broadband access portfolio. And we are growing. We are accelerating the simplification and digitization of KPN to further and more quickly serve our customers and lower our costs. And we focus on our core activities, which has led to the announced exit of a number of parts of the company in 2019. The Dutch digital landscape continues to be competitive. In the broadband market, we see an increase of competition, and the 3 biggest players are now focusing on convergence, fixed mobile companies. And 2 of those players have their own fixed network, and one of them delivers via a wholesale model broadband to customers of KPN. In mobile, the market has also remained competitive. And in the bottom of the market, we see a few step towards more rationale behavior. But in the premium segment, competition is rising. And these are the clients who are willing to pay a little bit more than average. In 2019, we started scaling up our glass fiber rollout, and 120,000 households extra were connected last year. And compared with our target of 1 million in 3 years, that doesn't seem a lot, but we are growing at high speed, 50,000 new connections. And at the end of the year, 2019, in more 70 places in the Netherlands, we were actively building. September last year, we started modernizing our mobile network. And at the end of the fourth quarter, some 640 sites, which is 6 -- 13% of our mobile network, had been upgraded. And that network modernization makes us future-proof ready for 5G, and 4G, at the same time, does a lot better. And thanks to the modernization, the capacity in our network can be much more efficiently managed. And we are making great progress with our ambition to have all our customers All IP by late 2021. And so we announced that the old telephony services and the technology surrounding them, PSTN and ISDN, will be terminated. And that movement is also very good for our clients because they migrate to future-proof environments. And late 2019, only 175,000 old connections based on old technology were left in our portfolio, and that is only about 1/4 of the number that we started that year with. Now in the consumer market, we have a strategy focused on the household, with a clear focus on supplying value. And our convergency strategy is based on 3 specific developments, very important. First of all, by concentrating on the strong KPN brand, we are able to strengthen our relationships with the households. And early 2019, we decided to phase out Telfort as a brand name. And all the Telfort shops were closed, and all the mobile Telfort customers were migrated to KPN. The migration of the broadband base is being prepared. And recently, we announced that the access for old brand name would be kept for the existing customers thereof. But in the future, we think that a technical integration to an unequivocal future-proof platform would be a logical step. Secondly, we are moving from a product portfolio focused on individuals to one focused on households. In October last year, we launched KPN Hussel. And the proposition was designed to give our customers the chance to have their package completely matching the various needs in the household. And thirdly, for our customers and our own people, it makes it very much easier to -- because of the further simplification of our processes. Households who have fixed and mobile services in a single package, therefore, are central. Last year, 59,000 converged households were added to our portfolio, and half of our broadband base is already converged at this point. Almost 190,000 SIM cards were added to our converged portfolio in 2019, that is 63% of our mobile postpaid base. And for the high-quality KPN brand name, already 73% are in that converged base data. And we have any -- every confidence that with these actions of further convergence, the growth of that convergence will be encouraged. And we see this in practice. It is very positive whenever we roll out glass fiber anywhere for our customer database. We've seen an increase of fixed -- and the number of broadband customers has gone down since the second quarter. And that is mainly affected by the Telfort move because a number of people whose Telfort contracts run out make different choices. In mobile, the average RPU was some EUR 17 per customer, and that remained stable throughout the 4 quarters of 2019. So the focus on the high-quality KPN name resulted in 80,000 new subscribers to this in 2019. And the total mobile database went down, but that was mainly driven by our brand name strategy and the continuing competition. In 2019, we made strong progress in the operational transformation of our business services, and that is by migrating clients to new portfolios with new technology. And at the end of the fourth quarter, some 74% of our small- and medium-sized business clients and 53% of larger business had been migrated to our new environment. And there are very many activities with lower margins which we have stopped, and we focused on combinations with solid service and maintenance contract. On the cost side, we see the advantage of these activities because of the simplification of our operational management. And for KPN ONE, we already realized cost savings which we're only going to get at the end of the year, we thought. So that's been accelerated. Now in a year in which migrations were accelerated, the turnover has gone down by 4.5%. There is an accelerated decrease because the market continues to be very competitive in the Business market and also because of the various moves that we made. But there's a growth in IT-based businesses because of security and workplace management services and good professional services. And it is important that we focus on sales from services that represents a true value for us in that Business segment. Important, of course, the next subject, client satisfaction. In the consumer market, in the fourth quarter, we saw our Net Promoter Score of 19 or -- and more, 19 plus, I should say. And with that, customer satisfaction went up to a record height. And that is a very positive noise from our customers in the consumer market and an important sign that we're on the right track. In the Business market, throughout the year, we saw a worse NPS trend. Of course, we don't want that. It's explicable because converting clients to new products and services is very impactful for them. We don't see this translated in clients who leave us. But of course, we're very determined to raise the NPS and the Business market, improving it this year, and we have various strategies for that ongoing as I speak. In 2019, we got several awards, the Reputation Institute, for example, which gave us the #1 in reputation awards. We've been recognized as the best mobile provider in the Netherlands. We were called the strongest Dutch brand. And we have won various awards as a service provider in the Business market. And we do business sustainably. We facilitate safe and future-proof infrastructure. And KPN security, for example, has won a tender because of that for more than 330 municipalities to receive services from us in the Netherlands. As to our social and digital inclusion, we stimulate diversity, social inclusion and make every effort to prevent social exclusion or digital exclusion, if you will. We've also seen that we were using 100% green power, climate-neutral. And our ambition is, by 2025, to be almost 100% circular in our activities by using fewer materials, by improving the lifespan of products and to make measures for our waste production to be reduced to 0. Our efforts are being recognized by various outside benchmarks. We are on the A-list of the CDP, and we are #2 in the worldwide Dow Jones Sustainability Index. I move to Chris to give you the financial results.

[Interpreted] Thank you. Good afternoon. My name is Chris Figee. This is my first general meeting of shareholders, and it's special to actually participate in this kind of form. I will talk about the financial figure for 2019, but I'm so proud to work for KPN. This is a company that, at the heart of our economy and society, investing in our digital infrastructure and society. And today proves more than ever that it's necessary. So the 2019 objectives have been realized, as the former speaker said. The adjusted income shows a decline of 2.7%. You see the number on the screen. Now the adjusted EBITDA, after leases, also called operation activity, grew by 1.2% to a little over EUR 2.3 billion. And our free cash flow is EUR 726 million, and that's in line with our expectations, if not better. So we sold some business units and that kind of is reflected in the figures. I will say more about that later. Last year, we achieved savings of EUR 140 million, net indirect OpEx savings. And that's after we sold the business unit. That is a strong performance, a strong reduction of cost, and we worked very hard to achieve it. We have lean for the Business market, and we also have our new IT rationalization. Now we need less staff to actually achieve the same turnover. We also consolidated brands. We consolidated IT systems. We optimized iTV platform. The new network is more energy efficient. So we're saving there as well, but our data use is exponentially going up. Now if you look at this graph, you see the development for the various business units. First and foremost, these are unadjusted for investments, the LDC (sic) [ NLDC ] sale, the international network service. So those sales of the business unit is reflected here. So it affected our operational results in the fourth quarter when those companies still contributed. So there is an effect of EUR 2 million and a negative effect of EUR 6 million adjusted EBITDA after leases and EUR 4 million on the free cash flow. So we're excluding our capital gain. So what about the various segments? The turnover in the consumer market showed a reduction, especially the lower income from the various services. Now the Business market, that's a decline of 4.4% in 2019, part of our strategy. So that was -- think of security and professional services. In Wholesale, the turnover increased by 0.7%, and that was because of increased data use, more partners and more broadband user. So 614 for the entire year, and that's a doubling compared to 2018. The financial costs then were compensated by a positive revaluation of losses carryforward and the capital gains on the business units, as I referred to earlier. Now we don't -- if you take all those effects together, then the profit would be better, as reflected in the figures on the screen. Now let's look at the free cash flow. It was EUR 726 million. That also helped us to pay dividend. Now the free cash flow was lower than 2018, and that was driven by EUR 51 million negative contingency plans versus EUR 92 million last year, EUR 20 million relating to the turnover-related contingencies and their negative effect. In summary, in 2019, we started with rolling out our strategy successfully. We met all of our financial targets. We accelerated fiber, and we connected many households. And we want to have 1 million households connected to fiber at the end of 2021. Our brand strategy will contribute to our strategy as planned, converged smart infrastructure, profitable growth segments, acceleration of simplification and digitalization. In Wholesale, we will grow with WBA, and a further digitization of KPN will save costs and improve our services. So we are well on our way in implementing this strategy, and we will continue with our strategy. And that is as far as I'm concerned for the financial figures for 2019. And I would like to give the floor to our Chair.

[Interpreted] Thank you, Joost. Ladies and gentlemen, I would like to point out that the sheets for this presentation will be made available at the end of this meeting, and they will be published on the website. So let's now move on to the questions and answers. And each time, I will read out the synopsis of the questions you've asked prior to this meeting, and Joost or Chris will elaborate on this further or I will do it myself.

[Interpreted] Now in respect of COVID-19, prior to -- so Mr. Spaargaren, on behalf of Eumedion, and I thank you for your questions. And I also thank the other members of the VEB who are not here, but they put the questions on paper. So Spaargaren wondered what the COVID-19 measures -- what kind of effect they will have on KPN. And what measures have they taken to protect their staff and their customers? And what kind of critical processes are informed? And was there strain on these operational processing? [ Stevenson ], again, also for you, you're participating at the distance on behalf of the SRB. He wondered what the consequences were for the starting of the operational services, the support. Now those questions were answered by Mr. Farwerck. Joost, is there anything you would like to add? Yes, please.

[Interpreted] Well, like I said, we focus straight by -- on people, on our own staff and also on all our customers and clients, of course. And not only are we a big supplier of broadband services to households, we're also the biggest workplace supplier in the Netherlands. And that combination, it turned out, was very, very important because that made us able to have the entire call center, which is located in various places in the Netherlands, to work from home in one fell swoop. 3,000 people are doing call center services for us from home, and that was, for me, a very important critical element. And we have stress-tested this late February. And very quickly, we moved to that model. The networks keep well. We are monitoring that. When we're not having to make new investments because it's simply the peak strain that we were ready for every evening that is now necessary over the day, and that is fine. But the question about your call centers is a good one because we see more traffic on the call centers because there is nobody in the shops, of course. But also the people who work in the shops have now taken on call services -- call center services. And so they can pick up where that has become a little more. Now I could mention a couple of the things that we see on a daily basis, small problems, but to date, all that is really going quite well. And we continue to moderate for the future, of course. Logistically, how do we get our hardware in? And what about our stocks in the Netherlands and the Benelux? Yes, you'd have to think of that. But it -- generally, with everything that I've already presented, the various results that you've heard, we seem to be doing okay. Naturally, I hope that at a very fine moment, in stages and steps, we'll be able to go back to a more normal model, and we'll meet more people here on the workflow.

[Interpreted] Then Mr. Spaargaren -- thank you, Joost -- had a number of questions also in the context of sharing data with the government. It's about privacy and whether we see an increase in online crime and what measures we are taking to secure our infrastructures best we can.

[Interpreted] Right. Well, first, the government and mobile data, much can be read about this in the media, of course. We are very eager to help get the coronavirus eradicated in the Netherlands and to fight it and combat it. And there are various solutions that we're working on. For example, there's a Bluetooth app, which also is being used in other countries, which will make it possible to warn our customers once they get near somebody who's been infected with corona. And handing data to the government, well, that is part of a debate that we are taking part in. We are looking at that. It's very important that there's a legal framework for this because we can deliver aggregated data to the government so that they can only see the total results and nothing personal. But there's no good legal framework for that, and we want that first to be arranged properly by the government before we do that. Cybercrime is another point, which, of course, we see, unfortunately. But security and privacy have such a high priority for us in our own environment, also for the way in which we supply services to customers. And so what we do is extra monitoring. There's no extreme growth in cybercrime, but we do see shifts taking place to the corona theme: criminals trying to abuse that current situation, focusing with phishing on health care institutes, et cetera, which is not a good thing, of course. And hence, there is extra activity that we're focusing on there.

[Interpreted] And then of the legal protection for investors and also the stockholders association, questions about the impact on our financial and investment targets. They are asking about what impact corona has.

[Interpreted] Well, we continue to have a robust balance sheet. It's solid. We have plenty of liquid means. And at the end of last year, we had a little over EUR 1 billion in cash and a little over EUR 0.5 billion in undrawn financing capacities. We'll have to use some of them this year to redeem a loan. We have ample financial means and strong financial buffers, and we're committed to digitizing the infrastructure. And we simply want to continue, where practically possible, where we left out. The EUR 1.1 billion investment remains a target, and we want to keep contributing to the digitization of the Netherlands. So where practically possible, we're just going to go on with all those things.

[Interpreted] Thank you, Chris. And then there was Mr. Stevense, of the legal protection for investors, something about the impact of corona on glass fiber outroll.

[Interpreted] Well, I already said it. It's very important for us, for the Netherlands, but also for our construction that we continue to roll out fiber. And so we've made that deal with our contractors. We've made that agreement to keep doing that. And so they are continuing to do that without stop. Should it become the case that it's not as easy to go to people's houses to take glass fiber there, we will adjust our schedules. And we'll go through the streets more quickly and do the finer connections later on at a later stage. However, it is very much our intention and important spearhead to roll out glass fiber and to continue to do that according to plan.

[Interpreted] And then we had 14 questions to the explanations about the financial figures. Eumedion asked, "Must we change our offerings to be more attractive, win new customers?" And something was asked about Ziggo. And Mr. Jansen of VEB said whether T-Mobile will be additionally competitive.

[Interpreted] Well, definitely, we want to become more attractive for customers. That is always the case. We want to create more value. Hussel was introduced in October. That's only a first step. We'll continue to give more facilities in our offering to customers at home to give that extra value. I already spoke about glass fiber. That's a very important topic for investment, but it's a flow that goes on over a longer period where we're also creating more value. We see strong growth of the total number of houses that use our network, and it is true that we lost a few customers on the retail side. But some 50% of households is being connected at -- on the network of KPN. And that is retail and wholesale positioned together. And there's an unlimited proposition that was launched in the mobile market against a somewhat higher rate, but that is very eagerly purchased by the clients in question. So I think we're attractive. But definitely, and I agree with that, we have to become more and more attractive all the time. And we want to also serve our clients a little more regionally. We've always thought nationally, but there's nothing wrong with going into the region a little bit more and offering services to our clients in a more regional sense.

[Interpreted] Thank you, Joost. And then Mr. Jansen is wondering how KPN is preventing a scenario whereby the earnings for shareholders are becoming less because there is so much investment but very little innovation, also he is saying. And he says the small homes market is a hamper -- a hampering to that international expansion maybe, being a solution to improve margins.

[Interpreted] Well, do you know it's combining more efficient operational management and having more high-quality services because of innovation. And of course, in the Netherlands, we have a strong position. But we're also good in watching our costs, and we'll continue to do that. We have sufficient scale and a good reputation of our brand. And like I just said, a couple of new things were launched at the end of 2019, but we're also still innovating. And think of IoT, the Internet of Things, for example, big investments in security that we've made and that I think will only grow. And we are big in our digital services for the health care sector. We are busily developing edge computing and software-defined network services. And they are new technologies and the technologies -- the investments that we make there are important because they are innovations, which will support us in the long run. International synergies or cross-border synergies, well, they were very hard to prove themselves in telecom land in the past. And of course, we exited E-Plus, [ Basics ], our international investments, INS, the International Network Services, last year. That was the old euro segment of KPNQwest. And then we have a one-country strategy based on The Netherlands. However, on that new technology, that will enable us to look across borders because if the software-defined network becomes bigger, we can offer this also to other countries over the technology of others. And that is the basis of our KPN ONE in the Netherlands, and we set up a small satellite company in Germany to see whether we can do something there. So we are cautiously looking at ideas like that. However, primarily, our focus and strategy is and remains the Netherlands.

[Interpreted] And then KPN -- subsequent question of the VEB. Can it develop as an international niche player, for example, in the area of security instead of being that broad provider in a small geography? And might we do things differently should we be able to start again?

[Interpreted] Well, if we were to start again, definitely, I think this is what anybody would do with the terms like that. But it's a what if question, isn't it? No, I think my answer is in line with what I just said. We are a company that makes the best margin on connectivity. However, if you look upward in the ecosystem a little bit and you go to the platforms, for example, and take a look around there, that there is an important innovation spearhead there. Security, software-defined networks, our IoT, Internet of Things, services and our health services are focused on that. And a large part of all that is connected to our connectivity and cannot really be called a niche therefore. But it may be that we become a niche player on one thing or another. There's a lot of -- there are a lot of innovative units, which we are building on now, but they're still too small to communicate anything about. However, it's definitely possible that we become a niche player at some point.

[Interpreted] Thank you. And then the VEB has a number of questions about ROCE, return on capital employed. How do we see progress in this? What can shareholders expect? Why are post licenses not taken into the calculation? And might we not publish a little more in our financials for next year about ROCE?

[Interpreted] Well, post licensing, let me start with that. That is, in fact, incorporated. They are income-generating and so definitely, they are ticking up in that effect. And for those who like to look at this, it's on Page 13 of our Annual Report, 9.9%. We do see our ROCE going up in the long room, but the impact of this is the long term. And in the long term, we are positive about our return on capital. And ROCE is used by us as a significant metrics in looking at investment options, things that in the long term will yield and then you will see the effect. So again, it's something for people with stamina. Let's see how it develops. But definitely, we will continue to mention ROCE in our financials as an important metrics.

[Interpreted] Then a number of questions of Mr. Stevenson. The first question. Because of the sale of consulting and CDK, has KPN become more predictable? Secondly, is the price of the auction affected by delays in other countries and is the choice of supplier an influence on that? And thirdly, will we depreciate extra on the copper network now that we have announced from 2023 to not use that any longer in specific locations. Joost?

[Interpreted] The sale of KPN Consulting fits our strategy to simplify and to focus on what we're good at. KPN Consulting is a part that's sprang from the old Getronics. It's a big segment and really the opposite of what KPN usually invests in, usually assets and the services is what we earn our money with. We are a people company, an hours and staffing company that sends people to houses, and they simply keep the hours. Maybe that's better in other hands than KPN. And so I'm really happy that we were able to sell that part of our company for a good price.

[Interpreted] Now the auction, what happens abroad?

[Interpreted] Many can see when the auction will be held, we're hoping for June of this year, whether it has an impact or not. On the amount of the price, I can't make any predictions because we have very strict auction rules, and they tell me to not say anything about this whatsoever. I can't say anything about it whatsoever, nothing about the auction, and that's all I have for now. Now there was a further question on the copper network, right, and decommissioning that. That's correct. We are rolling out fiber in those areas. It is our ambition to get rid of copper. That's good for our customers. That's good for our business as well. Also in respect of the service costs, in terms of fiber optic, we see it's a better proposition compared to the old copper network. Now perhaps we do have to write-off on that, but we expect those write-offs to be limited, in all honesty.

[Interpreted] VBDO has a further 5 questions about sustainability and KPN's policy. Chris, could you perhaps answer those questions briefly?

[Interpreted] I received a question on the scores of KPN around the climate goals and either risks in terms of climate adaptation and how we deal with it, and I will go through them one by one. So as KPN, yes. We do see room to improve. We're looking at new technology to monitor dikes, for example. There are sensors that can help us monitor dikes, there are Smart Farming pilots where you can actually facilitate agriculture and be very precise when to water the crops. And we can be very precise in that respect and there's technology for it. At the same time, our own infrastructure needs to be resilient. So we have recyclable materials for the infrastructure that you'll find abroad and we use our own sensitivity equipment at higher levels, so they are not impacted as much by water damage. So we are looking at climate risks and how it affects our business and how we can use our technology and connectivity to deal with all of those issues. Now there was a question about how we deal with our supplier and the supplier code of conduct and how we can ensure the sustainability. Now we always want our suppliers to agree with our own conduct. And we have the UN directives and our own goals, and we want them to agree to those, not just our own suppliers, but also their suppliers. Now we always assess our high-risk suppliers, the biggest suppliers, a lot of value involved. And we have the JAC platform, Joined Audit Corporation (sic) [ Joint Audit Cooperation ]. So that's an initiative. KPN is the founding father of it where we work together in terms of sustainability and compliance. And we share that at an aggregate level. And one of the questions, can we see the results at the supplier level? Well, we can't share that because there's an NDA, so I'm not authorized to share all of that. But you can go to the JAC, and you'll see some of the results at an aggregate level. And as I said, 16 telecom providers are associated in that platform. Now about diversity, the number of women versus males in the company, 3 in 4, our combined. So -- and the gender pay gap is involved as well. Now we see the number of women, 31%. And if the Shareholders Meeting agree, then we have another woman in the Supervisory Board. Now we want to bring that rate to 30%, that's our target, and we are focusing on gender diversity especially this year. It is wider than just male, female. You also need to look at other people. You also need to look at people who have more difficulty finding a job because of disabilities. Now the gender pay gap then, we did investigate that. And you see that the average pay differs between males and females. It's a little bit below 2% right now, but we're monitoring closely. But if you look at it at a more detailed level, it's not so much male, female. It has to do with years of service, age and males are older, they've lived -- worked for KPN for a little bit longer, and that explains the pay gap, and it is reducing. And then there was a further question, do we see any risks in terms of climate change and what kind of risks do we see? How do we deal with those risks? Well, I think there are plenty of opportunities. It's about livability, connectivity and security and monitoring that traffic because of our technology, we connect people. We allow, we facilitate remote working. We ensure security. We improve livability. We do tests with smart traffic lights. When an ambulance needs to move through, the traffic light moves to green. We look at security in the cyber area, remote working, reducing traffic movements. That is something that we do as a company, and that will benefit society in the long run. Risks. It's about reliability, integrity of our networks. We invest a lot in security, cybersecurity, we closely monitor geopolitical environments and we try to adapt, and climate effect. So if there's severe flooding or a lot of rainfall, then we look at our equipment that's out there and how they can adjust and how we can protect them against those influences of the weather. So when it's about sustainability, then we definitely are committed to all of that. It's about safety, security, society and approval of that risk.

[Interpreted] There was a question about limited insurance. Could you say a bit more about that?

[Interpreted] Yes, of course, we thought about this carefully. We have a limited assurance on the nonfinancial information in the annual report, and that's about the costs and the benefits. Moving to a higher level of assurance increases the costs tremendously and it's not worth it, and that's why we opted for limited assurance. But if it changes in the future, we will let you know. Right now, we want to use the money that we save by investing in our customers.

[Interpreted] Thank you, gentlemen. So we have one person here in the room, and you are carrying the torch. Do you want to speak or no?

[Interpreted] Yes, Mr. Sickinghe. I would love to have the floor. Now I am wonderfully impressed by KPN, and I am so happy that KPN took the lead when it came to sustainability. 2015, that's when you started, and it's a very strong brand. So Joost, you continued in a very strong tradition and climate neutrality, the 100%. KPN in 2015 did so but not all of them. And of course, whenever there is a disadvantage, there's also an advantage because you've already achieved the objectives for 2030, 2050. There are no flights, we need to close Schiphol. We need to open Lelystad, and we need to move to a new sustainable start-up. Now what we also see is that [ Technal Int ] is offering them services. Tech talent, it's very easy to hire them. So KPN, make your move, get them. And if you look around you, everything is in line with the Emergency Act. It doesn't say no shareholders, it says be safe. So this is great, trying things out. It is a lot safer here when you compare it to the greengrocers such as Albert Heijn or Jumbo where staff is exposed because people don't keep their distance. So I always participated in the start-up meetings with Koninklijke, you're great at start-ups. So perhaps you can develop an app that alert you when you find yourselves within a distance of 1.5 meters of a member of staff or another customer. And just get that alert, that sound signals, so we all know, yes, we are keeping a 6-feet distance. So you're not dealing with privacy whatsoever. All you need is an alert, you're within 6-feet distance of another person. Now what stood me out. I worked for -- I was involved in the millennial project of ING and everything needed to stop and cease. The world was organized, but everything worked out just fine. Now 2 years ago, we were alerted by the government there is a pandemic coming, and what did we do? Basically nothing. We were just overwhelmed by this. So KPN, what did you do together with the other companies because we are incurring damages running in the billions, trillions, millions, you name it. So there's a very specific questions. There were warnings of a pandemic coming. Companies did nothing. What did you do and what will you do about this going forward together with other companies? What's also relevant, 7.5% is the deterioration of the economy. The economy is shrinking by that percentage but maybe we can turn this around. Maybe we can improve the economy. Maybe we can mitigate this, maybe 2.5%, maybe 3%. So Joost, what are you going to do about this? Because if we do well together, it will benefit your results and your shareholders. So early 2020, the WHO, together with the United States, offered to send medical services to China. China didn't want this. And now we have this fire. And what happens? Now China sends us peanuts -- and some face masks to show the world how to do it, but KPN, how do you see Huawei? And the espionage activities on behalf of China, 3,000 people died. 1.3 billion people. But in the Netherlands, we're tiny country, and we also have that many casualties more. How is it even possible? Were we asleep at the wheel or something else going on? Now when you set fire to your masts, you're a high-tech company, so you can easily secure this, use your cameras, et cetera. So what are you going to do about this arson? And that's it. Now, a final question. What's going on right now? So let's say there's a lockdown in terms of cybercrime, that's far worse than what we're going through right now. KPN, how can you do something about this together with governments and other companies? And these are specific questions. And I think that KPN was well prepared. The measures inside here, fantastic. How can you roll this out to the rest of the Netherlands?

[Interpreted] Well, I will ask Joost to answer some of your questions.

[Interpreted] Well, thank you for your questions. Now let's go down your list. How did we prepare for a pandemic? And yes, indeed, we did have our contingency plan for pandemics. We used it for SARS. And the first steps that we took right now were the steps we took back then, distancing, disinfectants, you name it. But of course, we -- nobody could foresee that the coronavirus would continue where SARS stopped because SARS never really entered the Netherlands. So we had our emergency plan. It was ready. We used it immediately. So crisis management was up and running. We hit the ground running, to say it like that. But this is something, a situation that is easy to prepare for as a company. So at the end of January, I couldn't even imagine that 98% of our staff would work from home and that it would work well. So we learned a lot. But as I said, we had an emergency plan because of SARS. We updated it on the basis of what was happening around the world in terms of corona. Now the predictions that we saw yesterday about our economy shrinking 2 months ago, 2 months from now, I won't give you my predictions. But I will share what KPN is doing. I think we had a crisis in 2018 and we survived pretty well, because we're delivering primary services to our customers. Broadband, communication, more important now than ever. So households rely on us. Our business communities rely on us. So we're looking at the people who find themselves in emergencies and how can we help them. And how can we help companies who've gone through some very tough times. Now the self-employed people, we're trying to support them. The SME businesses, we're trying to support them. What are some of the vulnerabilities, and can we meet them halfway. Perhaps let them postpone their payments. And we look at this on a customer by customer basis, and we're talking to our larger companies as well. Now we delivered value by offering a lot of our services for free over the past 2 months. Call center platform is available for free in the Netherlands, available to all of the companies. Even if you're not a customer of KPN, you can use our platforms and we will continue down that path and see what we can do to get the Netherlands through these tough times. And I am in other Boards, and we talk with other companies who find themselves in similar predicaments. Construction, we are immediately talking to the chairs of the major construction companies in the Netherlands and to keep fiber optics up and running. You had -- you talked about Huawei in China, I am not sure how many victims they had in China, corona deaths. And the comparison between the Netherlands and China, that's your comparison. But Huawei, it's an important player in the market. We have a dual-vendor strategy. There are always various options available to us when it comes to picking our supplier, Huawei one of them. We have Nokia, we have Ericsson. And then we use software suppliers, bigger ones and smaller ones. And we are monitoring the geopolitical debate and we know that we are informed. So we can take decisions. Yes, some of the masts have been set to light and we don't have to explain it to the Netherlands, that is ridiculous. These are not our masts. They have a different owner. We use them often, but we also have other providers, but also the government for C2000 or the alert system, all of us suffer. And this morning, I saw on YouTube the footage of a gentleman who was setting one of those masts alight. And hopefully, they can arrest them today because he was easy to recognize, and I don't need to explain to anybody how crazy this is. And the police is definitely on top of things, and that's their job. And the owner of the mast will take additional measures to secure and prevent this from happening. Now the lockdown cybercrime, worse than what we are dealing with right now? Well, none of them is great news. Of course, we are an important player when it comes to keeping the digital structure of the Netherlands intact. I am involved in the Board, and we are definitely on top of this. So we talked to the government, we talked to other companies. Our TDO, our operations director, also part of the Board, has a large unit when it comes to protecting our own infrastructure and in our business market organization, there's a huge unit as well to offer secure, safe services to our customers. And there is a debate, an important debate, and it's the what-if debate. So what if something happens, how do you keep the Netherlands secure when it comes to their vulnerabilities? And I believe that KPN contributes tremendously in that sense.

[Interpreted] Thank you, Joost. I have one more question. What I thought was great, by the way, is that you told us how many people are ill, how many recovered, that's very relevant information for shareholders and also for the Netherlands. But the app that I spoke of, it's so simple, keep a 1.5 meter distance or else that the alarm bells will ring. Nothing too difficult about that, is there? You could do this with your network, your IT people, your start-ups. I think you could realize this very quickly. How can we do it?

[Interpreted] Well, I do have some expertise of what we're good at and not so good at. And we are in any initiative going on about the app now, and the main thing is that it's based on Bluetooth. And what is so surprising to me is that we're trying to reinvent the wheel. We can just link in with apps that are being prepared for launching in Austria and other countries. Let's just all use the same thing. It's so interesting that we are trying to think from the start of building a new app or as biggish app builders have already been thinking about this for various other countries. Wouldn't it be great if we looked at this more on a European level and worked together? Last Saturday, it's well explained in the financial paper exactly how that works, the Bluetooth app. So let me just refer to that article in its financial deck log. That would be a really good thing, and we could play a part in this in view of the position that we hold in the Netherlands. And we're eager to, but we are not a company that is illogically going to come up with a new app competing with others and only very specific to the Netherlands. I think we should look to Europe and definitely we want to play an important part in that development.

[Interpreted] Okay. That makes me so happy that I asked the question because now I know there's a company in Austria that can do this and supply this very quickly. And we want it yesterday because it would prevent many victims, 1,000 in fact a day, but all countries are working on this. And let's assume that it will take a little bit longer. In summer, this will quite it down and maybe it will come up again in September, and that will be the time for everybody to download an app like that. I'm happy that app is coming and the road to it may be much simpler than we think and fear.

[Interpreted] Thank you for your contributions and questions. And let me then establish that the second item of the agenda has been finalized, and let's go to #3, and that is to adopt the annual financials. And there is also the integrated annual report 2019. You've been able to look at it on the website of KPN. And it's been audited and confirmed with a combined audit opinion by EY. And over the year, EY discuss their reports with the Board of Management, the Audit Committee and also the Supervisory Board and naturally the reports are also the topic of conversation between the Supervisory Board and the Management Board. In addition, both the Chair of the Audit Committee and the Chair of the Supervisory Board have a separate consultation with the auditor about the work done and the various findings. The relationship with the auditor with that can be characterized as open, critical, professional and constructive. Topics that we looked at in the past year include, among other things, the implementation of the new IFRS rules to do with lease accounting, the nonfinancial KPIs, the tax positions, the appreciation of intangible and financial fixed assets, internal controls and continuity of IT, including, of course, cybersecurity and data privacy, and various compliance topics including fraud. Now based on the various consultations as well, as the content of the Board reports of EY, as a Supervisory Board, we were able to conclude that relevant topics and considerations were discussed in careful and transparent fashion between the management and the auditor and find their fair representation in the results of KPN. And I'm happy to give the floor to our auditor, Mr. Blenderman. And for the AGM, KPI has released him of his confidentiality duties and thus put him in the opportunity to give us explanations on the audit work that EY did. Let's go to the screen, because he takes part online. There he is, Mr. Blenderman.

[Interpreted] Well, dear Chair, thank you so much for this opportunity for our involvement as external auditors to be presented to the AGM. Ladies and gentlemen, my name is Blenderman. I am auditor at EY. And since 2017, we have been the outside auditor of Royal KPN. And I'll go into the next part of our audit of the consolidated and nonconsolidated financial accounts of KPN 2019. We will look at our approach for the audit and our focus. We will draw specific conclusions. We will look at key audit matters. We will look at compliance and communication. The scope. We looked at the non-consolidated and the consolidated annual accounts of KPN. We looked at whether the annual report meets the legal obligations. We looked at whether the content matches the picture that is given in the annual report and with the findings that we have made. We looked at the legal requirements for KPN, and we were also given the following assignments by the company. We looked at sustainability, information and the outcomes of that were taken up in our integrated audit opinion. We were involved in press releases, among other things. We looked at reviews of quarterly and half year figures. Our strategy was as follows: As the outside auditor of KPN, I'm in charge of auditing matters and to take that responsibility I composed an experienced team with relevant sector expertise and various other experts of EY for immaterial assets, goodwill, fraud risks and compliance with the rules. We work closely together with the in-house accountant. We share our activities, we share our outcomes. And how we do our audit is such that we can give a high measure of security that the annual accounts give a true picture. We looked at the materiality and set it at EUR 45 million. We discussed any mistakes, over EUR 225 million, together with the Supervisory Board. And based on the materiality used and the estimated risks by us, we did our activities subsequently. The main conclusions are these. As you can see on Page 165 of the integrated report, we have an audit opinion for the annual accounts and reports. We think there is nothing that need yet to be done. There were no differences between the estimations that we saw which generally qualify as well balanced. We looked at Scope 1 and 2 CO2 emissions. All the other information to do with sustainability was assessed on material correctness, and we found no mistakes or deviations. In the annual report and the report of the Supervisory Board, we looked at these, and we saw no material inaccuracies. And we looked at this in our roles as auditors and with the knowledge that we have of the company in that capacity. And naturally, we look at any information for the consistency of the annual accounts, which is a legal prerequisite, has to do with remuneration. We have seen that this is in conformity with [indiscernible]. Now the main focus points for our attention. This is an overview of the key audit matters and other focal points that are mainly the same as those of last year. And these are the matters that were given most attention in our audit. Let me look at 2 of them more specifically. IFRS 16, the implementation thereof has been explained into the annual account. And there, the main differences between the old and the new standard are outlined and the financial impact is also described.

[Interpreted] We can't hear. Interpreters can't hear, Mr. Blenderman. There seems to be a bit of a problem with the connection at this point. We are reconnecting. Please do wait calmly whether we can reinstate that connection.

[Interpreted] Okay. If all is well, then I'm back. Yes, indeed. And let me start again with IFRS 16 because I was telling you about the implementation thereof and that various things were adapted. IT solutions were implemented, and we made sure that there's consistent application of this at KPN. We looked at the financials of 2019 and also looked at the financial impact of IFRS 16. We agreed to any overviews included. We looked at the reliability of IT systems and the risk of cybercrime. Books and accounts at KPN are highly automized. And for companies in the telecom realm, of course, there's a heightened risk of cybercrime. Cybersecurity is not an object for our audit. However, if insufficient attention would be paid by KPN to security, that will be a threat for the proper functioning of the internal audit network and financial controls. And this is something that our audit would not be able to be supported by. And so we look at who has access to information systems and whether changes in that respect are being managed properly. We look at measures to do with cybercrime that take as appointed departure, the restriction of external threats and resilience if such threats should materialize. And we also take cognizance of the outcomes of tests that KPN does to assess the security assistants. We also look at the work of the risk management department, internal audit and CSO. Our conclusion is KPN has its internal audit structure well in order and the information given is useful and good. And on a quarterly basis, we look at in-house procedures or they -- I'm sorry, assess in-house procedures. And they do this well. They look at compliance. They document it well so that it is auditable for us. And with that, the internal audit structure contributes to a safe IT environment. Then fraud and noncompliance with rules and regulations. Of course, this is very much in the media, and we underwrite the importance of attention for fraud and noncompliance with rules and regulations and our compliance also and subsequent steps by auditor. Focus on fraud and noncompliance with rules and regulations is the place where we've looked at length at the risks of fraud and noncompliance. The scope of our work incidentally has not changed compared to earlier years. It's simply more explicitly formulated and focused on the actual situation at KPN. We think it's very important to play our part -- and for a minute there, I thought you'd lost me -- to play our part and take our responsibility as auditors, but it is important with this particular topic to look at the entire chain, including the 2 boards, the internal auditors and the risk management system and, in the end, also the government and any investigative institutions. EY has this high on the agenda and KPN has had great attention for fraud and compliance. And we looked at the fraud risk factors and discussed them with the committee and also with the management and took it up in our audit plan and corporate security compliance and integrated. And KPN Audit Committees talk with us about this on a regular basis and there are periodical information to the Boards about these topics, and we looked at the various reports that have been generated more closely. And in our analysis, we took into account material derogations to do with fraud, we want to be extra alert for any signals and signs of fraud, as our forensic experts were involved in this work, which is standard for such customers as KPN. Then communication and interaction. There are regular consultations with the 2 Boards and the Audit Committee. The relationship is always transparent, critical, independent, a very good relationship in short. And the various departments want a high level of quality, act professionally and are expert. And we were able to conclude that the management and the Audit Committee take our findings seriously and that adequate follow-up takes place. And each quarter, there was a Board report which we give to the 2 Boards about matters that we reported on in 2019, our independence, tax and legal matters, remuneration, going concern and the safeguarding of the continuity of automatic data processing. We also give our vision on estimations and appreciations. Thank you for your attention. Chair, back to you.

[Interpreted] Thank you, Frank. There's a question of Mr. Jansen of VEB, the Dutch Stockholders Association, who has concluded from the key audit matters list that we have trouble with our own IT systems and how this is reconcilable with the fact that we offer KPN security as a service. Might you answer this question, Chris?

[Interpreted] Well, key audit matters, maybe there's a misinterpretation, and those are not problems. There are things that are given focus. So security is a thing that was given a lot of focus by the auditor, and we spoke about this to EY, and we sort of sharpened our own -- spruced up our own security system. But that are the key audit matters. They are simply very important focal points for audit. They are not problems as such. The court matters, not issues for that reason.

[Interpreted] And I have a new challenge for KPN. I have Bose loud speakers and headphones at home and the TV part is HD quality. But then you get this and also at other shareholders' meeting, we see this. It seems as though quality progress has stood still for 20 years. In digital communications, it's not good, the sound is bad, the images are not good. So if you want to do things digitally, I would advise that you have high WiFi quality, TV quality, Hi-Fi quality because this goes wrong everywhere. This went wrong at PostNL, it was bad at Ahold, then lo and behold, it didn't go faultlessly at KPN. So my advice would be, worldwide, for digital communication to make sure that you make it a Hi-Fi or HD quality or else use different communication.

[Interpreted] [indiscernible], we all have our own vision, I watch the news, via the NOS. I see iPhones, other cameras, it's all acceptable nowadays. We live in a world where you have diversity in optical equipment. So of course, you can always improve, and I'm actually pretty proud of the complexity that we've achieved over the past month, what we manage today. But even today, there are that many stakeholders, and they can all participate in one form or the other in this general meeting.

[Interpreted] Well, perhaps it has to do with the fact that you have a Mickey Mouse budget. It's not BBC World. It's not CNN, where you have a lot of correspondence with investments and hardware, and that's why they can simply use their telephone.

[Interpreted] I understand. But even CNN, even the BBC, I see telephones being allowed. So I established that there are no further questions about this item on the agenda. This is the first voting item. The Secretary will now talk about the number of shareholders present and votes represented, and Jasper will explain how you can vote.

[Interpreted] Ladies and gentlemen, we have 1 shareholder who showed up in person and 2 proxy, 12 virtual participants. And if we combine the number, we have [ 2,000,943,300 ] were represented. So 70% of the share capital with right to vote, 2.2 billion votes are proxy votes sent to the similar notary. And I have 165 million. As the secretary, there are voting instructions, they are part of the voting system, and we have no influence on this. The number of votes that you will see on the screen are those proxy votes and they're included in it. Now the voting process itself, the online share -- the shareholders participating online can vote through their platforms. They've logged in and the shareholder here will use the app on a smart phone or tablet to vote. And if you do not see the voting items. Just click the icon with the graph on the equipment that you use, and there you see there are several voting items and then you see the options for voting item. You can vote in favor, against or in abstention. As soon as you voted, the screen will share your vote, and you can issue your vote or now you can do it later during the meeting until we have any other business to transact the item on the agenda. You can keep changing your vote. And not until we have the final item on the agenda, other business to be transacted, that's when you can no longer change your vote. So the adoption of the financial accounts for the financial year 2019. So abstention doesn't qualify as a vote cast. So we need a majority of votes.

[Interpreted] So Item 4 on the agenda, the remuneration policy on 2019. Like as we did in previous year, we will now talk about the execution of the remuneration policy for the Board members over the past year. What's new this year is that you have an advisory vote, and you can cast that vote, and I'll get back to that later. But first, let's listen to Mr. Hartman, he's the Chair of the Remuneration Committee, and he will talk to you about the remuneration policy and the execution thereof. Peter, the floor is yours.

[Interpreted] Thank you, Chair. Now the remuneration report for 2019 was drafted as much as possible in line with the new requirements arising from the implementation of the adjusted directive shareholders right in Dutch law as of December 2019. Now by way of introduction, I want to briefly talk about the starting points of our remuneration policy, like as they were approved last year during the General Meeting of Shareholders. Now the remuneration policy for the Board of Management for KPN is based on what's customary in society and in the market, aligned with the individual tasks and responsibility and the experience of the members. The composition of the remuneration policy for the Board consists of a basic salary, STI and an LTI and their variable remunerations plus perks. Now the STI variable remuneration is based on cash. And it has an on-target level, 90% of the basic salary for the CEO, and 60% for the other members of the Board. Now the remuneration is dependent on achieving a number of financial and nonfinancial targets. Now the long-term variable remuneration is based on performance-related shares with an on-target level of 135% of the basic salary for the CEO and 90% for -- of the basic salary for the other members of the Board of Management. Now this remuneration component is dependent on achieving various financial and nonfinancial targets. Looking back at 2019, then I would like to explain the results of the variable remuneration arrangement over the past year. Now the outcome, you see them on the screen. If you look at the STI, for the calendar year 2019, is a little over the target level. It's 104% to be precise. Compared to the original financial targets, the free cash flow performance is above the maximum level. The EBITDA after leases performance is between the target level and the maximum level. And the total revenue performance is a little below the target level. Now as far as the nonfinancial targets are concerned, as established at the beginning of the year, the employee engagement performance is below the threshold level for payment. And the NPS performance, and that is the benchmark to measure customer satisfaction, and at a little above the target level. Now these results brings us to 104% of the target level. The Supervisory Board did not make use the year of its discretionary powers to add a discretionary factor. So the outcome applies to all of the members of the Supervisory Board. The remuneration of the CEO is calculated on his average pay in the year 2019. So COO for the period to October 2019; and CEO, starting at the first of October 2019. Now the remuneration for the Board of Management members applying from the first of the -- appointed at the 1st of December 2019 were included and accounted for in the remuneration report in line with the current policy, half of the STI after the deduction of taxes and so. So security contributions will be paid in the form of shares because the directors no longer -- because the directors do not comply with the directive shareholder ownership, the LTI then for -- it is based on 2017 but for the financial -- nonfinancial targets measured across the years 2017, '18 and '19. The following applies the performance for the STI: ended up at 63.78% of the target level. This outcome is the result of the performance of the financial target in the area of the relative TSR and free cash flow and the nonfinancial targets in the area of reputation and sustainability. KPN in 2019 was again nominated and won as the best and most sustainable telecom companies in the world, and that was the Dow Jones Award. Unfortunately, the threshold levels for the LTI were not met. So no payment under the LTI plan in that respect. On the screen, you see the number of shares that on the basis of the LTI plan 2017 will be acquired mid-April 2020. The acquired shares may not be sold for a period of 2 years. If you look at the remuneration policy for 2019, you will see that the pay ratio is explained. The pay ratio is based on the relationship between the staff member earning the most, the CEO, compared to the average pay of the other staff members. The pay ratio is calculated on the basis of the IFRS starting points, and for 2019 is 30, 3-0. Now if you take that pay, it is being readjusted or calculated for an average on an annual basis. And for a detailed explanation to the pay ratio, I refer to the relevant passages and sections in the remuneration report. I noticed that later during this meeting, we get back to the remuneration policy going forward. So for now, we are only talking about the execution of the policy for the year 2019. So let's move to the questions in this area, and we received the following questions.

[Interpreted] Some questions, which we already answered on the website. But before I go there, I would ask everybody else to also type their further questions, so we can discuss them, and I thank you. In his questions, the VEB repeats the desire to have cash flow not included as a separate item in the variable remuneration overview, but as required capital. And capital efficiency is something that it would like to see as a basis before there can be any variable remuneration. And our extensive answer to that can be found on the website. KPN looks at the return on capital employed and chooses a balanced mix of metrics, both pertaining to the short and the long term view. And I would like to say at this point that the Supervisory Board believes that partly in view of the profile of this company and its long-term investment strategy, the free cash flow is a suitable financial KPI to measure the general financial performance of KPN. The Board of Supervisors seeks to find the right balance between the interest of the various stakeholders and believes that that balance is served with the current remuneration policy. The final prior question, if you will, is about the severance fee of Mr. de Jager. I'd like to say about this. This agreement matches the remuneration policy of KPN, and it's an outcome, as we already said, at the EGM of good consultation between Mr. de Jager and the Supervisory Board. And various interest played a part in those considerations, which led to this outcome. To be absolutely sure, let me see whether any additional questions have come in. There have not. Any questions in the room, perhaps? Mr. [ Frake ]?

[Interpreted] Well, this is the first time that I hear Mr. Farwerck in a shareholders' meeting. Last time he was at Ahold, and Ahold was on the same day the AGM. But I'm given a fine impression of Mr. Farwerck. And what I would like is for us to pay a sort of extra bonus should he be able to get this company through this crisis in the short, but also in the longer term, 3, 4, 5 years. And also the Dutch economy, where possible, together with other companies to be taken into an upward surge through his work. And Peter Hartman, the CEO of the most sustainable airline in the world. Well, we are super sustainable here as KPN, so that VOC mentality that Mr. Hartman has mentioned would be something good to develop throughout and then for Mr. Farwerck to take the lead in Dutch industries of that.

[Interpreted] Duly noted, Mr. [ Frake ]. I think as Board of Supervisors, we would love to have Mr. Farwerck, mainly engaged with the stakeholders and customers of KPN. But of course, the network in the Netherlands makes an implicit tremendous contribution to society as a whole. And incidentally, if you look at the proposal and remuneration policy of the past that Mr. Farwerck with his team and many others in KPN have the right incentives to create a beautiful success story for us. So we believe that the current framework does exactly what you're asking for. Well, then, ladies and gentlemen, I established there are no more questions. And so I would take you to the vote for the -- this item on the agenda. You can vote for or against, if you don't agree. But what you tell us will have no consequences for the remunerations granted. But of course, we will take it as advice and recommendations for the future. You can cast your vote now or later until the moment of any other business, which now moves us to Item 5, which are explanations to financial and dividend policies. Mr. Figee will give you a further explanation thereof.

[Interpreted] Thank you. And I'm looking at this slide, we are committed to a solid financial profile, it reads there. And that is what we are. We have a very strong balance sheet and credit profile. And this is characterized by the rating of number 3 that the credit agencies give us. You see there, Moody's and Fitch ratings. We have an optimized balanced position. There is some 60% lower interest payments compared to 2014. And our net debt is some 2.5% lower. And definitely, last year, we were very active in this area, refinancing debt, for example. And 2 things have been redeemed, we purchased back something expensive in terms of loans, replacing it by another using the possibilities that our capital offered to us. And so we pay less, much less, interest these days. Our position continues to be solid. Total liquidity at the end of the year with EUR 2.6 million, EUR 1.6 million was on of nondrawn facilities. 2.24x EBITDA was our debt ratio. And we are below our threshold of less than 2.5x. So it's very solid, gives us financial space and is a strong position for this uncertain year 2020 to be faced. So solid financial profile in combination with that attractive dividend payment to shareholders, it's important for everybody. We want to operate future-proof, we take balanced decisions, staying below the threshold values, and we pay attention to all stakeholders. We've been able to show that also today. So we announced a dividend of EUR 0.125 to be distributed, and this is after a deduction of the interim dividend of EUR 0.083. That was a total sum that was paid in August. What remains is EUR 0.083, I'm sorry, I made the calculation of the final dividend. So that is that EUR 0.125, EUR 0.083. EUR 384 million still to be paid out in final dividends.

[Interpreted] Thank you, Chris. And this moves us to the questions about this item on the agenda. Once again, through the VEB, prior to the meeting, we received a number of questions about that, which were answered on our website. And before I take another question here, please let me remind you that you can also give us follow-up questions about this topic online. Mr. Jansen wondered whether shareholders with a view to the current corona pandemic have to be worried about the sustainability of the dividend, and whether KPN should not consider purchasing its own shares now that the price has gone down. Could you answer these 2 questions?

[Interpreted] Well, let me say, it's a robust and stable balance. There's ample liquidity, EUR 1 billion on the balance sheet at the end of the year, as we already mentioned. This year, we had a number of big cash outs. So -- well, the dividends that we just announced, there is an uncertain outcome of the spectrum auction. An uncertain environment for our movements in September, but we're very comfortable with the balance. We're not worried, although we are alert. We're comfortable to give you the dividend for this year, and let me keep it at that. Anything else about buyback of our own shares? Too early to say. It's an uncertain environment. Let's get certainty about the financial and economic situation of the Netherlands first. And after we've made our big payouts of the year, we might be able to say more. We're not concerned, but we're alert.

[Interpreted] Thank you, Chris. Any other questions about this topic from anybody in the room? If not, then let me close this by concluding that the general share -- analyst meeting has been informed about the financial and dividend policy of KPN, which moves us to Item 6. And this is the dividend adoption for 2019. On 30th January 2019, KPN expressed the intention to pay a regular dividend of EUR 0.125 per ordinary share for the financial year 2019, and 1st August 2019, already an interim dividend of EUR 0.042 was paid out. And in line with our only -- with that earlier intention, we now propose to pay out a final dividend of EUR 0.083 per share, with which, indeed, that regular dividend will end up at EUR 0.125 per share. The total profit of the year 2019 assigned to the shareholders of KPN is in total EUR 626 million. The proposed total dividend, EUR 524 million. And on 21st February 2020, the Board of Management with the approval of the Board of Supervisors assigned a sum of EUR 101 million from the profits to other reserves. And taking into account the already paid interim dividend of EUR 176 million, the remaining part of the profit over 2019 is available. And this is a sum of EUR 348 million, which is available as final dividend. And so with of the Supervisory Board, the Management Board proposes to the general meeting of shareholders for the year 2019 to pay a total dividend of EUR 0.125 per ordinary share. And if you agree to this proposal, the final dividend over the year 2019 in the amount of EUR 0.083 per ordinary share in consideration with Article 33 of the Article of Association of KPN will be made payable on 22nd April 2020, and that moves us to the questions. I turn the page, and I see there are really no questions that came in about this. I'm looking around the room for any. No questions. Well, then please cast your votes about this. And that vote relates then to setting that dividend over the book -- over the financial year 2019 at EUR 0.125 per share. And again, you can vote now or you can vote later until the moment of the any other business. The next item in the agenda is discharge to be given to the members of the Board of Management and also the Board of Supervisors. Like every year, after we've adopted the annual accounts, we ask you to give discharge to the 2 Boards for their policy as is apparent from the annual accounts, all made known to you in any other way. And we already looked at this, of course, at item on the Agenda #2, which concern the report of the Board of Management over the financial year 2019. Now if we vote about this discharge, we make a distinction between the Supervisory Board and the Management Board. And because you can vote on any voting items throughout the meeting, I will combine my discussion of these 2 items. The discharge of the Management Board concerns any directors who had a seat in this in 2019 to which Mr. Farwerck, Fouladi and Overbeke, Ms. Snoep and Ms. Garssen, and former directors, Ibarra and de Jager, the discharge of the Supervisory Board regards all the supervisors. Which moves us to any questions about this topic. We haven't received any prior questions. Are there any questions in the room about this particular item on the agenda? And let me check online. No more questions also. I see. And so I'm happy to invite you to vote on this. And that vote then again regards the proposal to grant discharge to the Board of Management under Item 7, and discharge the Supervisory Board under #8, and the vote is open until the moment we start any other business. Now Item 9 is the proposal to appoint outside auditor for the year 2020 -- until the year 2021. The Audit committee has looked at the functioning of the outside auditor and the developments in relation thereto. And has also involved in its observations -- the observations at the Board management and has looked at the assessment of the functioning of the auditor by the financial departments, which was given a very nice 8.6 out of 10. In the evaluation, we looked at the good collaboration, the constructive but critical attitude of EY, the professionality of the various members of the team of EY and the good quality -- the good value for money, we should say. And in conformity with best practice provision 161 of the Corporate Governance Code, the Audit Committee has reported about its evaluation of EY to the Board of Supervisors. And there was a positive advice given about appointing EY as an auditor for the year 2021. And it's completely supported in this by the Board of Management. And in line with this advice, we propose that Ernst & Young Accountants LLP are given the assignment to audit the annual accounts for the year 2021. We've received no prior questions about this topic. Any questions here in the room? No questions. No questions online either. And so I conclude that there are no questions about this item, and so we can vote on it. And the vote then concerns the appointment of Ernst & Young accountants LLP as our outside auditors to audit our annual accounts for 2021. And if you've not cast your vote yet, please do so before the start of any other business. And we move on to the next item. And that gives you opportunity to make recommendations for the appointment of a member of the Supervisory Board. Upon closing this shareholders' meeting, Mr. van Bommel's appointment term will expire. And the Supervisory Board intends to fill the vacancy by nominating a candidate to be appointed by this AGM. That vacancy should be provided in accordance with the profile of the Supervisory Board and most -- more in particular, the Supervisory Board seeks a specific diverse composition of the Supervisory Board in terms of age, gender, experience and expertise. And any candidate, in this case, in view of the composition, must have a broad financial or audit background. And what we intend is to propose that you appoint Ms. Catherine Guillouard. But first of all, in conformity with the articles of the association, I'm happy to give the general meeting the opportunity to use their opportunity to propose or make a recommendation for a candidate. We've not received such a recommendation yet. Does anybody here now wish to make a recommendation?

[Interpreted] Well, yes. I think it would be good, and I would combine Items 11 and 12, if Jan Kees de Jager can return to the side of Supervisory Board because he has a great track record.

[Interpreted] He cannot in conformity with the governance codes.

[Interpreted] And when might he come back to us?

[Interpreted] I'm looking at my secretary. Former directors cannot become members of the Supervisory Board, full stop.

[Interpreted] Well, then an alternative might be [indiscernible] because of his ample financial experience. Also Europe-wide, he would be a good asset for KPN.

[Interpreted] This might be a proposal for now or for next year when, in fact, the rotation schedule says that 3 Supervisory Board members have to be replaced. Okay. So can I take that as a suggestion?

[Interpreted] Yes, indeed. It's only suggestions.

[Interpreted] Well, thank you very much. And let me then conclude that the meeting is not using it formal right to make a recommendation for a nominee for the vacancy that will arise because of the expiry of the term of service of Mr. van Bommel. So let's move on with the next item on the agenda. That's #11, and that's the proposal to appoint Ms. Guillouard as a member of the Supervisory Board. Let me explain her nomination, and I refer to the information available in the agenda. The nomination of Ms. Guillouard is supported by the Board of Management and the Central Works Council. Their point of view, in respect of this nomination, is published on our website as part of the meeting document. Ms. Guillouard meets the requirements for the profile for Supervisory Board member. She has extensive knowledge and experience in finance as well as in management of large companies and network-related industry. For these reasons, the Supervisory Board member would like to propose her as a member for a period of 4 years, which period ends at the general meeting of shareholders to be held in 2024. She, in this -- she is not present here in person, but she recorded a video message that we would like to share with you right now.

Dear shareholders, I'm Catherine Guillouard. I'm 55, I'm French, and I'm running a business of public transportation. We are in the #4 in the world. My group is RATP Group. We are based in Paris, where we operate all the public transportation system in Paris, but we are also in France, and in 12 countries in the world, like, for instance, we are running transportation system in Doha; in Algiers; in Riyadh; in Hong Kong; in the U.S., for instance, in Boston, for instance. And we're all 65,000 people in the group, on which today, 17,000 are working internationally. We -- in fact, I was just before Deputy CEO of Rexel, which was a EUR 13 billion company, specialized in distribution of electrical material and with a presence in 36 countries in the world. During my career, I have been CFO of big listed company, 3 of them, Rexel and also Air France and Eutelsat, which was at that time the #2 in communication by satellite. So I know a little bit communication. And I have been also put in various operational position. For instance, in Air France, I was VP, Flight Ops for the group and big transformation projects. Obviously, I have some experienced with crisis management. I could tell you, running a business like RATP, public transportation in Paris today with the COVID crisis is not a walk in the park. I am very honored. And I will do all my best, obviously, to bring my experience if you decide to give me a green light to join the Board of KPN. It will be a great honor for me. KPN is a very innovative, very solid company. Obviously, I have been already in contact with each of the Board member, and it will be a great honor for me if I join, if you give me the green light. I will do all my best to bring my experience as a CFO, but also as a CEO, with obviously the main goal, which will be to create value for you, shareholders. So it will be, obviously, for me, my main concern and goal. Thanks for the attention.

Thank you. [Interpreted]. So let's move back to the questions about this item of the agenda, the proposal to appoint her. And we did receive questions beforehand. On the website, we've already given a detailed answer to all of those questions. In summary, I would like to add the following. KPN is familiar with the settlement that concluded between Airbus and various countries. But if you look at the fact underlying the settlement, they relate to a period prior to her becoming a nonexecutive Board member of Air France. Integrity is very important to us. And allegations are always carefully checked. Now any ongoing investigations cannot be commented on by us. Even after our investigation, we have no reason to doubt the integrity of Ms. Guillouard. Now the Central Works Council talked to Ms. Guillouard and gave their opinion. And that was published on our website as well. We cannot comment on the contents of the conversations between the Central Works Council and Ms. Guillouard. She is -- she fits the profile because of her experience in management, in finance, in telecom industries and other industries such as aviation and public transportation. Now. There is a further question submitted by Mr. Stevense, and he asked, can you please talk about the selection process? Yes, I can. Within KPN, we have a tight process. Last year, we established together that there was a vacancy to be filled in this meeting. And within the Board of Management, we talked about the profile, what kind of person are we looking for and to have a balanced composition of the Supervisory Board and our diversity needed to be enhanced. We have 2 female Supervisory Board members, but we always have the ambition to add more. So the general principle played a strong part in this. And as we said earlier, Mr. van Bommel had an audit profile. So we needed somebody who could replace him in the Supervisory Board with a similar type of profile. And as you can see, our candidate has a wonderful financial track record. She fulfilled that position for various other companies. And as a Chief Executive, she understands how a business works and how that's managed. So in our process, we've reviewed several candidates. We were advised by an external consultant, we were advised by an external consultant. And we hashed it out together, what were the options available to us and together, we decided that she was the best choice that we could possibly make, and we are very happy with her. Anything you wanted to say or no? Next point on the agenda then. You can now vote on this item, of course. So it is about the nomination of Ms. Guillouard as a member of the Supervisory Board. And you can vote until the last item on the agenda. Moving on to Item 12 on the agenda. So any information about the vacancies in the Supervisory Board as per 2021. Where we closed this general meeting -- no, when we close the meeting in 2021, there will be 3 vacancies: Garcia Moreno Elizondo, Haank and Overbeke will have to step down because their appointment term has expired. The Supervisory Board wants to fill those vacancies and candidates will be nominated and presented during a general meeting of shareholders. Of course, Supervisory Board seeks a great balance of expertise, diversity and knowledge. And that brings us to the next item of the agenda because this was for information purposes only, as you understand. You agree? Anything you would like to add? Right. Next here.

[Interpreted] But you did this already, no?

[Interpreted] Is there more you wanted to say?

[Interpreted] Of course, there's more I want to say. Suggestions. Jean-Marc Huet, he was a CEO for Unilever, he is now the Chair of the Supervisory Board Heineken, Boxmeer retires, worldwide and fantastic network; Robert Jan van de Kraats or the CFO of Randstad; Polman would be a great one, but I don't think he will be available; but also Feike Sijbesma, he is their champion of sustainability, he would be wonderful; Ralph Hamers perhaps of ING, he'd be brilliant in terms of finance and IT; and Alexander de Carvalho, Heineken, again, he speaks Spanish. So the Mexican part is well represented in that case. Those are my suggestions.

[Interpreted] That is a wonderful short list indeed. Now we can move on to the next item on the agenda, and that is the proposal to adopt the remuneration policy for the Board of Management. It was last changed by the general meeting of shareholders last year, April 2019. One change, except for that one change we will explain the change later, the remuneration policy. You can approve today in all material respect is identical to the previous one. The remuneration policy is in line with the new requirements arising from the implementation of the adjusted directive shareholders' right in Dutch law as per the 1st of December 2019. And Mr. Hartman, you are the chair of the remuneration policy. Can you please explain more about the marginal change?

[Interpreted] Thank you, Chair. Now because the points of view of the various stakeholders do not always align, therefore, the Supervisory Board seeks to find that right balance. The right balance between the various interests. We believe that we have found that balance with the current remuneration policy. Also in view of the focus on the STI and the LTIs involved financial as nonfinancial targets and of course applying to the Board of Management. What contributes -- this contributes to our license to operate and the strategic course that we're sealing to have sustainable operational performances in the long run. One change only, as said, and that is deleting the discretionary factor of the STI. This discretionary factor allowed the increase of an STI payment with a maximum of 30% or decreased debt. Now we talked to the various stakeholders, and we arrived at the conclusion that such a factor is not in line with what happens in the market or the most recent ideas about good governance practice. In addition, the Supervisory Board wants to make it clear and explain that when you talk about possible increases of the basic salary of the members of the Board of Management, the development of the general collective labor agreement increases for KPN staff is included as an important reference. The Central Works Council in line with the implementation of the amend directive shareholders right in Dutch law as per the 1st of December 2019, was asked for advice. In respect of the amended remuneration policy, and the response of the Central Works Council is included in the policy. KPN values their advice and continues a constructive dialogue with the Central Works Council.

[Interpreted] Thank you, Peter. So let's move on to questions about this item of the agenda. Spaargaren, on behalf of Eumedion, submitted various questions. Now we -- it is all -- his question center around long-term value creation, and should that play an important part in the remuneration region policy instead of total shareholder return, TSR. We've given our answers extensively on the website, but let me briefly add. KPN has a balanced set of long-term and short-term incentives for KPN and is necessary to strike the right balance and make the right collect -- technological choices to create value for shareholders. So free cash flow is directly influenced by the investments of KPN in networks, strategic partnerships and platforms. Now the effect of this investment will be translated in total shareholder return performance compared to other companies. The Supervisory Board wants to find the right balance of the interest between the stakeholders. And we believe that that balance has been stricken correctly. Spaargaren also wonders how KPN sees in including the spectrum auction as a component of the remuneration policy. Now to -- management can only influence such an auction to a limited extent. And this is a strategic project, and we don't want them to be influenced by the outcome. We don't want them to influence the auction and perhaps influence their own remuneration. So if you look at spectrum auctions, there should not be a direct link between the outcome of the auction and the remuneration. And it is reflected indirectly in the TSR. Now Spaargaren also asked about corona impact and the impact on the list price. So perhaps there should be a change here. Again, we've given an extensive answer on our website. The Supervisory Board does not see a reason to change things because the performance targets for the LTI plan 2020 have been established prior to the current special and unforeseen circumstances. The Supervisory Board, on the basis of the existing remuneration policy, has a discretionary power. If they deem it necessary, at the time, they can use their discretionary powers. And in the remuneration policy, they will explain as to what -- as to why and to what extent they will make use of their discretionary powers. So are there any questions? I think there's an online question, perhaps several ones. I read out the question, Spaargaren -- Mr. Spaargaren. That's question 52. It is disappointing that the company in this time holds on to the first day of trading after the general meeting of shareholders. If the targets are established at the beginning of the year, why is the grand date not at that date as well comparable to ASML or AkzoNobel, end of December, January, respectively? B, again, I want to point out the responsibility of the RWC in this that if there is a dip in the share price, the final number should be reduced. It's all about common sense, and it contributes to the trust that society can have in companies. Now I believe that this is a logical question, understandable. Do we have a benefit? Do we benefit from the relatively low share price? We are also asking management right now, too, in these special circumstances to include the price and to bring that up. And I think that the room -- the people in this room here said it was very important that KPN doesn't only help themselves, but also society at large. And I believe that we will honor our agreements that were made in the long run. And these programs are programs that apply for the long term. You don't just establish a program like this, and then you change it a day later, it is for a longer period of time, including uncertainties. So we do not think it would have been wise to have an ad hoc response. As we said earlier, if we, in the long run, believe that there is an unreasonable benefit to those who are entitled to this program, we have our discretionary powers to change things. Now let's move on to Item 14 on the agenda, and that's the proposal to establish the remuneration policy for the Supervisory Board. About...

[Interpreted] Actually, we can vote about that prior point.

[Interpreted] Absolutely. Thank you for making me aware of the fact you can vote, of course, about that earlier item on the Agenda #13, until any other business. And #14 is a proposal to adopt the remuneration policy for the Supervisory Board. Also for them, the remuneration policy is based on new rules, and that policy was last changed in April 2015 during the AGM at the time. Also here, we would ask you to confirm the existing policy, barring a few changes that Mr. Hartman will enlighten you about.

[Interpreted] Thank you, Chair. As to the remuneration policy for the Supervisory Board, that Board confirms the existing remuneration policy, but proposes 2 marginal changes. First of all, we propose for the so-called foreign country expenses, fees for attending meetings outside the location or the country in which those members live. But this no longer be applied for new members nor for existing members as from their reappointment. We believe that that arrangement of reimbursing expenses in that respect is no longer necessary at this point. And we also propose that the fee for a membership of committees is limited to a maximum of 2 committees. We don't think that to an overly large cumulation of fees in this respect will no longer be reasonable.

[Interpreted] Thank you, Peter. We've received no prior questions. We see no questions coming in nor any hands raised in the room before me. And so your vote can be cast on also this item on the agenda, and that vote then would concern our proposal to adopt the remuneration policy for the Supervisory Board, which brings us to items 15, 16, 17 and 18. #15 is an authorization to be granted to the Supervisory Board to purchase KPN's own shares back. 16 is a capital reduction by withdrawing our own shares. The 17th is designating the Board of Management as the competent body to issue ordinary shares. #18 is appointing the -- designating the Supervisory Board as the authorized competent body to limit or exclude the legal priority right upon the issue of ordinary shares. And these are closely related items. You can make -- cast separate votes on all of them. These are the various proposals, which give the Board of Management, under supervision of the Supervisory Board, some flexibility as to the issue and buyback of shares. And they are on the agenda every year and are in line with what is common in the Netherlands market. And so we ask you, as we do every year, to give an authorization to the Board of Management to buy back a maximum of 10% of the company's shares. Secondly, to withdraw such shares once purchased, so as to reduce placed capital. Thirdly, to give an authorization to issue no more than 10% of ordinary shares. And fourthly, with such an issue to exclude or restrict the priority right. And I refer you for the exact modalities of these items to the explanatory notes to the agenda. And let me say that any of these decisions would apply for a period of 18 months from today, and they take the place of any decisions that were made in these respects last year. I have no prior questions and see no further questions either coming in or in this room. And so I pass the floor to the secretary.

[Interpreted] Well, you can cast your votes on any and all of these 4 items on the agenda. I ask that you do this now, and then we will close the vote. So #15 is the authorization to the Board to buy back its own shares in conformity with the specifications, as outlined in the agenda; item 18, reduction of placed capital by withdrawing the shares in the company; #17, the proposal to designate the Board of Management as the competent body to issue ordinary shares; and fourthly, then to restrict or exclude the legal priority right as to the issue of those ordinary shares. And we would ask that you cast your votes now. And these items on the agenda are also the final ones to be voted on this afternoon. And so the vote on all and any voting items will be closed in just a few moments. And so please vote on anything you haven't voted on yet. A couple more seconds to cast your votes or if so desired to change your votes. [Voting]

And then we close the vote for all and any items that you can vote on today. And the voting results are now being gathered, and will be shown after we have a round of any other business. And this is Item 19.

[Interpreted] Thank you, secretary. Any other business. Item 19. We've not received any prior questions, but now just online came in a question from the stockholders association of the Netherlands, Mr. [ Klein ] who said in relation of Item 19, "In view of the importance of ROCE and that very limited progress, 9.2%, we would like to hear your ambition for the coming couple years because we are in doubt of that firm growth that was mentioned. Is it going to be 12% or 14% in 2020? Or will we hang around maybe on 10%?"

[Interpreted] Well, true, we went from 9% to 9.2% in the past year. The qualification of that is something I would leave to anyone's decision. It's related to our cost of capital and the cost of capital can be found on Page 127, the WACC that we use for that, 6% to 7% on average for that. And we've seen that if ROCE goes up over the cost of capital, we create value. The CE in ROCE, capital employed, is a sticky point. KPN is a capital-intensive company. Capital is stuck, if you will, in the company. So there'll be a steady development of ROCE because the capital base is steady and solid. You will find this also in our capital allocation. If there is a big spending allocated, then we look at ROCE each time again we consider it. So you can expect it to go up because there are investments in glass fiber, which will create value in the long term. And it's a very attractive business, glass fiber. However, it's a long fiber with a long-term effect. There will be a steady increase of ROCE because of that ROCE-driven allocation and that value creation in fiber. So in the long term, in the long cycle, we see -- we will see it go up further. That is all I was going to add about this right now.

[Interpreted] Thank you, Chris. No more questions have come in. There's another question in the room. Mr. [ Frake ]?

[Interpreted] Right. I would like it if KPN contribute to a calm restart after this very hectic beginning that we didn't expect after about 3 months. We have such a clean climate now. In 2010, we had huge loads of tourists. In 2030 or '40, there are going to be many, many, many more. And definitely in our favorite theme park, Amsterdam, it's crazy. So I would love it if KPN could help a calm start to a more sustainable society. Another point is Jan Kees de Jager. He and I were collaborating in a shared bicycle scheme, but also other vehicles that were super sustainable for KPN workers to go to their clients. Is that something that KPN is going to build on? And there were also start-up meetings for this, which Kees de Jager used to be at, no longer, unfortunately. But how are you going to continue this initiative? And then finally, Mr. Farwerck and Mr. Figee, you do wonderfully well. And all of a sudden, I remember that I know Mr. Figee from a company, another company that is also very sustainable and excellently led. And so we're happy to have him.

[Interpreted] Definitely, we are going to continue those start-up meetings. We have a venture fund for new initiatives. And there are recurring very successful events of knowledge and expertise exchange and great inspiration for everybody. And yes, we will resume doing that. But of course, now we do no events at all. But as soon as they can be arranged, we'll come back with a very nice start-up event. And yes, our engineers run around in all sorts of alternative vehicles. And also on electrical bikes, for example. And definitely, in the inner cities, we're experimenting with that. And that can definitely contribute, as you said.

[Interpreted] Thank you. And then to our final item, which concerns #20, the results of the votes and close.

[Interpreted] Yes. I'm happy to go through those voting results with you and if all is well, we will share them on the screen at the same time. Here we have them. And then per item, let's read them out. Item 3 was the adoption of the annual accounts. Adopted by 99.99%, 0.01% against. #4. The advisory vote about the remuneration report over the year 2019, 97.17% in favor, 2.83% against. So it's been adopted, motion carried. Item 6. Adopting the dividend for the year 2019. 98.53% in favor. So motion carried, 1.47% against. The next slide, Item 7. Discharge to be granted to the members of the Board of Management. In favor were 99.1%, motion carried. Same percentage is -- applies to the discharge granted to the members of the Supervisory Board. #9. Appointment of our outside auditor, 99.75% in favor, motion carried. #11. The appointment of Ms. Guillouard to the Supervisory Board. Adopted with 99.76%, 0.24% against. Motion carried. And in the next slide, #13 and #14. The adoption of the remuneration policy of the Board of Management, adopted by 97.87%. The remuneration policy of the Supervisory Board under #14, adopted by 99.27%, 0.73% against. And then the final 4 proposals, they are the authorization to the Board to buy back shares in the company, 99.44% in favor. Motion carried. #16, capital reduction by withdrawing shares in the company, 99.98% in favor, 0.02% against. Motion carried. #17, the Board of Management to be designated the competent authority to issue ordinary shares. That's been adopted by 98.96%. And then as the competent body to restrict or exclude the legal priority right upon issuance of ordinary shares, adopted by 86.23%, with 13.77% votes against.

[Interpreted] Thank you, Jasper. And I conclude that the general meeting of shareholders has adopted all the various proposals put to it. So all those resolutions have been carried, and I congratulate Catherine, who's in Paris, with her appointment on behalf of the Supervisory Board. And work with you on the many things that we will face and experience in the future. [Interpreted] And naturally then, I also thank very especially Peter van Bommel for his years of dedication as Supervisory Board member of KPN. But especially, many years, he was Chair of the Audit Committee and very intensively involved in everything for KPN. He was always there. He's contributed so much. And so once again, our very warm thanks for that wonderful and good collaboration. And I thank all of you for being here even digitally. Thank you for your contribution. And I do realize that this year, there is no opportunity to talk to you personally. And it may not have been as easy to contribute as usual, but I hope that still under these circumstances, we've been able to serve you in the best possible way and facilitate your contributions. Those in the room, I would ask to surrender their voting sets. And what remains is to thank you once again to express the hope that we will see you in this room with us again next year. For now, the preliminary date for this is 14th April 2021, and the definitive date will be announced as soon as it is known on the website of KPN. And with that, I close this general meeting of shareholders. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]