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

Ladies and gentlemen, I would like to welcome all of you on the Annual Shareholder Meeting from our headquarters in Rotterdam. We are very happy that, again, this year, we can welcome you both physically and virtually. And this means that our shareholders can be present here in person or in the virtual space and can take part to this meeting, including asking questions and casting their votes. As a Chair of the Supervisory Board, I will chair the meeting of today. I would like to appoint Mr. Spanbroek as Secretary of the company and also Secretary of the meeting. And then I would like to introduce the people present. Here behind this table, we have the members of the Executive Board and the Supervisory Board. And also here in the room, we have Mr. Verhagen and [ Mr. Mum ] of EY Accountants; Ms. Leemrijse, notary in Amsterdam. She will draft the minutes of the meeting. And on behalf of the Central Works Council, represented here by the Daily Board and [indiscernible], the candidate members of the Supervisory Board, Mr. Noteboom, Heemskerk and Dijkhuizen here at the front, and you will see them later on, and they will talk to you when we get to the item of the agenda of appointments. The meeting was convened in a timely manner and in conformity with all the formalities and legal requirements by placing a convocation on the website of KPN on the 1st of March 2023. And before I continue with a number of formalities and announcements, I would like to point out the press release that was issued on the 27th of March in relation to the composition of the Executive Board. In this press release, it was announced that Mr. Fouladi and Mr. Van Overbeke will step down from the Executive Board as per the 1st of May. Also, the intention was announced to appoint 2 new members in the Executive Board. As per the 1st of June, Mr. Koelemeijer and Ms. Vergouw. She currently is a member of the Supervisory Board, and she will step down from that board as soon as she is part of the Executive Board. And we will organize very soon an extraordinary meeting of shareholders that will take place on the 31st of May. We will have on the agenda the Supervisory Board nomination and also, we will address the vacancies that -- or the vacancy that will occur because of Mr. Vergouw stepping down from the Supervisory Board. So that press release of the 3rd of April states the following. We also have the intention to nominate [ Ms. Koelemeijer ] as a member of the Supervisory Board. Looking at these 2 nominations not being on the agenda for the meeting today, I would like to address all the other issues, not these ones. And again, then some formal announcements, amongst which, first of all, remark about the voting process. Those who are participating virtually can cast a vote real time remotely if they are logged in on the voting platform through their own smartphone, computer or tablet. Shareholders who are present here also have their smartphone to vote with or tablet or they were given a tablet from registration. To cast your vote, again, you need to be logged into the voting platform with the registration desk you have received instructions. To the extent that you have not logged in yet to the voting platform, I would like to ask you to do so now because we will close the registration in a few moments. You can cast your vote on all voting items already, if you wish now, if you are logged in on the voting platform. Only at the end of the meeting, however, before any other business, the voting will be closed. And then the results for all voting items and resolutions will be announced after any other business. This is how we keep the meeting orderly, and we keep it without delays. And we hedge for possible Internet connection problems. Then another remark about the language. The language spoken in this meeting is Dutch. Some members of the Executive Board and Supervisory Board do not speak Dutch. And to the extent that they will speak, they will make a contribution in English. For the Dutch translation of that, you can use the headphones and press option 1, which is translation into Dutch. Questions can be asked both in Dutch and English. Then a remark for our foreign guests, the meeting will be translated in English, and questions can be asked in English. Answers will be given in Dutch and translated into English. Then about asking questions. As announced on our website, the following possibilities have been included for asking your questions. For those of you present here, if you wish to take the floor during the meeting here in the audience, please raise your hand, so I may give you the floor. For shareholders who are participating through the e-voting system, it is also possible to ask questions through a separate video connection similar to shareholders in the audience that you have received a separate e-mail with a link to the video environment. In that video environment, you then must click the virtual hand if you wish to ask a question. Then through an operator, you will be connected to the room here. I would like to point out that there might be a slight delay on the video connection, and therefore, we will first deal with the questions from the audience here, and then we will proceed to virtual participants. To help people drafting the minutes, I would like to ask you as a shareholder to please state your name and domicile when you ask a question, and please formulate your question or comment as concrete as possible and brief. And for the sake of reporting, we also have audio recording. I hope we have a -- an informative and interesting meeting together. Let's now proceed to item 2 on the agenda, unless there are questions about the voting procedure. I think there's 1 question here at the very front. The microphone will be brought to you. So please wait.

Can you hear me?

So please repeat your question, now the microphone's here.

So you were referring to audio recordings. And also, I don't think I have a voting machine. Can I please get a voting machine?

So you can go downstairs and someone will help you at the registration desk, yes. And you will receive assistance. So please make sure that you go there. Okay, let's get started with item 2 on the agenda, which is the report by the Board of Management for the fiscal year 2022. In the presentation, we will look at the financial statements and the entire financial year 2022. And you will be able to ask questions about the presentation afterwards.

Thank you, [ Gerard ], and welcome, everybody. It is very nice to see that you are actually here. Obviously, also a warm welcome to our digital participants. It is, of course, fitting with a company like KPN to have a hybrid form of meeting and in this digital era, it is good to see that we have people present here and online. Let's now look at our "accelerate to grow" strategy and the progress that we're making. At the end of 2020, we determined our strategy for the period 2021 to 2023 and shared it with the market, and we have a pathway to growth. In the second year of our strategic period 2022, again, we made important progress, and we've demonstrated successes. The 3 important pillars of our strategy are building, managing and using the best networks and the correct infrastructure, strengthening and growing our customer base and thirdly, simplifying and streamlining our company and our business model. During the presentation of today, Chris and me will take you along in the progress on these 3 strategic themes. So 2022 was a year in which we, as a society, again, were tested. Turbulent times in the world, war in Ukraine is obviously terrible, and the geopolitical tension brings pressure in the Netherlands as well and in the supply chain. Energy costs increased. There is pressure on the labor market. There is a strong inflation and purchase power is also under pressure. Despite all of that, we can look back on a good year. We made progress when it comes to our strategy, and we reached our financial goals. So we are accelerating the installation of optic fiber, and we prepared our mobile network for 5G. We improved the digital customer experience with delivering new and service with existing services. And that is important for the Netherlands and for us as a company. And we are the front runner when it comes to digitization of the country. And again, we have more turnover. And that is quite a while ago. I think this is the first time since 2007. What is striking here? Revenue from B2B services grew for the third quarter in a row, and that is an important milestone. We are convinced that we have reached a tipping point. Revenues from fiber optics and mobile services for consumers also grew and also revenues from wholesale keeps on growing because of our open network policy. So predominantly driven by this growth in turnover, EBITDA grew by 2.4% in 2022 and free cash flow grew with over 10%. We strongly invested in our infrastructure, the networks, the platforms. And together with Glaspoort, we have connected a record number of households to fiber optics. That's the joint venture, right, with APG. And we have activated the first phase of 5G in our mobile network, and we received a lot of acknowledgment for the quality of our networks and our services. That's great news for everybody, obviously, who works very hard on this at KPN. The return on invested capital rose -- improved to 13.1%, in line with the plans to create value, and we invested in our infrastructure and in our services. We also invested in our colleagues, training, remote working in compensation for working from home. We have increased the collective labor agreement by 2.6% in 2022 and to also mitigate the pressure on purchase power over the past year, we paid out extra compensation twice to our colleagues and especially those colleagues with the lowest wages received most. At the end of last year, we also came to great CLA agreements for this year, and we will see an increase of 6% to almost 10% for those who have a lower wage. So in 2022, we also continued with our purchase buyback -- share buyback program, which is a reflection of our solid financial position and the confidence in our strategy. In 2022, we bought back EUR 300 million in shares, and we plan to pay out EUR 0.143 in dividend per share, which adds up to EUR 850 million that we pay out to our shareholders, slightly less than the free cash flow that we realized this year. So we reached our goal for 2022. EBITDA ended at EUR 2.4 billion, in line with expectations. CapEx was EUR 1.2 billion and free cash flow was around EUR 862 million, slightly above expectation. So we repeat our promise of annual dividend growth, and we plan again to pay a regular dividend of EUR 0.143 per share. So we don't only have a focus on financial goals, we also look at our social impact. KPN is part of Dutch Society, and we take a responsibility in that field and in the field of sustainability very seriously. Our efforts were acknowledged and recognized again in 2022 by several benchmarks, like you can see in the overview, so CDP, the Carbon Disclosure Project, put KPN again, on the A list of companies worldwide as a climate leader. Also for the coming years, we have an ambitious agenda in the field of corporate social responsibility, like the ambition to be almost 100% circular in 2025 in all our activities. Chris will also talk about this and what our targets are when it comes to sustainability and diversity. So let's now look at the details of our strategy. Let's look at our mobile infrastructure and land lines. So rolling out of fiber optics is on the move. Together with Glaspoort, a joint venture with APG, throughout the year, we have connected 544,000 households. Almost half of all households in the Netherlands have a connection by us, and we are well underway to have 80% of the Netherlands connected by the end of 2026. So we're not only investing in our land lines. We will obviously also keep investing in our mobile network. So we prepared our mobile network for the 3.5 gigahertz auction so that we can supply an even better 5G experience if this spectrum becomes available, and we expect this auction in the second half of this year. The latest or most recent news was October. We are fully focusing on investments in our networks and services. And we made good progress to improve our customer processes and we are now seeing a return on those investments. The important benchmarks, those of Umlaut and Ookla also confirm that we have the best mobile network. On top of that, Tweakers has awarded us with a best mobile service provider award and best Internet provider and the consumer association sees in KPN the best all-in-one broadband provider, which is great. It's a nice sign of appreciation for our products and services. Not only when it comes to fiber, but also for copper. Our brand, Simyo, again, was awarded with the highest Net Promoter Score in the Netherlands for mobile service provider. Servicing our customers in a simple, clear and efficient way is what we get better at every day. And let's take a look at that. In the consumer segment, revenue from mobile services is growing. We see a movement from KPN clients or customers to -- in growth of the successful unlimited proposition, and we see a growth in the number of customers. The market for landline services is competitive. The total revenue was under pressure, which was caused by decreasing turnover of older services like telephone services, broadband is something that we see increasing by 16% and turnover on our copper network is decreasing 12%, which is something that we are confident about because we see that the best digital experience is in fiber optics. Customer satisfaction was doing really well. We are the highest in the market. We did a slight -- we did experience a slight dip in Net Promoter Score in Q4. So we ended 1 point under the year 2021. But this was predominantly caused by consumers who are concerned about costs of life. And this is a sentiment that slightly decreases that number. We see that with business customers as well. But I'm confident that this will change. Let's look at some important KPIs. Broadband remained more or less stable, solid influx for fiber optics and we have activated over 168,000 customers, and this means that we have now more people in fiber optics than on copper. And the average turnover per user has slightly increased. Turnover from mobile services keeps on showing growth and the number of mobile subscription grew by 111,000 and the average turnover per customer increased by 2%, driven by a mix of effects. So again, a movement towards the more expensive, unlimited and a strong growth in the cheaper Simyo and the price increase that we introduced October last year on our mobile subscriptions. Let me then move to the business market because there, of course, we have shown a very good performance last year. The business turnover grew for the third consecutive quarter, and that was a very important milestone for us, perhaps even the most important 1 for 2022. And we're convinced that we have reached their -- the tipping point. Also in the business market, we lead when it comes to customer satisfaction. And here too, we saw some pressure in the fourth quarter on the NPS due to concerns about inflation, but nevertheless, the consumer satisfaction score still remains positive. Then SMEs. They are really the engine behind the growth within the entire business market and the success of KPN1, KPN IN platform where entrepreneurs can easily purchase various products and services is at the basis here. But also turnover from LCE. Large corporate clients showed a positive development and the third segment tailored solutions, once again, performed in line with expectations. And last year, we introduced new combinations for the business market of connectivity and security and we'll continue to do so. And cybersecurity, of course, is a topic that is very important to companies. I won't have to explain that to you. And at KPN, security has the highest priority, both for our own organization and in our service provision to customers. We ensure that security is always part of our portfolio. Then let me move to the wholesale segment. KPN has been applying an open network policy for years. And this means that other providers, so the wholesale customers basically can use our network to offer their telecom services, right, to end users. And as a result, the network is better used with which we can also partly recover our investments. And wholesale continues to perform well with nearly 4% revenue growth over the past year. The Dutch market in 2022 remained pretty competitive, and our wholesale providers showed solid growth. Last summer, the ACM declared our renewed wholesale commitment binding, and this gives all players in the Dutch broadband market clarity and certainty for a period of 8 years so that the market can remain competitive, and that is good for the consumer because they then can continue to enjoy sufficient freedom of choice, and it also gives certainty to the other providers. And of course, that is very good for the rollout of our fiber optics program. For now, I would like to thank you all very much for your attention, and I will now give the floor to Chris to take a deeper dive into our financial and sustainability performance over the past year. Go ahead, Chris.

Thank you, Joost, and good afternoon, everyone. As he said, we have achieved our financial objectives from last year, and we're very confident that we will do so again this year 2023. So the financial results of 2022 were solid, and they provide an excellent basis for a healthy financial development in the coming years. And I will briefly explain a few results. So the clean sales for 2022 grew by 1.4% compared to the previous year, and this was driven by the increase in turnover in the business market and in mobile services to customers. And we also see a solid revenue growth in wholesale. So the adjusted EBITDA after leases, so our operating profit increased by 2.4% in 2022. And in addition to the aforementioned increase in sales, we saved EUR 38 million in costs. And our EBITDA margin thereby improved by 40 basis points year-on-year to 45.1%. And in recent years, we've seen the year-on-year growth of our EBITDA. Increase in our margin also improved annually. We invested more than EUR 1.2 billion last year and the free cash flow amounted to EUR 862 million, a growth of almost 10% compared to 2021 and 16% of our service revenues. So the return on capital used has improved significantly to 13.1%, which is an increase of 210 basis points. So the group revenue from services increased by 1.5% compared to 2021, and this was mainly caused by the strong growth in the business market. If we then look at the segments, we see the following. Sales in the wholesale segment grew with 3.9%. Business Services revenue increased by 2.1%, mainly driven by the SMEs and then the turnover growth in the business segment is sustainable and also increasingly based on multiple growth pillars. In addition to the SMEs, we also expect a sustainable turnover growth in -- for the LCEs in 2023. Compared to last year, turnover from services within the consumer market has remained stable, while mobile revenue showed a healthy growth, the landline services declined slightly due to sort of like a shrinkage in our legacy business. Broadband sales have grown slightly. So the adjusted EBITDA after leases grew 2.4% compared to last year, driven by revenue growth from services and lower indirect costs, partly offset by EUR 54 million in higher direct costs. So the increase in direct cost was mainly due to higher spending on handsets and hardware, which in turn related to nonservice revenues. Also, higher connection costs for third parties such as Glaspoort and a change in revenue mix in the business market. Our personnel costs have decreased by EUR 35 million, driven by increased efficiency, digitization and natural turnover. Our personnel costs also include 2 one-off payments to our staff to help them cope with the high inflation and the energy prices. Digitization also reduces IT/TI costs. However, the saving was overshadowed by higher energy costs. So in summary, we have saved EUR 38 million in indirect costs last year. Then the result of our continuous focus on a more efficient operations were partly put under pressure by inflation on energy and labor costs. If we take into account both the growth and turnover and the development of direct costs, we see an increase in our coverage contribution. So the contribution margin of approximately EUR 15 million. And if we add this to the EUR 38 million lower indirect costs, we see a substantial growth in our EBITDA of more than EUR 50 million, which basically explains the growth of our EBITDA, right? If we look ahead then to 2023, we expect to see the impact of wage indexation and higher energy costs reflected in our main costs. We estimate the gross impact of the higher wage costs of the new collective labor agreement at approximately EUR 45 million in 2023. Then the total energy cost, given that we purchased 20% of our energy needs on the spot market, during 2023, we expect the cost for 2023 to be EUR 50 million to EUR 55 million higher than last year. Although in the first month of the year, we've been able to purchase energy a little more cheaply than initially assumed. Depending on the price development on the spot market, the result could therefore deviate slightly from this margin. Then the operating free cash flow measured as operating profit minus CapEx for 2022 amounted to EUR 1.2 billion, and the free cash flow in total of EUR 862 million was approximately 10% higher than last year and has risen to 16.2% of turnover. This was mainly due to higher EBITDA. In conclusion, we can therefore say that KPN has further strengthened its profitability in the recent years. So we're ending the year with a strong balance sheet. At the end of last year, our gross debt was around EUR 5.9 billion and the net debt at EUR 5.4 billion. And our liquidity position is currently strong enough to meet our debt obligations through 2024. And we've been active in the capital market last year, and we've issued a green hybrid bond and our leverage ratio remained constant 2.3x, and this puts us well below our ceiling or a cap of EUR 2.5 billion. The ROC, the return on capital used improved by 210 basis points to 13.1%, consistent with improving value creation. And the ROCE increased, thanks to the increased operating margin, which was mainly driven by a solid cost control. In our continuous pursuit of long-term value creation, we see room to further improve our ROCE in the coming years. Then on to the sustainability performance. Joost already said it, sustainability is in our genes. Let me take you along in the progress we're making on our targets on sustainability and diversity. Our own business operations have been climate neutral since 2015 already. That is why we have now shifted the focus to the entire chain. Scope 3 emissions, the emissions from the chain make up 75% of our total emissions. We want to achieve net zero emissions throughout the chain by 2040. And in this way, we contribute to the maximum warming of 1.5 degrees as agreed in the Paris agreement. Now to achieve this, we've set out various actions, including reducing the energy consumption of the equipment in our network. Our energy consumption in 2022 was 48% lower compared to the consumption in 2010, and we're working hard to further reduce this. For example, we have reduced the energy consumption of modems and TV receivers in consumers' homes and we're making our transport more sustainable and improved cooperation with suppliers, for example, by switching to green energy. At the beginning of the year, we've already seen good, further progress in reducing energy consumption. In addition, last year, we signed an agreement for the purchase of offshore wind energy from 2027. And this energy, which will be supplied by Eneco is clean and helps us to keep a grip on the energy costs in the long term. Now to ensure that we can accurately and transparently track our progress on the target, we regularly carry out checks on the way to measure the targets. During 2022, we examined the method of measuring Scope 3 emissions and as a result, adjusted the historical numbers. This adjustment is described in detail in our annual report for 2022. We invest in improving our control framework for nonfinancial indicators, and this allows KPN to continue to report accurately and transparently on its targets. Finally, last but not least, we also do our best to ensure diversity within KPN. For example, the Executive Board and Supervisory Board have been made up of at least 1/3 of women and half of the Executive Board will be women after the proposed appointments. In addition, we strive for a higher percentage of female colleagues throughout the company. Thank you for listening to this explanation. I'll give the floor back to our Chair.

Thank you, Joost and Chris. Ladies and gentlemen, I would like to point out that the sheets of this presentation will be available on the website of KPN afterwards. Does anyone have any questions either in the room or by the video connection? The microphone will reach you in a moment.

Thank you, Mr. Chair. My name is Mr. Stevens. And my -- I am from [indiscernible] and we've had fiber optics since 11 years already. So yes, I think I'm from a municipality that was very, very forward at the time. To start out with, we've had some extra work to be able to understand the figures. And that started on Page 138.13.2. And I would like to hear the auditor say something about this. I don't know if this is an error in the annual report or whatever happens, but you have 2 green eternal hybrid bonds that you issued of more than EUR 500 million. And one is equity -- listed as equity and one as a liability. So those bonds perhaps are simple bonds, but I don't really understand. And it also says somewhere that this was to purchase electrical cars and to install fiber optics and their eternal hybrid bonds. So probably, there will be some prepayment or buyback at a certain point, right? So my question is, what's going on with these? Do you do a buyback or what's going to happen? And then given that one is listed as equity, there is no interest charge on it, but it is treated as dividend, it seems. And when I was a student, a long time ago, but I always learned that loan capital is not the company's own money. So how do we explain this? And then I took a look at the cash flow. And we saw some net payments under the heading of financing. The result is, of course, the same, but the justification is then done in a different way. Why did you do it like this? And if you look at the remuneration policy, which, of course, I know, is a separate item on the agenda, and we'll be able to vote on it. But then okay, the bonus then. The height of the bonuses. Cash flow is part of the bonuses, right? So really, we have the impression that you've done this to just be able to pay out higher bonuses. Perhaps you can address these questions first because we really don't understand this construction here.

Thank you for your questions. Look, it is great to hear that you've had fiber optics, already 11 years. It would also be great if you've already been a shareholder for 11 years. You are good. Well, and no complaints I see, right? Okay, because that's what in the end, it is all about, right? So your 3 questions then. I think they are all sort of like about the same thing, all about the bonds that were issued and for that, I will give the floor to Chris to give his explanation, including the aspect that this has nothing to do with the bonus payments. So Chris, can I give the floor to you?

Well, sir, but if you read it like this, I mean, and if it's -- things are unclear, then, of course, you start to guess, like, is it for this? Is it for that? I had expected this to be explained in the presentation that was just given.

Well, Chris will explain it to you.

Yes. Look, there are a number of hybrid loans, indeed, 1 is in dollars. And the end date of the dollars was dated -- there was a dated loan, not a perpetual loan. And you're saying the equity qualification, the other 1 is a liability is debt, right? That's not our choice, it's not conscious policy. It's a consequence of the characteristics of the loan. Second, we issued loans in the dollars in the past. Now we do that in euros, and I, of course, prefer to do that in euros so that you don't have to swap it back to the euros, so it's always more attractive in euros also because we have more investors in the euro market. And of course, the investors that, by nature, will look more towards KPN invest in euros. And we've announced a loan that would be called and so we said, one, the old loan will be called. So we're going to be repaying. It's going to be repaid, but it's going to be replaced by a new hybrid, which automatically, of course, will then turn into a euro loan because we prefer to issue loans in euros. So even in the euro market, a perpetual loan is a perpetual loan. So if you want to do an early redemption of that loan and then replace it by a new hybrid loan in euros, then automatically, you end up in a perpetual loan because that's the way the market is and that is also the way accounting works. So the moment you say we keep the hybrid loan, and you no longer want to do it in dollars, then automatically, you roll on to -- switch to a loan in euros. That's just the technicality. There's not much you can change about it. We've decided to replace the old hybrid by a new hybrid loan and because -- of course, there is going to be a limit to the issuance of hybrid loans. So our weighing was that we want to be able to use the instrument for now. So let's redeem the first loan and then replace it by another one in euros. So it's a bit of a technical process in which you optimize the balance structure and keep access to the financial instrument. And I can assure you that this has nothing to do with the bonuses because it had no effect on the target for 2022. It did have an effect on 2023, but the target was only established after the bonds have been issued. So the objectives already included this impact on the cash flow. And indeed, if you issue a loan and qualify this equity, then, of course, the payment is outside of your free cash flow. But that's, again, a technical thing. That's not something I can change. So for 2022, it didn't have any effect because the interest payments only take place in '23 and in '23, it was already part of the target setting. By the way, the free cash flow target for this year is quite ambitious. The biggest point, by the way, is the fact that we'll pay more taxes this year, but also related to the impact of the increased interest. The part that is variable has an impact also and then the restructuring charges and the EBITDA growth is a little lower than last year. So the free cash flow target is going to be challenging. And I have also informed everyone that in the reporting, there is a bit of a tailwind because there is certain interest that you don't have to report on. You don't have to include, which we explained very clearly, but it really has no effect whatsoever on our bonus because the targets were set after this bond was issued. So we've tried to -- it's not the order in which you propose it.

So it's 2 loans of a total of EUR 1 billion and not 1 loan of EUR 1 billion. But now -- because now it just occurs to me, if you look at KPN's market value, that's now EUR 500 million less? Or what am I missing? Well, we already had 1 loan, a dollar loan of EUR 146 million. That was just redeemed and the other 1 was the 2% and 1 loan was added. We didn't spend EUR 1 billion. We spent EUR 500 million. So it's partly existing and partly new and no, it's not that KPN's value has decreased. It doesn't become different because of the fact that we take out a loan. We replaced 1 thing with another simply. So you're saying the loan is equity, right? That is how it qualifies. And then if you do the math, the company is worth EUR 500 million less because of that, right? No, EUR 500 million is added because it replaces debt that we don't have now because we have the loan. Well, then I'll ask the auditor about this because it's not clear. Well, you will definitely have the opportunity on the next item of the agenda to ask the auditor about this. But in summary, what goes on here is nothing more and nothing less than 1 loan being replaced by another one. The risk was reduced. So dollar loan replaced by a euro loan, the interest rate is lower. And that is something Mr. Figee didn't even mention. And then thirdly, it doesn't change anything to the bonus scheme because it was already before it was set and then you may have 1 more question then we'll proceed to others.

Yes. Again, the question about 5G then. So what is the planning? What are your phases? So there will be an auction? What is your policy this year when it comes to 5G? Because with the auction, things will change. That auction -- in the past, we've seen some auctions already. So it gives me the creeps. So I really want to know what your strategy is?

Thank you. Yes, auctions are always very interesting. And coincidentally, both Boards actually took a good look at this morning because it's coming up. And you can rest assured that we are fully focused on that. And it's a coincidence we actually talked about that today. But I would like to give the floor to Joost for that to elaborate a little bit further on the imminent auction.

Well, 5G is obviously that auction is an important moment in time. And last year was very important as well. We invested significantly in our mobile network to be ready for 5G. And the first spectrum, so the megahertz to have the national coverage, we have already activated that. So if you have a recent set, then you will see 5G right there. But the real 5G will come with the spectrum that the ministry will put into the auction in second half of this year. So everybody needs to just wait and see what that beginning of that quarter will bring. And there are many things that still need to happen. But again, the ministry has announced the rules and the design of the auction and in itself, it looks better, actually. Then the auction that you were referring to, it seems very -- or rather transparent and designed in such a way that all operators could buy their share. There is also an obligation for those who buy spectrum to invest in the network, so really activate it. We believe that the obligations could be stricter. So we will definitely announce that to the ministry. And in the meantime, on the operational side, we need to do a couple of things in the north of the Netherlands where the Ministry of Defense is using that spectrum and Inmarsat who provides services at sea. So that's something that will migrate to another country, and then we will get the auction. And again, it is a fairly robust and from -- at a glance, let's say, it's looking good, then -- looking better than the past. There are some things that we will definitely address the ministry for. And in the meantime, KPN is ready for that auction by really investing in the mobile network. At this moment, we have the best mobile network in Netherlands. And actually, we have the best mobile network in the world, which was never a goal, but it's nice to have, thanks to my colleague, Mr. Fouladi, and he did that with his team. So we are ready and we are still talking to the ministry, and we hope that things will go well from the operational side. We are very confident, and we are ready for that auction.

My name is [indiscernible] from the VEB Securities Association. So my compliments when it comes to rolling out the fiber optics together in Glaspoort joint venture, maybe it is not as fast compared to planning, you're still on schedule, nevertheless. And especially when it comes to global perspective, you're a leader, also compliments for getting those financial goals and strengthening your strategy and, of course, your ROC of over 13%, like we saw in 2022 and further growth that you have talked about. Obviously, the reporting is transparent, clear KPIs for remuneration and also the performance of the Board, 2 small things. A relatively large part of remuneration consists of nonfinancial KPIs. We understand that, but that's 30% of the annual bonus and 30% of the share based bonus. And I have some question marks with how desirable some of those nonfinancial goals are? For example, gender diversity. The question is whether it's desirable to give a strong financial incentive to executives for diversity. Now in this way, you wouldn't maybe get the best candidate. We do know that this is important from a social perspective. But with the new appointments today, we see that diversity is fully there with the competent people in the right place. And it is going towards 30%. It's going really well. But really, should you, as an executive, have a bonus or an incentive of EUR 360,000 in bonus. Congratulations, by the way, but should that be an annual party? The goals were met. So I think you should say now that you need another goal to bring KPN to the next level. So this particular KPI should expire and my question to the Supervisory Board is now that we've achieved that goal, what is your position on that? Then cash flow and impact on bonus, I think there was a correct question from the audience already. And we, as VEB, we talked about this in an article, and we understand the answer of Mr. Figee and we understand this completely, and we are very confident that when he says it had no effect then and also that it was included in the KPI criteria for 2023, and it really demonstrates the use of a meeting today because it was difficult to sort of distill all of that simply from the financial statement. So this is an important explanation that you gave here today. And it really puts my mind, [indiscernible] so I have no further questions about that. And then a question about sustainability information. In paragraph of the external accountant, EY here in the other, there are key assurance matters, something with the sustainability information it says, they're the Scope 3 energy data, so emissions in the chain has to be reviewed because of inflation adjudgment and refinements of data used. So in the annual report, this is elaborated on. I understand very well that KPN wants to be a front-runner when it comes to sustainability and reporting on that. And I also understand that this is complex. But could you please talk about as to why this did not go well in first instance? Are these, the teething problems when it comes to providing sustainability information, but we will have a whole stack of new regulation coming at you. So this has to be a piece of cake, something that doesn't need to be corrected by the external auditor later on. So that's for the accountant. But how can you give us the confidence that this will be better year-on-year so that we don't have to keep on correcting this. Thank you.

Thank you for your questions. I will address the first part when it comes to the nonfinancial goals within the bonus system. Yes, as a company, what do you wish to focus on? Where do you want to progress? So the example that you were mentioning is one, we are at the eve of reviewing our remuneration policy. Next year, in the Annual General Meeting, we will present our new policy. So your suggestions, ideas and comments will be included in our deliberations. We will have consultation rounds with all relevant stakeholders. And when it comes to remuneration, we always do that. So for now, it is what it is. But looking forward to next year, we will be very careful in designing our new remuneration policy. Your second question was more of a conclusion rather and then the third point, Chris, can you say something about the sustainability information?

Yes. It's a review, and we found this sort of mistake ourselves. So when you look at Scope 3, there is some inflation numbers that were -- became relevant. So we actually added the Scope 3 volumes, which is not the same as the monetary value of that. And so it was just a -- when a car becomes more expensive, it doesn't emit more. So it's a mistake that we found. We corrected it ourselves and then reported it to the external auditor. These are the things that still happens. So you correctly refer to them as teething problems. So again, we now have much more information about Scope 1, 2 and 3, and we realize that when it comes to emissions, et cetera, you have to be solid in your reporting. We have now a CSRD project together with other companies, what do you need to report? And how do we report so that everything is consistent? So I'm not concerned that we don't have the information, but the biggest investment would be how auditable that information becomes in the end. So we are focusing on it. It is something we're learning. Think you should audit the financial part and the sustainable part. And it's a journey of discovery, but we dedicate a lot of attention to that. You can rest assured, and we will -- and at a very high level of quality.

Thank you, Chris. I see someone else who has a question.

My name is [ Matthew Shutters ]. I'm here on VDBO, Investors for Sustainable Development. We asked 2 questions in a letter in English. Question 1. '24 onwards, the EU's Corporate Sustainability Reporting Directive [indiscernible] the CSRD will apply. The CSRD requires companies to report extensively on sustainability topics, especially those that the company considers material. [indiscernible] wonders if KPN will include a double materiality assessment in its next annual report and whether KPN expects that biodiversity and supply chain management will be considered highly material next year. And [indiscernible] introduced lobbying as a new engagement theme this year since InfluenceMap discovered that 89% of the European Industry Associations are not always lobbying in line with the Paris agreement. Companies such as KPN can and should play a proactive role by engaging with aligned industry associations on their lobby activities. [indiscernible] wonders whether KPN is also willing to, in its next annual report, report on the direct lobby objectives on specific legislation. And whether KPN believes that the lobby activities [indiscernible] industry associations are in line with KPN's lobby and sustainability objectives and the specific industry association membership costs.

Thank you. Good to hear that you have questions on the annual report of next year. First question is for Chris. You know what we are going to do next year? And the second question will be answered by Joost. Chris, go ahead.

So we are looking at developing a double materiality. They have this -- so this is very important to us. So that double materiality, we're looking at it. And also we're looking at what impact it has. So that will obviously result in some factors, factors that will be weighed. The things that you mentioned were definitely on it, but we will include them indirectly. So the answer is yes, we did a double materiality assessment. I also -- we already have something in our annual report 2022, and we will develop it further also in the light of that CSRD project that you were referring to as well. So how do we think we can strengthen that double materiality assessment? Well, there is an appendix that relates to that. The things that you were mentioning, we're on our wish list, so to speak, but not as a high as priority to correct. So that's what I can tell you about that.

Yes, your second question. Yes, responding to what Chris was saying, yes, my apologies. So our concern obviously is what you see is that companies consider certain matters not as material, and therefore, they don't have to intensively report on it. So we saw the biodiversity and supply chain like Scope 3 emissions and climate change. It's predominantly caused by the supply chain, right? And -- so biodiversity, supply chain, these are things that should be considered as a materiality or -- but of course, the company determines that, but it has an effect on the extent to which you report on it. That's just, yes, very briefly responding to that. So this is why we have external stakeholders. People from society are consulted because we are consciously looking at other stakeholders when it comes to that. So it's not only us who determine what is important. We are dedicating more and more attention. We work together with other providers, but also with people from Naturalis in Leiden. And we look at what effect it has on biodiversity. Wherever we open up the street for fiber optics, we also include other parties where they can make it greener once we've done our work, for example. So there's many, many initiatives to support biodiversity, for example, and that's something we include in our metrics as well. It depends not only on us, but also on our stakeholders. And this is a process that we're mapping at this moment. Yes, we are a member of several platforms to, obviously, lobby and consult. We are a smaller telecom company. And when -- especially when it comes to Scope 3, we are in a huge supply chain, and this is why it's very important that we do this together with other parties to sort of influence that supply chain. So it's very important. And we also have proposed our goals. And obviously, we follow the guidelines. And I'm not sure whether we can clearly report on that next year. We definitely intend to do that, but I cannot guarantee anything, but I take your recommendations to heart.

Thank you, Joost. Any further questions about this subject? I see no further questions. I also see that online, we have no questions. And I conclude that we have no further questions. And we can finalize this subject. Then item 3, the adoption of the financial statements. The financial statements have been included in the integrated annual report that was available through the website of KPN. The financial statements have been audited and confirmed by an unqualified opinion of E&Y. During the year, EY discusses the reports with the Executive Board Audit Committee and Supervisory Board. And obviously, these reports and meetings are subject of the meetings between Supervisory Board and Board of Management. And next to that, the Chair of the Audit Committee and the Chair of the Supervisory Board have separate meetings with the external auditor about the activities and findings of the external auditor. The relationship with the external auditor can be characterized as open, critical, professional and constructive. Current subjects have been nonfinancial KPIs, the fiscal positions, for example, latent tax claims, important estimations in the financial statements, the appreciation of immaterial and financial fixed assets. The -- of course, the joint venture of Glaspoort with APG, the internal controlling environment, is it robust enough, the IT environment. And based on several meetings, both -- also the contents of the Board reports of E&Y, we, as Supervisory Board, concluded that the relevant subjects and considerations are being dealt with in a very careful and transparent manner between the management and accountant and is a fair reflection in the numbers of KPN. And I would like to give the floor to the external auditor, Mr. Verhagen, who is present here in the room to talk about the auditing activities that EY conducted for KPN to be able to be very transparent to our shareholders, EY for this opportunity was given permission to not adhere to secrecy for this time.

Mr. Chair, thank you very much for the opportunity to explain our work in more detail. Assembly, my name is Jules Verhagen, I'm a partner of EY. I've been involved in KPN's audit since 2021 and the external auditor of KPN since 2022. And in this presentation, I will discuss the following parts of the audit of 2022 financial statements, control approach and the focus, our main outcomes, the main points of attention, the key audit matters, the topics going concern, fraud and noncompliance or compliance with laws and regulations. I will also address ESG sustainability, our control plan for 2023 and the way we communicate and interact with the company. So let me start with control approach and the focus. We've audited the separate and consolidated financial statements of KPN, and we have also examined whether the annual report meets the legal requirements, whether the content corresponds with the picture of the annual accounts and whether the annual report matches the knowledge we gained about the company. These are legal requirements for KPN's audit. And in addition, the company has also given us the following tasks: to assess the sustainability information, and we have included the results of that in the integrated audit report. We've also checked the fiscal country-by-country reports over 2022. This is an extension of the scope of our assignment compared to 2021 and the results of that reporting have also been included in the integrated audit report. We've also been involved in press releases in response to the quarterly figures, the half yearly figures and the annual figures, and we've carried out reviews of the quarterly and biannual figures. So as the external auditor, I am ultimately responsible for the audit. So to be able to take on that responsibility, I have put together an experienced and expert team with relevant industry knowledge. In addition, there are some topics at KPN for which I have engaged EY experts. For example, valuation of intangible assets such as goodwill, the Glaspoort JV, financial instruments, taxes, IT, cyber and fraud risks. And we work closely together with the internal audit department of KPN. So we coordinate our work and planning with each other, and we also share the results of our activities. So we use materiality to check the annual accounts and the materiality that we've used in the audit of the consolidated financial statements, amounts to EUR 45 million and this is based on 2% of EBITDA after leases. And our audit is designed in such a way that we can detect material deviations and that we can offer a high degree of certainty that the annual accounts give a true and fair view. By the way, we do not use the same materiality for all balance sheet and profit and loss account items. In the case of certain additions, like, for example, the remuneration of management, we only see and except minor deviations, all errors above EUR 2.25 million are discussed with the Executive Board and the Supervisory Board. So based on the materiality used and the risk we have estimated, we have then carried out our work. Then let me address the main outcomes of our audit. So first, the annual accounts. We've provided an unqualified opinion on the financial statements, and there are no audit differences or deviations that still need to be corrected. I can also inform you that there was no difference of opinion with the Executive Board regarding the estimates and that the -- we generally qualify the estimates made by KPN is balanced. We've also assessed the management -- the Executive Board's report and the report of the Supervisory Board, and we found no material inaccuracies. And so the information is consistent with the financial statements. And we've done this in a role as auditors and with the knowledge that we have of the company in that capacity. We've also established that the report complies with the Dutch Corporate Governance Code requirements. So with respect to the remuneration, we've established that required information was included in accordance with SRD II. So the annual accounts have made an assessment of the going concern assumption for the 12 months following the date of the financial statements when preparing those financial statements. So we've assessed their analysis, and we found no material uncertainties. Then let me address the sustainability information. So we've checked the CO2 emissions, Scope 1 and 2 and also the energy consumption and we found it -- we approved it. And we've also assessed all other information regarding sustainability, including the EU taxonomy information for material accuracy, and we've also found no deviations there. With respect to the Scope 3 emissions, as Chris Figee mentioned before, there was a restatement made in 2022 with regard to the previous years. And we've reviewed that restatement, and we agreed to it. The country-by-country reporting on taxes complies also with the GRI Standard 207. Then the key audit matters. So on this slide, you can see an overview of the key audit measures that largely are the same as last year. These are the matters that have received most attention by us in our audit. And I'd like to address 2 of them in more detail. Firstly, the valuation of the Glaspoort joint venture and also the viability of IT systems and the risk of cyber crime. Let me start then with the Glaspoort joint venture. Since 2021, KPN participates in a joint venture called Glaspoort, together with APG. In the fall of 2022, ACM declared the fiber optics fees offered by Glaspoort binding. During our audit, the focus was on the valuation of Glaspoort, including the assessment of a possible impairment, so lowering of value. In this context, we've assessed, among other things, the updated business plan and also the underlying -- the other underlying assumptions, and we agree with the valuation, the reporting and also the explanatory notes. There is no impairment in our view. Then the second key audit matter, which is the reliability of IT systems and the risk of cyber crime. So KPN's administration is highly automated. And there is also an increased risk of cyber crime for companies in the telecom sector as such. Cyber security in itself is not an object of our audit. We carry out work to gain insight into the risks, the cyber risk that could have a serious impact on the financial statements. So that's why we have included a cyber security expert in our audit team. If KPN had paid insufficient attention to security, there would have been -- or there would be a threat in the proper functioning of the internal audit structure, right? And that's why we check who has access to certain information systems and in which way KPN controls, changes in data access and in its programs. We also look at KPN cyber risk management process, KPN's monitoring of cyber measures and the cyber incident management process, including resilience in the event of an actual occurrence of such threats. We also look at the results of the test that KPN itself carries out to assess the security of its systems. And we also assess the activities of the risk management, internal audit and CISO, which is a Chief Information Security Officer department. Internal audit and the risk management department assessed also on a quarterly basis, whether the internal procedure are properly complied with and they make it verifiable for us. And our conclusion is that KPN has set up its cyber risk and incident management in a good way. So with respect to the cyber risks, we have seen no indications that material cyber incidents have occurred that have not been reported on or have not been acknowledged. Then the topic fraud and noncompliance with rules and regulations. So the topic of fraud and noncompliance with laws and regulations is totally in the public eye. We believe that it's very important to take our role and responsibility as the auditor very seriously. And we -- for us, this topic is very high on the agenda. However, it's important to oversee the entire chain, right, including the Executive Board, Supervisory Board, Internal Supervisor and also the government and the investigative authorities. Now if I look at our work and activities, we have forensic experts that we've involved in our audits and in our risk analysis. We have taken into account also the risks of material deviations as a result of fraud, whereby we're extra alert to fraud signals. We've discussed the risk factors and our audit approach with the Executive Board, the Supervisory Board, et cetera. And we've also included them in our audit plan. And we've also discussed it with risk management, legal and compliance and other important departments. And in the context of fraud risk, we've paid specific attention to the revenue recognition of large complex contracts in the business market. And we looked at the possibility of management adjustments. We also have regular meetings with the Board and corporate security, compliance, legal and audit department. Fraud and noncompliance are by the way, also periodically discussed with the management of the different business units. We've also taken note of any correspondence with regulators. And given the importance of the new telecommunication security and integrity regulation, we have also held frequent meetings with the responsible management, and we've assessed the reports in this regard. Plus, we also have reviewed important manual bookings. So basically, the journal entry testing. So our conclusion is that KPN put fraud and noncompliance high on the agenda and is alert to fraud signals and also provides adequate follow-ups. And we've also established that the Supervisory Board is periodically informed in an adequate way by the Board about the risks of fraud and noncompliance. Then sustainability. As said before, the attention for climate and biodiversity has enormously increased on a global level, which is clearly reflected not only at a European level -- Dutch level, but also the European level and the measurability of the impact is becoming more and more concrete. Now let me say something about taxonomy because since the 1st of January last year, listed -- sorry, of 2021, listed companies have to include additional nonfinancial information on the basis of the Taxonomy Regulation directive. And for 2021, this was limited to 2 of the 6 climate objects. The obligation was only to report on eligibility. That means to what extent the activities fit within the criteria of the taxonomy regulation and thereby potentially contribute to achieving the climate objectives. But for the first time in the 2022 reporting year, it was necessary to report on the extent to which activities for these 2 objectives are aligned. And our conclusion is that the nonfinancial information contains the required information as included in the taxonomy regulation. Now let me look ahead with respect to the reporting expectations, right? Because listed companies from next year on will have to report more extensively on sustainability information. The EC published draft standards in November, and we expect them to be adopted in June of this year and the plan changes to the existing legislation are intended to provide more transparency in the field of sustainability. KPN already carried out a GAAP analysis last year and is preparing also on a project basis for the further implementation of these European standards. Then finally, also with respect to climate risks, when preparing the annual accounts, the Executive Board has to check whether the consequences of climate-related risks and obligations have been properly accounted for and also properly explained. And the management conducted this analysis and determined that climate risks do not materially or seriously affect the valuation of assets and liabilities. And we agree after checking it. We agree with this conclusion. Then looking ahead to our control brand. So later this month, we will discuss it with the Executive Board and Supervisory Boards. But just like last year, there will be a top-down risk-based approach. And based on our draft control brand, we see no significant adjustments necessary in our audit approach, strategy and materiality. Of course, we will take any changes in the KPN organization into account, such as implementation of new systems, developments in the field of sustainability reporting and other developments also in rules and regulations in our audit plan for 2023. Then we already spoke about the way we collaborate and interact. We have regular meetings with financial management, with the Executive Board and the Supervisory Board. And our relationship with KPN is very transparent, is critical, independent and can be basically characterized as very good. So the various departments all strive for a high level of quality, and they have professional and knowledgeable attitude. And we issue a quarterly Board report, as I said, to the Executive Board and to the Supervisory Board and in addition to the key audit matters, topics that we report on include tax and legal matters, ensuring continuity of automated data processing and also our vision on important prognosis, valuations, et cetera. And we have determined that the Executive Board and Supervisory Board and management take our findings. And also the findings by the way, of internal audit, risk management and compliance seriously. And again, they take adequate follow-up measures. So on behalf of EY, I would like to thank the KPN organization for the very good and constructive cooperation over the last -- of the past year. Thank you very much for your attention and the trust you've given me.

Thank you, Mr. Verhagen. Does anybody have questions to the auditor or the Board? Mr. Stevens?

Right. I already prepared you for what I was about to ask. When we saw this, we looked into the financial statements immediately. You simply signed off, and we were quite surprised. We actually thought that you were going to make a remark about that, that EUR 500 million loan, how did you audit that, Mr. Verhagen?

I think Mr. Chris Figee already explained this. So IFRS regulation looks at the conditions of the loan concerned, and this new loan meets the requirements as listed in classification under equity, which means that payments or redemptions for this loan classify as dividend. So it's fully in line with the regulation. And therefore, there was no reason for any remarkable comment. Thank you.

Any further questions? Mr. Evers?

Thank you, indeed, [ Karen Evers, VEB ]. Very good that we have the auditor here. Obviously, you have your auditing object, and we are your clients. And it is quite an extensive overview that you have presented to us, but it's quite procedural, factual and just listing the responsibilities that any external auditor has. So I'm going to try to get more details from you. We talked about risk management, especially in sustainability that was already a question to the Board. Now that same question to you, Mr. Verhagen. How do you look at the risk management? Can you simply say, yes, as far as we know and what we saw, this was a well-developed part or are there other teething problems that need to be reviewed later on and especially what you explicitly address the cyber risks, how can assess EY, KPN because there's not many customers like KPN in the Netherlands. So how aware and exceptional can KPN be when it comes to this risk cyber crime? So what frame of reference do you have here to say as an external auditor, the cyber risks have been managed correctly? Then [ '11, '18 ] of course, many discussions about -- amongst auditors to what extent can you do this? Of course, this requires that you coordinate with the chairs of the Audit Committee. Can you talk about what kind of coordination took place with that chair of the auditing committee? And what things did you have to do or things you would have liked to disclose, but you couldn't?

Well, that's a discrete question, and first of all, the first was about your internal control framework within KPN. And I think Mr. Figee already said that it's important to make a distinction between financial and nonfinancial information. For nonfinancial information, KPN has a very robust control framework, our grip and this is periodically reviewed. All the measures have been assessed and documented and reported on and also to what extent inefficiencies were found and then follow-up takes place. And when it comes to that information, there is a robust control system. If you look at nonfinancial, doesn't only apply to KPN, by the way, but any other company, it is a subject that is under development, which means that information at this moment cannot be assessed in the same way. Sometimes, the spreadsheets are used, and that is susceptible for mistakes. And I think it's just very relevant that the internal control framework for nonfinancial information is further developed and that it has priority. The regulator also reported on this extensively, you know, that documentation as well as I do. And I think the conclusions from that report apply to the entire corporate life in the Netherlands.

Yes. In addition to that, we indeed allowed Mr. Verhagen to talk about his activities and not maintain confidentiality. So there's no problem whatsoever. Okay, that brings us to cyber security then, which is indeed a subject of which you say that it needs attention.

And yes, we have had IT auditors for years now, especially also with the external audit of KPN. And over the past 2 years, we also engaged cyber security experts in the auditing activities and they frequently talk to the CECL when it comes to latest developments and also looking at integrity, security of telecommunication, which steps have to be taken. So looking at always possible to mitigate security or cyber security risks and looking at whether this is in conformity with the standards that we have. And we also look at the monitoring of cyber actions that KPN has and if there are incidents, how follow-up takes place. And that is what you do in your capacity as external auditor. And we do that. We have a solid collaboration with KPN for that. And then your final comment, yes, that new -- well, obviously, we had a consultation meeting with the company and a number of aspects have been applied. And I am not aware of any aspects that I couldn't disclose today. We both did agree what I was going to include in our presentation needs to be relevant. And I think there were no barriers to disclose anything, and that is because we have a healthy relationship with the company.

Thank you, Mr. Verhagen. Any further questions about this item? No further questions, also not online. Then I conclude that there are no further questions, and we can proceed to go to the first resolution. The Secretary will now talk about the number of present shareholders and number of votes represented. And also, he will explain to you how you can cast your vote. Jasper?

Thank you, Chair. Ladies and gentlemen, at this meeting, we have 23 shareholders, all representatives of shareholders. There is 1 shareholder who is online, a total of 3,087,175,137 shares with an equal number of votes represented here, which is 76.71% of the issued share capital. Of these shares, over 2.3 billion votes have been given to Ms. Leemrijse, notary, through a proxy and also I have a proxy for a number of votes. These are all proxies with voting instructions that have already been introduced into the voting system and therefore are already included in the voting results. Then, a brief explanation about the voting process. The virtual participants can cast their vote when they are logged in or if they are logged in through their own smartphone on the platform. And those of you present in the room will cast their vote on the smartphone or tablet, you are logged in on the website on your own phone and you received instructions upon registration. So you are logged in. If this is not the case, please raise your hand, there are people who can help you. I see 1 hand, so unsuccessful so far? Well, okay. So you were logged off unexpectedly, someone will come to you. You will have some time to vote. On the screen, you will see your options in favor, against or abstain. You can just simply press. The screen will then indicate what your vote was. You can now cast your vote or you can do that later on in this meeting. For all items on the agenda that are a resolution, you can cast your vote until the end of the meeting, they will all remain open and also change your vote if you wish. As indicated, all voting results will be announced at the end of the meeting. Any questions at this moment? If not, Chair, the floor is yours.

Thank you, Jasper. I would now like to invite you to cast your vote. It concerns the adoption of the financial statements for the fiscal year 2022. Thank you. We will now move to Item 4, the remuneration report for the fiscal year 2022. We would like to inform you about the remuneration policy for the Management Board and Supervisory Board over the past fiscal year. From 2019 and onwards, you can have been able to cast an advisory vote. I will come back to that later, but I would like to give the floor to Mr. Hartman as Chair of the Remuneration Committee. He will inform you about the execution of the remuneration policy for the Management Board and the Supervisory Board in 2022. Peter?

Thank you, Chair. The remuneration report 2022 was drafted in line with the requirements that come from the current law and regulation. As an introduction, I would be happy to outline the starting points of the current remuneration policy for the Management Board. The remuneration policy of the Management Board of KPN is based on market and society confirmed starting points. The composition of the remuneration package for the Management Board consists of a base salary, short and long-term variable remuneration and extra secondary labor conditions. The short-term variable remuneration is based on cash with an on-target level of 90% of the base salary for the CEO and 60% for the other members of the Board of Management. The remuneration depends on whether or not certain financial and nonfinancial KPIs are met with, respectively, a weighing of 70% and 30%. The long-term variable remuneration is based on performance-related shares with an on-target level of 135% of the base salary for the CEO and 90% of the base salary for the other members of the Board of Management. This remuneration also depends on whether or not certain financial and nonfinancial KPIs were met with the respective weighing of 70% and 30%. Now if we look back on 2022, I would like to first highlight the outcomes of the variable remuneration arrangements over the past period. Outcomes of it are on the screen. The outcome of -- or a result of the short-term variable remuneration incentive scheme for calendar year 2022 for the total lies at 90.54% of the on-target payout level. Compared to the original financial goals, as was said at the beginning of this year, the free cash flow performance and the service revenue performance between the on-target level and the maximum level, it lies in between. And EBITDA performance ended at almost on-target level. So when it comes to nonfinancial goals, as laid down at the beginning of the year, the NPS performance is the instrument for customer satisfaction between -- and it ended between minimum and on-target level and broad base. Performance -- broadband-based performance is the measure for the number of active commercial broadband lines, which was under the threshold value, mainly driven because of competitive dynamics in a broader market. And these results then lead to an outcome of 90.54% of the on-target payout level. In line with the existing remuneration policy, half of the short-term variable remuneration will be paid out through shares if the executives have not reached the maximum for share possession. This guideline or regulation for share possession for CEO is based on 250% of the base salary. And for the other members of the management Board based on 150% of the base salary. So all executives will have reached that intended STI 2022 level at the moment of payout, so that the STI 2022 will be paid out in cash. The long-term variable or long-term incentive scheme concerns the outcome based on the LTI plan 2020 for both, including financial and nonfinancial goals that were measured over the years 2020, 2021 and 2022. The performance of the LTI ended at 121% of the on-target payout level. This outcome is the result of performance of financial goals in the field of relative total shareholder return, so that's TSR and free cash flow and the nonfinancial targets in the field of reputation and sustainability. The relative TSR performance is measured compared to the STOXX Europe 600 Telecommunications Index. That's the so-called benchmark or reference group that consists of 21 companies. KPN is in fourth position when it comes to that reference group and performs with that above the threshold value for vesting, which is on the median of that particular reference group. The free cash flow performance measured as an aggregated target of the years 2020, 2021 and 2022 ended between the threshold value and the on-target level. Now the nonfinancial targets then. As said at the beginning of the 3-year performance period in 2020, is the circularity target based on reuse and recycling of materials above and it ended at the -- above the maximum level and the reputation target based on the 3 specific focus fields, positive influence on society, a well-organized company and excellent manager ended at the maximum level. KPN performs in the field of reputation and has been performing for several years, not only above the benchmark in the industry in Netherlands, but also well above the average of the top 30 of companies in Netherlands and the international benchmark as well in the telecom industry. Next to that, KPN in 2022 was awarded by CDP, MSCI and EcoVadis with 1 of -- what's called 1 of the most sustainable telecom companies in the world. So based on this performance, the realization of the 2 nonfinancial targets in the field of reputation and sustainability ended at the maximum level. On screen, you will see the number of shares that will be acquired based on the LTI plan in April. The shares acquired cannot be sold for a period of 3 years, it's the lockup period. The Remuneration Committee also has assessed over the past year whether the COVID pandemic could give rise to taking specific measures in relation to the remuneration of the Management Board. The Remuneration Committee has concluded that there was no reason to deviate from the agreed remuneration policy. The gross annual salaries for the individual members of the Management Board were increased per the 1st of October 2022 by 2%. The Supervisory Board took that decision considering that no change was made in the gross annual salary since the appointment in 2019, looking at the developments of the CLA wages within KPN and the developments within the peer group as explained in the remuneration policy. In the remuneration report 2022, it is also explained what the pay ratio of the company is. This ratio is based on the relationship between the highest-earning officer, the CEO, compared to the average remuneration for any other coworker. The pay ratio is calculated based on IFRS starting points. And in 2022, in [ '32 ]. So for a more detailed calculation and the methods used, I would like to refer to the relevant clauses in the remuneration report. During the previous Annual General Meeting, we also talked to you about the nonfinancial targets, especially when it concerns the LTI. And we indicated that these nonfinancial targets were adjusted for certain parts. For the STI and LTI 2023 plans, we will continue these nonfinancial targets. For the STI 2023, we include next to the financial targets, the Net Promoter Score, NPS, and the number of broadband connections. And for the LTI 2023, we will include next to the standard financial goals, reduction of the supply chain -- CO2 Scope 3 emission in our complete chain and the balance or ratio male/female in diverse management layers of the organization. We feel that these targets connect best with our purpose, strategy and ambitions at this moment, and Board and colleagues are stimulated in the right way by realizing value creation on the long term.

Thank you, Peter. Does anyone have any questions about this topic? No questions? Good. That means that there are no questions and that means that you can now cast your vote or actually so-called advisory vote on the 2022 remuneration report. You can vote just as usual. If you agree with it, you say that you are in favor. If you're against, then you're against, and you can also abstain. And your vote will not have any consequences for the remuneration granted for this year, but we will take it into account in the implementation of our policy for the future. And you can ask a question now or keep it for the other business. Now let me move on to Agenda Item 5, and Chris will give an explanation about the financial and dividend policy.

Thank you, Peter. So we have concluded the year with a very strong balance position. And at the end of 2022, we had a total liquidity of almost EUR 1.5 billion, of which EUR 500 million of cash was on the balance sheet and EUR 1 billion in [indiscernible] facilities. This already covers the expected repayments for the next 2 years. We're also fully committed to maintaining a strong credit profile. This also is evident from the solid ratings of all 3 rating agencies. Then an attractive dividend, in combination with the solid financial profile is, of course, important for not only KPN but also our stakeholders. So therefore, financial soundness is paramount. And KPN has also announced its intention to pay a dividend of EUR 0.143 per ordinary share for the financial year 2022. After deduction of the interim dividend payment of EUR 0.48 per share, which represents a total amount of EUR 196 million paid on the 4th of August last year, proposed final dividend of EUR 0.95 per ordinary share remains, meaning EUR 383 million, depending a bit on the progress of the share buyback program. And if the meeting approves, the final dividend will be paid on the 19th of April. The dividend for the financial year amounts to approximately 67% of the free cash flow of the year 2022. As I said, we focus on creating long-term value. So we invest heavily in the digital infrastructure of the country, and we're convinced that this will deliver value for all stakeholders. The execution of our strategy is also successful. I mean, we're financially healthy. That's why we can supplement the annual growing dividend with structural additional distributions to our shareholders. We have repurchased EUR 300 million of shares, and we will continue the repurchase program also this year. We have started the repurchase of our own shares of EUR 300 million for 2023. And yesterday, we already announced that the bank was given the order. And this means that when we're done, we will have paid approximately EUR 875 million to our shareholders. And that makes a total distribution to our shareholders approximately equal to the planned free cash flow for this year. That was my very, very brief summary on the dividend and for the return policy, I give the floor back to the Chair.

Thank you, Chris. Then let's move to the questions on this agenda item. Does anyone have a question or want to make a remark either in the room or via video? No question? That means that I can note that there are no more questions, and that means I can conclude the discussion of this agenda item. And I can note that the General Meeting of Shareholders has been informed about KPN's financial and dividend policy. Now let's move on to agenda Item 6, which is the proposal to adopt the dividend for the financial year 2022. On the 23rd -- sorry, 31st of January 2022, KPN announced its intention to pay a dividend of EUR 0.143 per ordinary share -- sorry, on January this year over last year. An interim dividend was already paid in August, EUR 0.048 per share. So in line with the previous intention, we now propose to pay a final dividend of EUR 0.095 per share. And that means that the total dividend will indeed, as said, amount to EUR 0.143 per share. The total profit for the year 2022 allocated to KPN shareholders amounts to EUR 760 million. On the 23rd of February of this year, the Executive Board with the approval of the Supervisory Board, allocated an amount of EUR 181 million from the profit to the other reserves. Now taking into account the interim dividend already paid EUR 196 million, the remaining part of the profit for 2022 will be an amount of EUR 383 million. That is available and is proposed to be paid out as a final dividend. And this amount corresponds also with the EUR 0.095 share that I just mentioned. The Executive Board therefore proposes with the approval of the Supervisory Board to the General Meeting to determine a total dividend of EUR 0.143 per ordinary share to be paid. If you agree with this proposal, the final dividend for the year 2022 of the amount of EUR 0.095 per ordinary share, taking into account Article 33 of KPN's Articles of Association will be made -- will be paid out on the 19th of April. Let's see. Are there any questions about this agenda item, either in the room or via the video connection? There seem to be no questions. So that means I can invite you now to vote on this agenda item. So the vote will now concern the proposal to adopt the dividend and to establish it at the amount of EUR 0.143 per share. As said, you can either cast your vote now or later during the meeting up until the moment of the -- any other business item on the agenda. Thank you. Then agenda Item 7 and 8. 7 concerns the proposal to grant discharge to the members of the Executive Board and 8, this discharge to the members of the Supervisory Board. So like every year, after the annual accounts have been adopted, we ask you to grant discharge to the Executive Board and Supervisory Board members. This concerns their policy shown or -- shown in the financial statements or disclosed to you in any other way. We've already discussed this in agenda Item 2 with the report of the Executive Board over the financial year 2022. So a distinction is made in the vote between the Executive Board and Supervisory Board. And since you can vote on all agenda items throughout the meeting, I would like to combine a discussion of these 2 agenda items in one go. So the discharge of the Executive Board concerns all the current directors and for the Supervisory Board, also all current members and the former Supervisory Directors, Mr. Sickinghe and Mrs. Zuiderwijk. Does anyone have any questions about these topics or anything to add or remark either in the room or via the video link? No questions? Then you are requested to vote again. So again, your votes now concern the proposal to grant discharge to the Executive Board, agenda item 7 and the Supervisory Board, which is Item 8. And again, you can vote until any other business item. Thank you. Agenda Item 9 then, proposal to appoint the external auditor for next year -- financial year 2024. The Audit Committee has evaluated the performance of the external auditor and also the developments in the relationship with the auditor and the Audit Committee has taken into account the observations of the Executive Board and the review of the performance of the auditor by the financial department. And we have given it a very good score of 8 out of 10. So the valuation highlighted the good cooperation, the critical but constructive attitude of EY, the professionalism of the team members and also the good price quality ratio, among other things. Now in accordance with best practice provision 1.6.1 of the Corporate Governance Code, the Audit Committee has reported on this evaluation to the Supervisory Board and the Audit Committee also issued a positive opinion on the nomination of EY as the auditor for the annual accounts audit for the year 2024, and it is fully supported in this by the Executive Board. So in line with this advice, the Supervisory Board now proposes to order or commission EY to examine the financial statements for the financial year 2024. Does anyone have any questions or remarks about this topic, either in the room or online? I see no questions. Then no questions. That means that we can vote on this item as well. So your vote concerns the proposal to appoint EY as the external auditor to audit the 2024 financial statements. If you've not yet cast your vote, you can still do that until the end of the meeting up until any other business. Good. We can now move on to agenda item 10. You can make recommendations for the appointment of a member of the Supervisory Board. Now at the close of this meeting, the term of appointment of Ms. Sap and Mr. Hartman will expire and Ms. Guillouard already previously indicated that she would resign from her duties at the close of this meeting, and that is due to personal circumstances. Now in order to ensure continuity, after a number of changes in the composition in a relatively short period, the Supervisory Board now proposes to reappoint Ms. Sap as a supervisory member for a third term of 2 years, also with effect from this meeting. As a result, the Supervisory Board will temporarily consist of 9 members. The Supervisory Board intends to fill the vacancies that have, of course, will now be created by nominating 3 candidates for appointment by this GMM. In addition to the reappointment of Ms. Sap about which I will say a little bit more in a moment. On behalf of both Boards, I would now like to first thank Mr. Hartman and Ms. Guillouard for their important contribution provided to KPN. Mr. Hartman has been a member of the Supervisory Board since already 2015. From his appointment, Mr. Hartman, who was the Chair of the Remuneration Committee and a member of the Nominations and Corporate Governance Committee and the Strategy and Organization Committee. And in the last -- in the past year, Mr. Hartman also helped me as a Vice Chair of the Supervisory Board, for which I'm very grateful. And because of his extensive managerial experience and also his knowledge of the international business world and also the relationships he has between the business community and society, Mr. Hartman was of great value to the Supervisory Board and the Executive Board. And as a Chair of the Remuneration Committee, he has also been able to steer the discussions about executive remuneration in the right direction, focusing on a fair remuneration from the perspective of employees, the company and society. And therefore, we will miss him very much. And therefore, we would all like to thank him so warmly for his important contribution to the company and also his dedication to KPN, employees and shareholders. Peter, thank you so much. Ms. Guillouard has been a member of the Supervisory Board since 2020. And from the moment -- from that moment, she took -- from the moment she took office, she was a member of the Audit Committee and also she chaired the Audit Committee in 2021 -- from 2021 onwards. And she ensured the soundness of financial reporting and also a very prudent management of company finances. A very keen eye and broad business experience kept both Boards very alert, and therefore, we will miss her very much. And of course, we would also like to thank her very, very much for an important contribution to the company and to her dedication to KPN, the employees and the shareholders. Catherine, thank you so much. The Supervisory Board, like I said, intends to fill the vacancies that have been opened by nominating candidates for appointment by this General Meeting of Shareholders. Now the new vacancies have to be fulfilled in accordance with the profile of the Supervisory Board. In particular, the Supervisory Board aims to have a diverse competition in terms of experience, professionalism, age and gender. In addition, candidates will need to have knowledge of or experience with the management of a large company and also with national or international business finance and/or relations between companies and society. Moreover, candidates must have also an affinity with the telecoms and IT industry world. So in addition to the reappointment of Ms. Sap, we would want to intend to propose Mr. Noteboom, Heemskerk and Dijkhuizen to be appointed today. And I'd like to stipulate here that the composition of the Supervisory Board at the time of this meeting and even if the intended appointments are adopted, we'll still continue to meet the legal requirements that apply with respect to a balanced composition in terms of gender distribution. Now for the sake of completeness, as already said, Ms. Vergouw will only step down from the Supervisory Board when she joins the Executive Board. So we wish to fill the vacancy that this creates immediately by having Mr. [ Koelemeijer ] step on as a member of the Supervisory Board. And all this will happen on the 31st of May. And in this way, the Supervisory Board will continue to comply with the legal requirements, right, regarding the balanced composition of the Supervisory Board, even if -- or with Ms. Vergouw's resignation. Now having said that, in accordance with the Article of Association, I gave the general meeting the opportunity to exercise their right to make a recommendation for the appointment of a member of the Supervisory Board for the vacancies that now exist and for which the nominations have been put on the agenda of this meeting. Does anyone in the room or via video connection have a recommendation to make for a candidate? Then I can note that the general meeting has not made a recommendation for a candidate. Then we can move on to Agenda Item 11. That's a proposal to reappoint Ms. Sap as a member of the Supervisory Board. Now first of all, the Supervisory Board nominates Ms. Sap for reappointment as a member of the Supervisory Board. Let me briefly explain this nomination. And for the rest, I would like to refer you to the further information in the agenda. So the nomination for this position is subject to the reinforced right of recommendation of the Central Works Council, which by the way, recommended her nomination. This was taken over by the Supervisory Board. Also, the Executive Board supports her nomination and the recommendation of the Central Works Council can be found on the company's website, which was part of the meeting documents as well. Ms. Sap meets all requirements of the Supervisory Board's profile. In particular, her extensive knowledge of and experience in the public sector and her knowledge about relations between society and the business community. She is very much appreciated for her contributions to the Audit and Remuneration Committee, especially with respect to ESG topics and also because of her relationship with KPN employees, Ms. Sap is considered independent within the meaning of the Dutch Corporate Governance Code. Ms. Sap has fulfilled her duties in a good manner and always to the satisfaction of the Supervisory Board. She's provided valuable contributions and good insights, including as a member of the Audit Committee and the Remuneration Committee. Supervisory Board, like I said before, believes that for continuity, it's desirable to reappoint her after a number of changes in the composition of the Supervisory Board in a relatively short time. Now that means that I'd like to propose now that Ms. Sap be reappointed as a member of the Supervisory Board as included in the agenda, right, for a period of 2 years, which will end at the close of the Annual Meeting of Shareholders to be held in 2025. Does anyone have any questions either in the room or via video? Mr. Stevens?

Thank you, Mr. Chair. Mr. Stevens from [indiscernible]. We would like to hear from Ms. Sap, what motivates you to add yet another 2 years to your experience as a Supervisory Board member. I am sure that you will do that very happily?

Yes, indeed, Chair. And thank you, Mr. Stevens for your question. Of course, after being active in the company for 8 years, you wonder whether you are still sufficiently curious and willing to really take a deep dive into it. And I am very much so. This is partly because of the wonderful and interesting colleagues that I will have, which will create an entirely new dynamic, but it also relates to all the interesting challenges that we will be faced with over the next few years, especially with respect to ESG policy. So I would love to keep contributing to that together with KPN. And as said, the Audit and Risk Committee have contributed to it with a great pleasure. And I think it's important to have the right continuity there. So I will continue my efforts there, too.

Thank you, Jolande. Does anyone else have any questions about this topic? No questions. Then that means that since there are no questions, we can cast our votes. You can cast your votes on this. So the vote concerns the proposal to reappoint Ms. Sap as a member of the Supervisory Board. And again, just like with the others, you can cast your vote until the other business item. We can now move on to agenda item 12, which is the proposal to appoint Mr. Noteboom as a member of the Supervisory Board. Let me also briefly explain his nomination. And for the rest, again, you can -- I would like to refer you to the agenda. In our opinion, Mr. Noteboom has a very valuable -- is a very valuable addition to the Board, and he also meets the requirements of the profile. In connection with the resignation of Mr. Hartman, the Supervisory Board would like to supplement his managerial knowledge and expertise, especially in a Dutch context. So with his very extensive track record, in managerial and currently also supervisory positions in different industries and is very good anchoring, so to speak, in the Dutch business society, Mr. Noteboom meets this profile and complements the Supervisory Board very well. He's also considered independent within the meaning of the Dutch Corporate Governance Code. Now his nomination is supported by the Executive Board and the Central Works Council and the position of the Central Works Council with respect to his nomination can be found on the company's website. So for these reasons, the Supervisory Board would now like to nominate Mr. Noteboom for appointment as a member of the Supervisory Board for a period of 4 years. In this case, ending at the close of -- at the annual meeting of shareholders to be held in 2027. And Mr. Noteboom is attending this meeting. And for that, I would like to give him the floor for a brief introduction.

Good afternoon, ladies and gentlemen. I would like to introduce myself briefly. My CV has been added to the agenda, so I will not address that. But why KPN? That was the same question to Ms. Sap. I would like to answer that question. My lifelong -- I was very motivated to do something for companies that contribute to society. And I must say that KPN is of crucial interest to Dutch society. And this is why I had no doubt when I was asked whether I was interested to take this position. The welfare of the Netherlands is connected to companies like KPN, and I would like to really contribute to that. And then the second factor is how do you do that? Randstad, the company that I was with for a long time has described the concept of stakeholder interest. But it means that you take into account all decisions that are made and what effect it has. And I think KPN does that. I've seen it all. Today, it is all very well thought for shareholders, for colleagues, for the environment and this is why I'm very much motivated to contribute to this company. Thank you.

Thank you. Are there questions about this item on the agenda? Mr. Stevens?

Thank you, Chair. Again, Mr. Stevens from [indiscernible]. Yes, for all 3 candidates, we have the same question. So is that all right, that I ask them straight away for all 3 of them, then you can put them forward to all 3 candidates and then they can answer it. First of all, we were wondering how KPN got in touch with you or you with KPN? Did you use a headhunter or a recruitment agency? If yes, what was the profile? What was the assignment? Did you have a short list? How did the procedure go of selecting a candidate? So again, was there a short list? Was it discussed in a committee, a recruitment committee, who was in it and did it lead to a select number of candidates? And then did you talk to those candidates and were those interviews -- what can you say about this interviews?

Well, Mr. Stevens, I can answer the question for you for on behalf of all 3 candidates when it comes to the process. Look, when we are looking for a supervisor or an executive, it doesn't matter, this process always begins by drafting a profile. What are we looking for? What type of executive or a supervisor do we need? And there is variation, obviously. If you look at the profiles at the 3 people who have been nominated, they are all different when it comes to their profile. This is how it happens. Then what happens is that you engage an agency. This agency, I think there's 3 or 4 of them, and we regularly use those services. They will provide a long list. First of all, the long list is discussed. This happens in the Nominations Committee. The Nominations Committee is in the lead usually. They look at it, then that long list is reduced to a manageable number that you talk to, could be 3 candidates, 4. And in the end, you have a preferred candidate or the candidate that you prefer most. Then the process continues. As a chair, usually, I first talk to a candidate. Then members of the Nominations Committee will talk to the candidate. Then the other members of the Supervisory Board. And then in the end, this will result in an appointment. This is how these processes go to the extent that wherever we, as Supervisory Board, are in the lead when it comes to executives that are nominated by the Central Works Council, for example, that is relatively similar, but then obviously, the Supervisory Board is not in the lead, but the Central Works Council is in the lead, and we are in touch, obviously. But all these processes are very similar and identical to -- and obviously, the outcome is based on the profile that we look for. Does that answer your question?

Yes. Thank you.

Any other questions? Mr. Stevens? Again, for all candidates, I know that Mr. Noteboom has said something already. But we would love to know how careful the process was that the candidates went through and how the interviews were with the Executive Board and the Supervisory Board. Did you look at the future perspective, the expectations, the strategy, any upcoming regulations, how extensive for all these subjects addressed. And just like what Mr. Noteboom already referred to, what will they add? What kind of values will they add to KPN. So their motivation? And I would like to know whether they've already talked to the auditor as well. Maybe when the gentlemen introduced themselves, they can briefly zoom in on that. But your question also ceased to really the contents of the matter. When you say -- I've already said that candidates talk to the CEO and the Supervisory Board, obviously, there is a strong component on the merits, where is the company, what are the challenges? Obviously, all these matters are addressed. What decisions are upcoming. So really talking about the strategy of the company, plus all ongoing challenges that you have every year. These items are included, but please, candidates when you introduce yourselves, they can briefly address this, and maybe they can include it. And they will also address the matter of why KPN. Ben, maybe you feel a need to add something to what you've already said?

Well, I think I said it all that I was very motivated, and I think you need motivated people in your company, right? So when I started out with [indiscernible] , I was like how exciting is it? And then it was very exciting, and I talked to other supervisors. And obviously, we talk about the challenges, you know, what, how is the company doing, where you want to go, all the obvious things that you'd expect. Does that answer your question, Mr. Stevens?

So it was all positive. Yes, it was all positive. It doesn't mean, however, that there are no aspects that can be challenging or maybe I have a different opinion of, but that's normal.

Any further questions? If not, then I conclude that there are no further questions about this subject. And now you can cast your vote on this item. It concerns the proposal to appoint Mr. Noteboom as a member of the Supervisory Board. The vote is open until any other business. Then we now proceed to Item 13, which is the appointment of Mr. Heemskerk. I would like to briefly address the nomination. I'd like to refer to the further information in the agenda. The nomination for this position was also based on the recommendation of the Central Works Council, which recommended Mr. Heemskerk's nomination. The complete recommendation of the Central Works Council can be found on the KPN website. Mr. Heemskerk complies with the requirement and is a very knowledgeable in the public industry and politics and has a clear insight in the society and also because he is a Secretary General of the European Roundtable for Industry in Brussels, but also in previous roles that he was a Minister of Foreign Trade. He was a member of Parliament. Mr. Heemskerk is considered independent within the meaning of the Dutch Corporate Governance Code. It is therefore proposed that, therefore, Mr. Heemskerk is a great addition and has adopted that nomination. And also the other Board supports this. The Supervisory Board proposes to appoint Mr. Heemskerk in accordance for a period of 4 years, ending at the closure of the Annual General Meeting of Shareholders to be held in 2027. The -- Mr. Heemskerk is present here, and I would like to give the floor, Frank?

Good afternoon. You see my CV and picture on the screen already. I believe that COVID, everybody who was not convinced yet, it demonstrated how important digital services and digital infrastructure is for the Netherlands, and KPN plays an enormous, important role. And it's a huge honor for me for that reason that I have been nominated for the Supervisory Board and an even bigger honor that this was done based on a right of the Central Works Council. I, of course, bring experience from economic affairs, but also my work at the World Bank, I am pretty sure that growth, investments and having a healthy profitability is very, very important for any stakeholder. And I am very committed to work on that. I have a current position in Brussels, and I am able to see and witness how more and more regulation and directives come from Brussels and that has an impact on KPN in the Netherlands as a country, and I would really like to contribute to that, making sure that KPN is ready. And I must say all meetings were very pleasant, informal and formal, and I think I have the impression that KPN is doing really well. They're growing, and you can always do better, right? And if there are any further questions, I'm happy to answer.

Thank you, Frank. Any further questions for Mr. Heemskerk or this item? If not, then thank you. I conclude that there are no further questions. And also then you can now cast your vote. The vote is about the appointment of Mr. Heemskerk as a member of the Supervisory Board and the vote is open until any other business. Thank you. This means that we have now come to #14, which is the appointment of Mr. Dijkhuizen on the Supervisory Board. Again, I would like to briefly inform you and I again, refer you to the explanatory notes with the agenda. Mr. Dijkhuizen is a valuable contribution to the Supervisory Board and meets the requirements of the profile of the Supervisory Board. Mr. Dijkhuizen is a seasoned executive with a strong track record as finance and audit professional. And because Ms. Guillouard is stepping down, the Board wishes to use his audit and finance expertise. And again, his track record is unprecedented and therefore, he meets all the requirements of the profile and he is a nice addition to the Supervisory Board. Mr. Dijkhuizen also qualifies as an audit committee financial expert. He is independent within the meaning of the Dutch Corporate Governance Code. The appointment is supported by the Dutch -- by the Management Board and the Works Council as well, and you can find the position of the Works Council also on the company's website. For that reason, Mr. Dijkhuizen is nominated by the Supervisory Board for a period of 4 years, ending at the closure of the Annual General Meeting of Shareholders to be held in 2027. Mr. Dijkhuizen is present here, and I would like to give the floor to him for a brief introduction.

Thank you, Chair. Looking at my -- first of all, thank you for having me. It says a CFO, NIBC. I am no longer that. I stepped down as per the 1st of April.

Mr. Dijkhuizen, this is how we know each other, right?

Mr. Stevens, I'm sorry. And there is a time when you no longer wish to be a full-time executive and you want to do something else in your life. And I decided that I wanted to do that. So as per the 1st of June, officially, I will have no longer have those ties. This is why it would start at the 1st of July for me and not at the end of this AGM. Why KPN? Well, if you look at my CV, I have done many, many things and Ben said this already, but really focusing on social issues. I obviously also consciously did a number of things. I did not do a number of things. For example, IT is fundamental. How we interact, how we communicate, it will only become more important, not only today but also in the future. And I would really like to contribute to that. It is great that the chair says that I'm an expert in the field of finance, that's nice. But I want to grow in a number of other fields. If you say as an executive, I'm going to stop, the worst thing to do is to completely retire. I wish to focus on a number of things. And one of those things is the nice discussion that we had today about 5G. What happens -- what do you do? How can you work that best. So it's a combination of giving and also receiving, making sure that in my other roles that I have, I can still continue to grow. So that's one. Next that we have had regular talks. I had an informal talk with the auditor, and he confirmed to me that I was allowed to do this. This is why I'm free to say this today, Mr. Stevens. And I think it's just great to be able to do it. So these are my reasons.

Thank you, Herman. Then we will now proceed to questions on this item on. Are there any questions, comments to Mr. Dijkhuizen? No further questions? Then I conclude that there are no questions. So now you can vote. And it concerns the proposal to appoint Mr. Dijkhuizen as a member of the Supervisory Board as per the 1st of July this year. The vote is open until the start of any other business. Thank you. Then this brings us to 15, 16, 17 and 18. 15 is the proposal to grant the -- sorry, consider proposal to authorize the Board of Directors to acquire KPN's own shares. Then the proposal for capital reduction by with role of own shares, then 17 concerns the proposal to appoint the Board of Directors as the competent body to issue ordinary shares and then IT and concerns the proposal to appoint the Board of Directors as a competent body to limit or exclude the statutory rights of preemption when issuing ordinary shares. So these 4 items on the agenda are closely linked. So I will explain them to you at once. However, you can vote on it separately. The proposals give the Executive Board under the supervision of the Supervisory Board some flexibility with regard to the issuance and repurchase of shares. These schemes are on the agenda every year and are in line with what is customary in the Dutch market. We, therefore, ask you, like every year, to one, authorize the Board of Directors to repurchase a maximum of 10% of its own shares. And then second, withdraw own shares, thus repurchase and thus reduce the subscribed capital. And three, empower the Board of Directors or authorize the Board of Directors to issue up to 10% of ordinary shares and then fourthly, give the Board of Directors the power to exclude in such issuance or limit the right of preemption in the event of -- in that event. For the exact modalities of these items on the agenda, I refer you to the explanatory notes. Finally, I would like to point out that these decisions apply for a period of 18 months from today and will replace your decisions from last year. We will now proceed with questions. Does anybody have questions?

Yes, thank you, Mr. Chair. My name is [ Broonink ]. So this power, is it about the EUR 300 million worth of repurchase of shares that was announced?

No, sir.

So this is a separate proxy?

Yes, but it's part of it. It fits in it.

What do you mean, sir? So you mean -- yes, I'm now looking at the Secretary, but this is part of it? Yes, the buyback or the purchase program of EUR 300 million is part of the mandate that you will give us? So do you have any plans to purchase any more?

Well, we will not tell you, as you'll understand, it's not currently something where that's our plan. But if not, we will, of course, issue a press release. Do you have any more questions?

Do you have any plans perhaps to withdraw any shares or reissue new shares? I mean are there any concrete plans? Because yes, this is an annual mandate, but does anything ever happen?

Sir, if it ever happens, we will, of course, inform you about it as we should. Currently, those plans are nonexistent. Any other questions? So no further questions about this topic then? Now about each of these agenda items, you can cast your vote. So I would like to request you to do that because afterwards, we will end the voting. So 15 concerns the proposal to authorize the Board of the Executive Board to acquire KPN's own shares according to the specs that you read in the agenda. Then 16 concerns the proposal for capital reduction by withdrawal of KPN's own shares. Agenda Item 17, as said, concerns the proposal to appoint the Board of Directors, the Executive Board -- sorry, as the competent body to issue ordinary shares and agenda item 18 concerns the proposal to appoint the Executive Board as the competent body to limit or exclude the statutory right of preemption when issuing ordinary shares. Please cast your vote, and these will also be the final voting items. So within a few moments, we will close the voting on all items. So please, therefore, make sure that you cast your vote on every item insofar as you've not done that already. I will give you a few moments to cast your votes or if you should want to change your vote because that's possible too. Let me look at the Notary and also the Secretary. The vote is hereby closed. So that means that on no agenda item, you can vote any longer, and the results will be shown on the screen. So before that, we will -- before that, we will now continue first with Item 19. DNA of the business. Yes, someone in the back. Please state your name.

Last year, I asked the very same question. The dismantling of the ordinary land lines, right? And the fact that we can only go and use Internet basically in the future. A former general once said that we should not fully do away with the old phone line network, i.e., landlines, right? And for now, it seems that the government doesn't seem to realize the importance, but I would like your reaction on it.

I will give the floor to Mr. Farwerck to answer this question.

I was just told that I should state my name. My apologies, [ Rynick ] is my name.

Thank you for your question, sir. And indeed, the year we started dismantling the old copper because we are now focusing on fiber optics. We, of course, don't need to overlay one network over the other, right? But we do have a very careful approach. Whenever we roll out fiber optics, we always announce that on average, 5 years later only, we will start dismantling the copper network in that area. So people have some time. But basically, the whole industry of, let's say, the old-fashioned ISDN and whatever calling has already moved to IP calls. But my dad, who's 93 years old also uses the same old landline. The problem in the past was that the IP protocol didn't work on certain networks, right? For example, alarm systems, et cetera, but that hardly ever happens. So whenever we do dismantle networks and sometimes we see exceptional cases and then, of course, we take that into account. So the actual turning off of that system hasn't happened, but we have basically taken 2 million households of the system. I don't know which former general you are referring to. You -- well, we have very good relations with the Department of Defense. Obviously, they're a very important partner and client of ours, but I've never heard from them that we should not move to the IP protocol because that's the industry standard and it has been for years. But for those people who still struggle with it, we have great substitutes available in the market. And we've had no one dissatisfied that we had to sort of leave behind. We've always been able to provide households with the best equipment. Even if they only have equipment that uses ISDN, for example, we made a very, very small device for it that provides the possibility to make a switch to the old system. But anyway, I remember your question from last year. And indeed, we have included it in dismantling program. So I'm sure things will be fine. But I hope to be able to give you a new update next year.

Thank you. Mr. Stevens, you had a question? Yes, Mr. Stevens?

I read somewhere that the room for the issuance of new mobile phone numbers is limited to the space. So how long do you think you can continue? And how much room is there to create new phone numbers? And how is that going to be in the future?

Joost?

Yes. That is indeed something that was in the media recently. It's the ministry that issues or creates those numbers. And it has happened that the mobile phone numbers threatened to be insufficient, but that, of course, had not only to do with how the market grows, but also the way you deal with the numbers because many numbers come back and you can reuse them. So there's a world to be one there. But the Ministry is considering indeed to make a new 06 series available on mobile series that used to be called -- used to call to a certain network that cannot be released. Anyway, so -- but I also think that mobile phone providers can use the numbers that come back more efficiently. They can reuse them and we already are doing that very efficiently. We see no shortage whatsoever, but there is no shortage in the Netherlands anyway with the new 06, 760 might become available for the market as well. In addition, if I may. So in the past, I have received -- or I have experienced -- or a person I knew, received a renewed number and there was some issues. Well, that's exactly what I meant with doing that carefully because you give a number to a person that is then used. So if people, for whatever reason, stop using that number or switch to a new number, then obviously, the provider has to ensure that the number is disconnected for that client and can then be reused in the market after a cooling off period. This doesn't happen from 1 week to the next, normally, at least, it shouldn't. So whenever we come, receive a number back then, we don't reissue it the next week.

How long is that period?

I'm not sure, sir. But I think it is 1 or 2 years at least because obviously, it's also about the number -- making the number available to a new user who can then, in his or her way, start using it. So there is a cooling off period. I think it's more than a year in any case. Thank you. Any other questions?

Thank you, Mr. Chair. My name is [indiscernible] , and I'm from Delft. And my question is partly as a consumer, partly as a shareholder. It's about the rollout of fiber optics. Last summer, it was concluded up until the front door, right, of the building? And then afterwards, it's become -- it's very difficult. Normally, as a consumer, I have the experience of getting answers quickly from KPN. But now it is basically, you have to wait 45 minutes, the chain partners. And then everyone says, "Yes, fiber optics has been delayed with the year." And then another product that I'm not sure of that I tested and they said, "Do you want it? Well, if you want it, then you have to renew your contract, leave your data, and then we'll call you." And they called me within 8 weeks. That doesn't seem very efficient, does it? And with respect to efficiency, I have competitors on my doorstep every 2 weeks. So basically, I'm not really interested in them, but anyway.

Look, we're working on a gigantic operation. The rollout of optic fiber is basically us selling connections for -- physical connections that still need to be built. And so it's a lot of work. Having said that, it goes pretty well. There is indeed a labor market shortage, as you may know, so the rollout in the streets goes faster than connecting the actual homes although 70% can be done by us, and competitors are not even close to that percentage. But it's a process that we have to recalibrate every time. So if you get lost within KPN, when you call, of course, that's bad, that needs to be improved. So this is definitely one of the most important objectives for us also to make it clearer and more unidirectional, right? So it's correct that, indeed, the streets are connected sooner than the actual homes, and that is because of management of available capacity, but it's not correct if we're not clear about it. So that should be improved. So I agree with you. And where do you live?

In Delft?

Okay. That's exactly where we are indeed working. But indeed, that should definitely improve in the client communication. So thank you for pointing that out. The second point, I don't know what service you were referring to.

Can I speak freely?

I don't know. If that's legal, then I suppose why not? Is it about KPN?

It's about KPN, yes. Well, last year, we received an offer to test the new devices, but it was said you were not allowed to communicate about it.

Yes, I know. Yes. That indeed is also a very important project. And by the way, we have already announced it, and it's in the market. We made a huge step by moving our TV product to a different platform, the Android platform, which is the industry standard in the world. So we can very quickly and basically over and out -- overnight present new content to our clients without needing 6 quarters for it. We still have to migrate many clients to it, though. We've only just started with a few tens of thousands of few clients. So -- and you apparently were one of them. So great, good to hear. And that is if you indeed participated. But we have already started it, and it's already gone live, and the first 10,000 clients are indeed already on Android. It's a bit worse though that you can register for it. But then within now in 8 weeks, you'll hear from us, that's ridiculous. That is indeed something we will take along because, yes, that could be better. Thank you for the advices. I indeed think that it is wise to have you to talk with each other afterwards over drinks to exchange details. I see there's business cards flying around already. So good. Any other questions? No questions? Good. In that case, we can move on to the final item, and that's the voting results for which I would like to give the floor to the secretary.

Yes. Thank you. I will share the results with you, ladies and gentlemen, and they will also be -- or they should be on the screen, yes, so that I can see them as well. So Agenda Item 3, the adoption of the annual accounts of the year 2022. The proposal was adopted by 99.99% of the votes in favor. Then the remuneration report adopted with 96.56% and 3.44% against. And the dividend 100% and 0% against, so adopted. Then Agenda Item 7, discharge of the Executive Board members, 98% in favor and 1.9% against, by the way. And the same for the Supervisory Board members, 98.1% and 1.9% against, also adopted. And the same for the adoption of the proposal to appoint the external auditor, 99.86% in favor. Agenda Item 11, the appointment of Ms. Sap, as a member of the Supervisory Board, the reappointment actually, 93.5% in favor. Then to appoint Mr. Noteboom as a member of the Supervisory Board, 97.2% in favor. Mr. Heemskerk, as a member of the Supervisory Board, also adopted 97.29%, and that means that proposal was adopted as well. And the same applies to Mr. Dijkhuizen's appointment, 97.26%, also adopted. Then the mandate to acquire own shares, 99.63 adopted, capital reduction by withdrawing own shares of the company, 99.9% in favor, so all adopted. Also adopted, the Executive Board as the competent body to issue ordinary shares, 98.62% adopted and also adopted the proposal to appoint the Executive Board as the competent body to limit or exclude the preemptive right. 75.4%, so also adopted.

Thank you, Jasper. So I can hear by state that all Agenda Items -- sorry all proposals on the Agenda Item have been voted for in favor. That means I can also congratulate the new members, Noteboom, Heemskerk, and Dijkhuizen and Ms. Sap, I can congratulate her on her reappointment. So congratulations, and the Supervisory Board is looking forward to the future collaboration. I'd also like to congratulate Jolande on her reappointment. So congrats and nice that you will remain part of the team. So finally, I would like to briefly mention or thank a few persons. But for that, the notary and Secretary, I would like to thank them for their work at the meeting. And I would like to thank the Executive Board, on behalf of the Supervisory Board, and for all their help and support and everything. And I would also like to thank the auditor for his efforts and for taking the floor here today for attending this meeting. And obviously, I would also like to thank the people who make all of this possible. So the team behind the screens, [ Gerald ] and all the others, I don't know where you are, but a big thank you. I see him in the back indeed. Thank you very much for the organization. Everything went very smoothly as always. So thank you. In addition, I would like to say something about the resignation of Mr. Fouladi and Mr. van Overbeke, from the Executive Board as of the 1st of May, and I'll do this in English. It is impossible to do justice to your contribution over the past few years in just a few sentences. But since we are now gathered here today with our shareholders, I deem it appropriate to extend on behalf of the Board of Management and the Supervisory Board, our sincere gratitude for your contribution to the company and its shareholders in your capacity as members of the Board of Management. We will all, and at different moments, say goodbye to you, but hopefully, you will feel our appreciation and gratitude by expressing these words in the presence of our shareholders today. Babak and Jean-Pascal, thank you very much. Finally, I'd like to thank all of you for your presence and your input in this meeting, and this applies to everyone here, but of course, also all of you joining us by the video link. The next annual meeting is expected to take place on April 10 next year. The final date will, of course, be announced as soon as it is known on the KPN website. In my introduction, I already referred to the extraordinary meeting, which will be convened shortly and which will take place on the 31st of May because of the appointments -- sorry, the proposals for permits that have been recently announced by the company. I hereby thank you for your -- for being here. And I hereby close the meeting. [Statements in English on this transcript were spoken by an interpreter present on the live call.]