Results Second Quarter 2004 9 August 2004 Safe harbor Certain - PowerPoint PPT Presentation

Results Second Quarter 2004 9 August 2004

Safe harbor Certain statements contained in this presentation constitute forward-looking statements. These statements may include, without limitation, statements concerning future results of operations, the impact of regulatory initiatives on KPN’s operations, KPN’s and its joint ventures’ share of new and existing markets, general industry and macro- economic trends and KPN’s performance relative thereto, and statements preceded by, followed by or including the words ’believes’, ’expects’, ’anticipates’ or similar expressions. These forward - looking statements rely on a number of assumptions concerning future events and are subject to uncertainties, and other factors, many of which are outside KPN’s control, that could cause actual results to differ materially from such statements. A number of these factors are described (not exhaustively) in KPN’s Annual Report and Form 20 -F for the year ended December 31, 2003. All figures shown throughout this presentation are unaudited. Certain figures may be subject to rounding differences. 2

Agenda • Introduction Ad Scheepbouwer CEO • Financial results Maarten Henderson CFO • Business performance Ad Scheepbouwer CEO 3

Ad Scheepbouwer CEO

Financial Highlights Q2 2004 • Net result more than doubled to € 369 mn • Net sales flat – Continued challenging environment Dutch market (Fixed – 6%, KPN Mobile Netherlands – 4%) – Continued strong growth in our international markets (Germany +13%, Belgium +30%) • Lower operating expenses (-5%)( € 116 mn) which more than compensated lower operating revenues (-1%)( € -27 mn) • Increase in margins of both Fixed and international Mobile operations • € 0.8 bn of cash returned to shareholders – € 606 1 mn dividend – € 218 2 mn shares repurchased • Additional € 1 bn of share buy backs announced • Interim dividend of € 0.08 per share declared 1 Including dividend on shares purchased for option plans, dividend amounts to € 611 mn 2 Remainder of € 500 mn share repurchases, of which € 33 mn settled in July ’04 5 p

Industry leading cash return to shareholders • 2003 dividend of € 606 mn 1 in Q2 • Share repurchase program of € 500 mn completed • Share repurchase program of € 1 bn announced • Interim dividend 2004 of € 0.08 per share declared 15% of total market capitalization returned 2 •Refinancing of peak debt ’05/’06 increases flexibility for future cash returns 1 Including dividend on shares purchased for option plans, dividend amounts to € 611 mn 2 Expected cash return in 2004 divided by market capitalization as of June 30, 2004 6 p

Maarten Henderson CFO

Headlines P&L € mn Operating revenues € mn Operating result Operating revenues Net sales 2 678 3,114 681 1 661 3,082 3,043 1 2 3,019 3,016 603 589 3,009 2,998 2,960 2,927 2,903 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 € mn Profit before taxes € mn Profit after taxes 1 2 524 532 1,639 458 398 387 1 375 2 369 139 183 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 1 Including € 36 mn book gains (Eutelsat) 2 Including € 20 mn book gains (PTC) For further information about book gains & other exceptional items in intermediate quarters, please refer to KPN’s ’03 result publications 8 p

Developments in net result More than doubled Y-on-Y € mn 58 -17 4 369 56 3 74 2 42 1 183 -27 Q2 ’03 Operating revenues Operating expenses (excluding D&A) D&A Financial income and expenses Taxation Remainder Q2 ’04 1 Includes book gain on sale PTC in Q2 ’04 of € 20 mn 2 Includes € 9 mn change in restructuring provision 3 Q2 ’03 contains impairment on goodwill SNT of € 38 mn 4 Income from participating interests ( € +2 mn) and minority interest ( € -19 mn) 9 p

Developments in operating revenues Decline mainly related to lower MTA tariffs € mn 103 -26 -50 -71 3,043 -3 1 20 3,016 Q2 ’04 Q2 ’03 Net sales MTA effect Net sales MTA effect Book gain Remainder Mobile Mobile Fixed excl. Fixed PTC excl. MTA MTA 1 Own work capitalized + other operating revenues Mobile € – 1 mn, Fixed € – 5 mn; Operating revenues other € – 23 mn; MTA inter-company effect € +38 mn; (remaining) intercompany revenues € – 12 mn 10 p

Margin development Improvement at Fixed, pressure at Mobile KPN Group Fixed Mobile 45% 45% 43.4% 45% 42.2% 41.3% 41.8% 41.2% 41.7% 41.0% 43.2% 39.8% 39.8% 39.7% 41.2% 41.9% 40.3% 39.5% 39.5% 38.7% 39.4% 34.5% 39.5% 37.7% 33.7% 35% 35% 35% 33.1% 32.1% 31.0% 31.9% 31.1% 30.3% 30.5% 25.5% 24.3% 28.4% 25% 25% 25% 22.2% 22.8% 20.1% 20.2% 18.8% 18.8% 1 18.3% 17.6% 17.1% 15% 15% 15% 11.5% 9.2% 8.2% 8.8% 5% 5% 5% Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Operating EBITDA margin excl. exceptional items 2 (Net sales – Operating expenses + Depreciation, amortization and impairments) / Net sales (Net sales – Operating expenses) / Net sales 1 Includes € 103 mn reversal of impairment GSM license BASE 2 Operating revenues – Operating expenses + Depreciation, amortization and impairments / Operating revenues shown for comparative purposes only 11

Fixed in Q2 € mn € mn Operating revenues Operating result 42 452 -32 468 -71 71 1,937 1,811 71 -44 -27 -44 7 -28 555 527 501 509 Revenues Expenses 719 686 Networks Fixed 912 816 Q2 ’03 Q2 ’04 Remaining result Remainder Fixed result Operating Internet traffic Fixed Telephony + ISPs ADSL subscription 1 Impact revenues of MTA reduction Voice traffic and 2 access Fixed Telephony + ISPs Networks 3 Business Solutions Impact MTA reduction on expenses impact expenses Operating -468 -508 -259 -242 Q2 ’03 Q2 ’04 = Business Other Fixed Carrier Fixed Interdivision Fixed Interdivision Solutions Networks Services Telephony Fixed Networks Networks Fixed 1 Of which € 35 mn ADSL connection charge and € 7 mn ISP charge 2 Excluding impact MTA reduction 3 Decrease Carrier Services (excl. impact MTA reduction) and lower inter company revenues 12 p

Mobile in Q2 Subscriber growth drives increase revenues and costs € mn € mn Operating revenues Operating result (+6%) 1,270 1,346 105 82 -26 102 -88 1 574 592 162 161 13 676 604 -8 -9 Q2 ’03 Q2 ’04 result Development revenues excl. impact MTA Impact of MTA reduction on revenues Operating result Operating expenses Impact MTA reduction on expenses Operating Q2 ’03 Q2 ’04 E-Plus KPN Mobile (NL) BASE Other 1 Including € 26 mn decline due to MTA reduction 13 p

Continued strong cash flow Cash flow from operating activities Cash flow from operating activities -/- Capex € mn € mn 1,537 1,188 839 1,072 1,077 711 978 646 607 481 1,141 960 928 870 889 534 389 349 267 314 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Cash flow from operating activities before change Capex in working capital Cash flow from operating activities minus Capex Cash flow from operating activities • Operational cash flow before change in working capital increased 21% • Increase of working capital mainly related to € 194 mn tax refund in Q2 ’03 • Further increase of Capex in Mobile for UMTS roll-out 14 p

Financial profile € bn Debt Financial ratios 6.9 6.5 5.8 11.8 6.0 5.0 4.7 11.1 10.2 10.1 9.2 10.2 2.0 9.4 8.2 2.1 1.7 8.3 1.9 1.6 1.7 7.9 Q2 ’03 Q3 ’03 Q4 ’03 Q1 ’04 Q2 ’04 Q2 ’03 Q3 ’03 Q4 ’03 Q1 ’04 Q2 ’04 Gross Debt Operating EBITDA/Net interest 1 Min. target financial framework Net Debt Net Debt/Operating EBITDA 1 Max. target financial framework • Gross debt further reduced by planned redemptions • Net debt increased by € 0.3 bn as a result of lower cash position due to significant cash returns to shareholders • Financial ratios well within boundaries of financial framework 1 Ba sed on a 12 months rolling calculation excluding ‘extraordinary’ and ‘exceptional’ items Though it is a non- GAAP measure operating EBITDA excluding ‘extraordinary items’ and ‘exceptional items’ is used by financial i nstitutions and credit rating agencies as one of the key indicators of borrowing potential. It can be reconciled to GAAP by taking the Operating result and adding Depreciation, amortization & impairments before taking into account all ‘extraordinary’ and ‘exceptional’ items. 15 p

Successful debt refinancing € bn Redemption profile & cash position 3 Debt repayment 0.8 2.0 Cash 2 1.8 1.0 3.5% subordinated convertible bond due ’05 1.7 1.4 6.5% Eurobond due ’06 1.6 1.0 0.9 7.25% Eurobond due ’06 0.2 1 0.7 0.9 New issued debt Credit facility ( € 1.5) + securitization ( € 0.2) 0 z Cash '04 '05 '06 '07 '08 '09 '10 '11 '30 • Successful debt refinancing contributes to optimising capital structure and increases financial flexibility due to lower peak debt 16 p

Ad Scheepbouwer CEO