Always in touch

  

The financial figures presented in KPN’s  Sustainability Report were prepared in accordance with
Dutch legislation (Dutch GAAP). You should consult the KPN Annual Report and Form -F  in order
to understand KPN’s financial position and results, including the reconciliation with figures according
to US GAAP. Moreover, KPN publishes on the Internet an Annual Review and summarized financial data
for . Visit our website at www.kpn.com to download all reports and the latest information.

Disclaimer
The KPN Sustainability Report  does not constitute an invitation to invest in KPN shares. You are
solely responsible for any decisions you take on the strength of this information. Certain statements
made in this document are of a forward-looking nature. These statements include but are not confined
to statements about future business results, the effects of legislation on KPN’s activities, the market
share of KPN and its joint ventures in new and existing markets, general industry-related and macro-
economic trends and the performance of KPN in relation to them. Forward-looking statements often
contain – or are preceded or followed by – words like ‘believe’, ‘expect’, ‘anticipate’ or other such similar
words. These forward-looking statements are conditional on several assumptions concerning future
events and are subject to uncertainties and other factors over which KPN cannot usually exercise any
influence. Consequently, the actual results may deviate from the forward-looking statements. Some of
these factors have been described, albeit not exhaustively, in KPN’s Annual Report and Form -F .
Contents
Foreword by the Chairman of the Board of Management and CEO 

KPN and corporate social responsibility 

The company 
Profile 
Key financial figures and workforce 
Corporate Governance and Code of Conduct 

KPN and the economy 

Introduction 
Customers 
Personnel 
Suppliers 
Capital providers 

KPN and the environment 

Introduction 
Policy and targets 
Environmental impact 
Environmental performance 
Legal frameworks 
Purchasing and suppliers 
Raw materials and consumption of materials 
Energy 
Water 
Emissions into the air, water and soil 
Waste 
Products and services 
The environment and society 

KPN and its people 

Introduction 
Employment at KPN 

KPN and society 

Introduction 
Society 
Products and services 
Social sponsorship 
Art 
Doing business fairly 

GRI references 

Appendices 

                       Contents 
 Foreword by the Chairman of the
Board of Management and CEO

KPN strives to achieve the optimum balance between economic, social,

community and environmental objectives. We benchmark ourselves against
similar telecom and listed companies. KPN makes a distinction between corporate
sustainability, which concerns the way we conduct our business, and our
commitment to society, through which we look beyond our immediate core
activities. We support a number of good causes that do have a relationship with
our business. Corporate social responsibility is the totality of corporate
sustainability, social commitment and, last but not least, ethics and integrity.

KPN pressed ahead in  on the course it set in . We have set down a
revised and more precise company code and a policy on our commitment to
society. The Board of Management also approved the company’s environmental

 Foreword by the Chairman of the Board of Management and CEO                       

policy, which forms an integral part of our corporate sustainability policy. In the
coming year, KPN will formulate a complete policy. This will allow us to show our
stakeholders more clearly the contributions that KPN makes to society. It is no
coincidence that KPN endorsed again in  the updated ‘ETNO Sustainability
Charter’.

It is part and parcel of our objective to perform increasingly better across the full
spectrum of our business. Better performance is essential: we operate in fiercely
competitive markets where we can survive only by continually surpassing
ourselves and others. Reporting on our corporate social responsibility is
inextricably linked to our pursuit of this objective.

KPN AND THE ECONOMY

KPN made a net profit of EUR . billion in . Our cash flow from operating activities was
EUR . billion, almost the same as in  (EUR . billion). By beating our targets we have fully met
the market’s expectations in . This has been achieved by almost doubling the number of digital
subscriber lines (DSL), successfully defending our market share in the traditional telephony business and
strongly expanding our international mobile activities. Through the payment of a dividend and buy-back
of our own shares, we were able to return EUR . billion to our shareholders in . Our  figures
show that the migration from traditional to new services is continuing. This explains the marginal
drop in net sales. Viewing the underlying results, we see rapid decline and rapid growth side by side.
With traditional telephony revenues fast diminishing, broadband and our mobile activities abroad are
posting spectacular growth.

KPN AND THE ENVIRONMENT

We want to reduce the effect that our operations have on the environment. In our policy for -,
we state that we want to rank among the better-performing companies in the telecommunications
industry when it comes to the environment. We are concentrating mainly on waste reduction, energy
efficiency, lower CO² emissions and reporting on our compliance with environmental laws. The volume
of waste has been decreasing since  and in  we achieved a reduction of % compared with
.

KPN AND ITS PEOPLE

The quality and commitment of employees, fully-fledged participation in market developments and
cost-aware business operations will determine KPN’s future in large measure. Initiatives in new markets
like digital television require a modernization of the knowledge and competences of our employees.
Our human resources policy has been aligned to this situation, with a new vision of the quality of
recruited personnel and lasting employability. This is necessary on account of the shrinking market
and decreasing market share for some traditional services. Therefore, the staffing that KPN needs will
continue to decrease, and this will be intensified by technological advances and productivity rises
through better processes and automation. KPN concluded a new collective labor agreement and
introduced performance-related pay in .

                       Foreword by the Chairman of the Board of Management and CEO 

 KPN AND SOCIETY
KPN is not only a commercial provider of services, but also a player in society that wants to demonstrate
its commitment. The policy we have introduced focuses on bridging gaps in society. We concentrate
primarily on education and care, because they are causes appropriate to our slogan ‘Always in touch:
KPN’. KPN wants to contribute to the knowledge economy; one example is our successful offering of free
broadband Internet access to schools. We also endeavor – especially in the care sector – to bridge the
physical and mental gaps of loneliness and inconvenience by means of our telecommunications products
and services.

DIALOGUE
This is the second time we have published this report in this form. We listened to the tips, suggestions
and criticisms we received following last year’s report. We have tried to make various improvements, not
only in our reporting but above all in our policy. Increasingly, we are embedding our objectives for
corporate social responsibility in our organisation and processes and we are making them measurable.

For this report, we asked a number of stakeholders to comment on the way we demonstrate our
responsibility to society. The statements they made have been incorporated in the report at the start of
each chapter. We also want to hear your opinion. Therefore, I invite you to enter into a dialogue with us.
You can use the e-mail address duurzaamheid@kpn.com for this purpose.

Ad Scheepbouwer

 Foreword by the Chairman of the Board of Management and CEO                       

                       Foreword by the Chairman of the Board of Management and CEO 
 KPN and corporate social responsibility
This report on KPN’s activities in society in  builds on last
year’s Sustainability Report. We report on our objectives and
performance in the economic, social, ecological and community
fields.
We prepared the report to the fullest extent possible in
accordance with the guidelines of the Global Reporting Initiative,
both general and specifically for telecommunications. GRI is an
authoritative international institute that exists to promote
standardization of sustainability reporting and has developed
guidelines for that purpose. KPN adheres to the general GRI
guidelines – because they allow a good comparison of KPN with
other listed companies – and we use them to support the GRI
guidelines specifically for telecommunications.
KPMG Sustainability conducted a study into the quality of the
information processes and systems that we used as a basis for
producing this report. The study resulted in recommendations
for our reporting process (including the correct application
of the GRI guidelines) and underlying information systems.
Through this process, KPN has taken the first steps towards
external verification.
 KPN and corporate social responsibility
The report on  concerns the activities in the Netherlands
covered by the KPN collective labor agreement (KPN), Germany
(E-Plus) and Belgium (BASE). XSALL publishes its own report so
we have not included data concerning this subsidiary. We have
reported in part on our other major Internet provider, Planet
Media Group (consisting of Planet Internet and Het Net). The
same applies to Xantic. This year we did not include reporting by
SNT on account of the reorganizations taking place there and the
available reporting structures. With regard to the overall report,
you should note that KPN does not report in equal detail in all
fields, either because for some parts of the group we have not
yet implemented a structural reporting process, or because the
methods of reporting are not always aligned to each other.
KPN invites interested parties to enter into a dialogue with us
about this Sustainability Report. You can use the e-mail address
duurzaamheid@kpn.com for this purpose.
                      
The company
Profile
KPN offers telecommunication services to both consumers and
businesses. The company’s core activities are telephony and data
services through KPN’s fixed network in the Netherlands, mobile
telecom services in Germany, the Netherlands and Belgium and
data services in Western Europe. KPN is the market leader in the
major segments of the Dutch telecom market. Through E-Plus in
Germany and BASE in Belgium, KPN has number-three positions in
the mobile markets of these countries.
As at December , , we served . million fixed-line
subscribers and . million Internet users in the Netherlands as
well as . million mobile customers in Germany, the
Netherlands and Belgium. KPN employed , individuals as of
the same date.
KPN was incorporated in . Its shares are listed on Euronext
Amsterdam and the stock exchanges of New York, London and
Frankfurt. The credit ratings at February ,  were A– with
stable outlook (Standard & Poor’s) and Baa with stable outlook
(Moody’s).
MISSION STATEMENT
‘We are committed to providing a portfolio of modern,
high quality telecommunications services to our customers.
We want to help our customers to achieve their goals and
to enrich their lives, whether for business or pleasure’.
We believe this approach will lead to satisfied customers,
providing the basis for profitable growth and value creation for
our shareholders.
We believe that service quality and customer satisfaction will only
flourish if our employees are motivated to provide the best
possible service to our customers.
We are conscious of our responsibilities and are accountable for
our performance to all stakeholders.
STRATEGY
The Netherlands, KPN’s key market, continues to be one of the
most competitive market places in Europe. KPN has successfully
maintained its leadership positions in all key segments. Many
competitors are trying to carve a position for themselves by
offering new services such as VoIP and Triple Play (Internet, voice
and television). In the Mobile business, the offering of mobile
data services through G networks is being accelerated by mobile
operators. As the migration from traditional to new services is
progressing across the telecommunications spectrum, it is KPN’s
                      
dual challenge to develop new services as well as to sustain its
leadership positions in the ‘old’ markets.
KPN’s long-term success will be dependent on its ability to satisfy
customer needs better than any competitors and to differentiate
itself in the consumer’s mind. As customers are increasingly
looking for access to communication, information and
entertainment everywhere and at any time, the boundaries
between fixed and mobile communications are disappearing.
It is KPN’s challenge and commitment to make the customer
experience a fulfilling one with seamless, easy access and user
interfaces.
In , KPN will make significant steps to further strengthen its
positions in a maturing IP governed market.
In our Fixed business, we adopt a threefold strategy:
• attacking the market for new communications services to
establish leading positions that will deliver attractive long-term
financial returns;
• defending the traditional services to maintain our leading share
of declining markets; and
• exploiting our leadership of both the traditional and new
services markets in order to achieve a cost structure that is
unrivalled by our competitors and which will represent a source
of significant sustainable competitive advantage.
New services that we will be launching in  include VoIP,
Mobile TV and Video on Demand over ADSL. KPN will continue to
offer Triple Play services (voice, internet and TV). Also in ,
KPN will upgrade its ADSL network to ADSL+. Further rollout of
the digital TV network to reach national coverage will be realized
in  and . An all IP access network pilot will be conducted,
which may herald the complete rationalization of our network.
In the Mobile business we will continue to focus on expanding
our customer base with appealing propositions with the aim to
increase our revenue market share. We will continue to invest in
the expansion of our UMTS networks. UMTS brings higher
download and upload speeds, which makes video messaging,
and music and video downloading possible.
In the Netherlands, we aim to remain the undisputed market
leader, offering appealing propositions to our customers with
the KPN and Hi brands.
In Germany, E-Plus continues its growth path with highly
attractive and innovative tariff offerings. Focus will remain on the
post paid and business markets.
BASE, our brand in Belgium, distinguishes itself with an innovative
marketing approach, makes specific offerings to communities and
The company 
 further developing its position through partnerships and
MVNO agreements.
In all we do, we keep the customer needs in mind. Only if
we manage to maintain customer satisfaction to the highest
standards, we will be able to reach our strategic goals.
Our progress in this respect has been significant and very
encouraging.
New technology offers opportunities to achieve structurally
lower network costs. Also, new technologies will require less
people and different capabilities. Therefore, further restructuring
will remain necessary in the coming years. KPN will rise to the
challenge of transforming the industry and will not slow the
pace of change. Instead it will lead change from the front and
from a position of strength.

ORGANIZATIONAL STRUCTURE
The overview below reflects our organizational structure as of December , .

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 The company                       
In , the first steps were taken within the Fixed division to
change to structure its activities around the following customer
groups and operations: Consumer, Business and Wholesale &
Operations. Further, KPN has embarked on a comprehensive
program to achieve a structurally lower cost base by – amongst
others – simplification of the Group structure.

As from January , , we transferred KPN EnterCom from

Other activities to the Fixed division. In addition, we also
transferred the distribution channel for personal sales, KPN Sales
(including External Distribution), from the Fixed division to
Other activities. Within the Fixed division, various activities were
transferred within Fixed Networks as well as Business Solutions.
Within Business Solutions, we have divided our activities into
three new business units (Connectivity, Integrated & Managed
Solutions and KPN EnterCom).

The new business unit Connectivity consists of the

former business units:
• Transmission Services;
• KPN EuroRings; and
• the IP-VPN (Epacity) and Internet Access activities from
IP Services.

Integrated & Managed Solutions contains the former

business units:
• Integrated Solutions;
• Managed Application Services; and
• the MVPN activities from IP Services.

The remaining activities of former business unit IP Services

were integrated into the new business unit Broadband (ADSL)
and subsequently transferred from Business Solutions to
Fixed Networks.

                       The company 
 Key financial figures and workforce

OPERATING REVENUES PROFIT OR LOSS AFTER TAXES

AMOUNTS IN MILLIONS OF EURO AMOUNTS IN MILLIONS OF EURO

2004 11,731 2004 1,511

180
191 2003 2,731
12,102
2002 –9,542
2003 11,870
165
872
12,907
NET CASH FLOWS
2002 11,788
166
830 AMOUNTS IN MILLIONS OF EURO

12,784

Net sales 2004 3,969

–1,594
Own work capitalized –2,636
Other operating revenues
2003 4,087
Total operating revenues –48
–4,853

2002 3,975
OPERATING RESULT –335
–8,329

AMOUNTS IN MILLIONS OF EURO

Operating activities

Investing activities
2004 2,457 Financing activities

2003 3,108

2002 –5,581
CAPITAL

AMOUNTS IN MILLIONS OF EURO

PROFIT OR LOSS BEFORE TAXES

2004 22,736
AMOUNTS IN MILLIONS OF EURO 6,965
7,792
1,650
1,573
2004 1,837
2003 24,125
2003 2,246
7,359
9,207
2002 –6,759
952
1,839

2002 25,161
4,780
12,648
2,360
2,657

Total assets

Group equity

Loans (long-term)

Loans (short-term) and bank overdrafts

Cash and cash equivalents

 The company                       
RATIOS WORKFORCE

IN % INCLUDING CONSOLIDATED AND INTERNATIONAL PARTICIPATIONS

2004 55.6 * 2004 28,911

20.3 28,056
30.6 31,116

2003 22.5 2003 31,267

24.1 29,668
30.5 32,736

2002 - 2002 40,195

–43.7 34,990
19.0 38,118

1) 1)
Pay-out ratio Average number of FTEs
2)
Operating margin Number of FTEs as of December 
3)
Solvency ratio Number of employees as of December 

* Proposed to the Annual General Meeting of Shareholders on April , . ) One FTE (Full Time Equivalent) equals an employment of  hours per week.

) Pay-out ratio: dividend per ordinary share divided by earnings per ordinary share

as determined under Dutch GAAP. ANNUAL HIGH AND LOW CLOSING PRICES OF ORDINARY
) Operating margin: operating result divided by total operating revenues as SHARES ON EURONEXT AMSTERDAM AND ADSS ON THE
determined under Dutch GAAP. NEW YORK STOCK EXCHANGE
) Solvency ratio: shareholders’ equity plus minority interests (group equity)
Euronext Amsterdam NYSE
divided by total assets as determined under Dutch GAAP.
High Low High Low

EUR EUR USD USD

PER-SHARE INFORMATION

AMOUNTS IN EURO 2004 7.07 5.80 9.65 7.03

2003 7.13 5.37 8.02 5.92

2004 0.35 *
0.63 2002 6.85 3.99 6.79 3.70
0.63

2003 0.25
1.11
1.09

2002 -
–3.94
–3.94

Dividend per ordinary share

Net income per ordinary share (non-diluted)

Net income per ordinary share (fully diluted)

* Proposed to the Annual General Meeting of Shareholders on April , .

                       The company 
 Corporate Governance
Corporate Governance deals with efficient supervision of the
Board of Management and a balanced distribution of influence
and power between the Board of Management, the Supervisory
Board and the General Meeting of Shareholders. KPN remains
of the opinion that a governance regime should strike the
right balance between transparency of rules and avoidance
of bureaucracy caused by excessive detail in order for Dutch
companies to remain internationally competitive. Application
of sound corporate governance principles is important for a
company, but it should not be an end in itself. The true aim is to
achieve and maintain a culture of honesty and integrity. This aim
can, ultimately, be achieved only if the culture and behavior in
a company are in all respects positive and transparent.
COMPLIANCE WITH THE DUTCH CORPORATE
GOVERNANCE CODE
The year  was a year of checking and amending existing
rules, procedures and by-laws for compliance with the Dutch
Corporate Governance Code that was issued by the Tabaksblat
Committee on December , . It also meant adopting new
regulations and implementing additional procedures.
The Dutch Corporate Governance Code is generally considered to
be a considerable step forward for Dutch standards on corporate
governance. The Dutch Corporate Governance Code is based on
the principle that a company is a long-term form of collaboration
between the various parties involved. The Board of Management
and the Supervisory Board have overall responsibility for
considering the interests, generally with a view to ensure the
continuity of the enterprise. In doing so, the company endeavors
to create long-term shareholder value and the Board of
Management and Supervisory Board should take account of the
interests of the different stakeholders.
KPN fully supports the principles of the Dutch Corporate
Governance Code and is nearly fully compliant with the best
practice provisions of this Code. KPN’s position vis-à-vis all best
practice provisions is available on its website www.kpn.com.
 The company
ONGOING IMPACT OF THE US SARBANES- OXLEY ACT
Given the listing of KPN on the New York Stock Exchange, KPN has
to comply with the requirements of the Sarbanes-Oxley Act.
During  the compliance efforts of KPN focused on further
improving its internal controls over financial reporting. The
Sarbanes-Oxley project of KPN, which started in , focused
in  mainly on the design and partly on the operating
effectiveness of controls over financial reporting. KPN
investigated the requirements for anti-fraud programs and
controls and measurements are established. In , the
Sarbanes-Oxley project will continue and KPN will further
enhance the internal control framework.
LEGAL STRUCTURE OF THE COMPANY RESULTING FROM
CHANGES IN DUTCH COMPANY LAW
Under Section , Part  of Book  of the Dutch Civil Code, the rules
for large companies are mandatory for KPN. As such, KPN has a
two-tier management structure with a Board of Management and
a Supervisory Board. Among the powers vested in the Supervisory
Board is the power to appoint and remove members of the Board
of Management. Some of the resolutions of KPN’s Board of
Management are also subject to the approval of the Supervisory
Board. As a result of a change in Dutch company law per October
, , shareholders rights have increased while the rights of the
Supervisory Board have decreased. Under the new legislation,
shareholders are entitled to approve decisions of the Board of
Management that have a company transforming effect, to
approve the remuneration policy and share (option) plans, to
appoint members of the Supervisory Board upon proposal by
the Supervisory Board and to dismiss the Supervisory Board.
A proposal to amend KPN’s articles of association will be
submitted to the Annual General Meeting of Shareholders
in .
SUPERVISORY BOARD
The Supervisory Board oversees strategic and organizational
policymaking by the Board of Management and the way in which
it manages and directs the operations of the company and
affiliated/associated companies. It oversees and supervises the
Board of Management. Under the new rules for large companies
(as from October , ), members of the Supervisory Board are
appointed by the Annual General Meeting of Shareholders upon
binding nomination by the Supervisory Board. The nominees must
fit within the profile of the Supervisory Board. The central works
council has an enhanced right of recommendation with respect to
one third of the Supervisory Board.
                      
Members of the Supervisory Board resign according to a schedule
set by the Supervisory Board. They step down at the first General
Meeting of Shareholders following their four-year term of office.
The by-laws of the Supervisory Board were reviewed and renewed
during . The by-laws contain, among other things, rules
regarding the members’ duties, powers, working methods,
decision-making, approval of decisions by the Board of
Management, training and conflict handling. The by-laws are
available on KPN’s website www.kpn.com under the section
Investor Relations, Corporate Governance.
In , three committees assisted the Supervisory Board: an
Audit Committee, a Remuneration & Organization Development
Committee and a Nominating & Corporate Governance Committee.
The committees assist the Supervisory Board in its decision
taking and report their findings to the Supervisory Board. The
committees are not empowered to take decisions. The activities
of the committees are governed by written charters, available on
KPN’s website www.kpn.com under the section Investor Relations,
Corporate Governance.
BOARD OF MANAGEMENT
The Board of Management, supervised and advised by the
Supervisory Board, manages KPN’s strategic, financial and
organizational matters and appoints senior managers.
The Supervisory Board appoints and discharges members
of the Board of Management and establishes their individual
remuneration within the boundaries of the remuneration
policies approved by the Annual General Meeting and the
recommendations by the Remuneration & Organization
Development Committee.
A managing director, who is also a member of KPN’s Board of
Management, heads each of the divisions. Management teams
assist the managing directors. The managing director and his
management team are responsible for achieving targets defined
for their divisions and for organizing, managing and controlling
business processes within their division. They are required to
observe KPN’s codes of conduct governing such matters as
financial accounting, investment decisions, cash management
and internal control. The Fixed division consists of several
reporting units, whereas the Mobile division primarily consists of
KPN’s three mobile operators in Germany, Belgium and the
Netherlands.
                      
AUDITOR
KPN’s external auditor is responsible for auditing the Financial
Statements. Upon proposal by the Board of Management and the
Supervisory Board, the General Meeting of Shareholders appoints
the auditor. The external auditor reports to the Supervisory Board
and Board of Management. The external auditor is present at the
meetings of the Audit Committee and the Supervisory Board
when KPN’s quarterly and annual results are being discussed. In
, the procedures within KPN to ensure the independence of
the external auditor were made more robust with the renewal
of the by-laws of the Audit Committee.
CODE OF CONDUCT
KPN introduced a Code of Conduct in  and revised it during
 and . KPN adopted a new code during  and will
communicate the new code widely in . The code sets out
KPN’s standards and values. KPN is conscious of its social and
ethical responsibilities and KPN wishes to ensure that work
practices across the Company are in strict compliance with the law
and consistent with social and ethical norms. KPN’s key values are:
personal, trust and simplicity. KPN can be held accountable for its
performance in this regard by all of its stakeholders. The Code of
Conduct is available on KPN’s website.
To translate the Code of Conduct into practical terms for
employees, KPN has introduced in recent years a number of
separate codes to clarify the rules in various areas of its
operations. These area-specific codes set rules for KPN’s
employees, for example with respect to business transactions and
business gifts, information about customers and relationships
with competitors. KPN has also adopted rules to prevent insider
trading. In  and , KPN introduced a Code of Ethics for its
financial management and a whistleblower policy, respectively.
KPN will communicate the updated Code of Conduct and the
separate codes widely among its employees in  in order to
further increase awareness of these rules.
KPN encourages its employees to actively report any (suspected)
breach of the Code of Conduct or the separate codes. KPN’s
internal Security department plays a key role in this by offering
support via a helpdesk, where employees can anonymously report
such breaches and also obtain information regarding the
principles underlying the codes. In the event a breach is reported,
KPN’s Security department will conduct an investigation on a
strictly confidential basis. The outcome of the investigation is
reported to local management.
The company 
 ANNUAL GENERAL MEETING OF SHAREHOLDERS
Within six months of the end of a fiscal year, an Annual General
Meeting of Shareholders is held, where the discussion of the
Annual Report and approval of the Financial Statements are put
on the agenda. Other General Meetings of Shareholders are held
as often as the Supervisory Board or Board of Management deems
necessary. The Board of Management and the Supervisory Board
determine the agenda of the General Meeting of Shareholders.
Shareholders who individually or collectively represent at least
% of the issued capital have the right to propose items for the
agenda. Every shareholder has the right to attend a General
Meeting of Shareholders in person or through written proxy,
to address the meeting and to exercise voting rights.

THE STATE OF THE NETHERLANDS

The State of the Netherlands holds .% of KPN’s ordinary
shares and the special share that carries the right to approve
resolutions causing fundamental changes to the structure of the
KPN group and certain additional rights. As part of KPN’s initial
public offering in , the State undertook not to exercise, not
even in part, its special share privileges to protect KPN from
undesirable shareholder influence. Following amendment of the
Enabling Act in , the State gave an undertaking to exercise
the rights attached to the special share only to protect its financial
interest as a shareholder. At that time, the State announced its
intention to retain the rights attached to the special share until
such time as its capital interest in KPN is substantially reduced.
The State has announced that it intends to sell the remainder of
its KPN shares, subject to market conditions.

For extensive information on KPN’s Corporate Governance policy

and remuneration, please refer to the Annual Report and
Form -F .

 The company                       
                       The company 
KPN brings the world into the living room. Through its Digital TV,
KPN offers households numerous Dutch and international TV stations.
Many radio stations sound crystal clear. With broadband, customers
have everything at their fingertips: entertainment, films, music and
computer games. A wireless ADSL broadband network makes it even
easier. And KPN engineers relieve customers of the technical hassle
of installing these facilities in the home.
KPN and the economy
‘A sustainability report is an important Customers
source of information for a research institute
At year-end , KPN employed , individuals. They were
like DSR. The KPN report covers the most serving . million fixed-line subscribers and . million Internet
customers in the Netherlands, plus . million mobile customers
important subjects for telecommunications
in Germany, the Netherlands and Belgium.
companies. DSR welcomes the references to
NUMBERS OF CUSTOMERS
the GRI guidelines. This simplifies the analysis
2004 2003
of the sustainability of KPN. DSR notes that IN MILLIONS (AT YEAR-END)

Fixed-line connections (PSTN/ISDN) 7.4 7.7

most European telecommunications companies
ADSL connections 1.4 0.7
devote considerable attention to sustainability. Internet service providers (subscribers) 1.6 1.5
Mobile 17.2 14.7
KPN is no exception.’
• of which in Germany 9.5 8.2
• of which in the Netherlands 6.1 5.2
Rosl Veltmeijer, Coordinator, Dutch Sustainability • of which in Belgium 1.6 1.3
Research BV (DSR).

Our total operating revenues in  came to EUR , million,

Introduction
As a supplier and innovator of telecommunications services,
KPN plays a key role in the Dutch and European knowledge
economies and in the development of the information society.
KPN operates at the cutting edge of the new developments that
are so characteristic of the telecommunications sector. The
migration of traditional services to new services like ADSL and
IP-VPN have impacted significantly on our business results.
A fall in sales at the Fixed division was almost entirely made
good by growth at the Mobile division, however.
Despite fierce competition and fast technological developments,
KPN achieved its goals for . The company made a net profit
of EUR . billion in . This is EUR . billion less than in ,
but the result in that year included EUR . billion in book profits
and income of EUR . billion under an agreement with the
Dutch tax authorities. Our cash flow from operating activities
was EUR . billion in , almost the same as in 
(EUR . billion).
a decrease of % compared with .
The Mobile division again grew in  by significantly increasing
its number of subscribers. The fall in operating revenues at the
Fixed division is due mainly to the accelerated migration from
traditional services (like telephony and dial-in Internet and
analogue and digital leased lines) to new, cheaper services based
on IP technology (like ADSL, VoDSL, KPN TV and IP-VPN), a further
increase in competition, migration to mobile-only (i.e. growth of
the number of households that have only a mobile phone) and
the effects of price reductions introduced in  for fixed-mobile
telephone calls. The operating revenues obtained from the new,
cheaper services constitute a growing proportion of our total
operating revenues, but cannot compensate for the decrease in
revenues from traditional services. In the year under review, we
increased the market share of KPN ADSL in the overall broadband
market for residential customers (including broadband via cable)
to % from % in .

The shift to the IP world will predominate at the Fixed division

in . KPN wants to invest substantially in new services and
the underlying technologies, while at the same time aggressively
defending its position in the traditional markets. The Mobile
division will continue to pursue growth of its international
activities. KPN will also focus on offering shareholders an
attractive return.

                       KPN and the economy 

 The table below shows how KPN’s total operating revenues Personnel
have developed in recent years.
KPN had , employees (, FTEs) at year-end ,
including , employees (, FTEs) covered by the
AMOUNTS IN MILLIONS OF EURO 2004 2003
KPN collective labor agreement in the Netherlands. E-Plus has
Fixed division 7,254 7,752 , employees in Germany. BASE had  employees in Belgium
Mobile division 5,437 5,379 at year-end . The rest of the employees work at KPN’s other
Other activities 458 946 affiliated and associated companies.
Inter-division sales * –1,047 –1,170
The table below shows the distribution of employees over the
Total operating revenues 12,102 12,907 divisions.

* This item includes inter-division supplies of products and services within our
NUMBER OF EMPLOYEES AT YEAR-END 2004 2003
divisions.

Fixed division 20,896 20,479

The table below shows the geographical distribution of our Mobile division 5,688 6,111
total operating revenues. Other activities 4,532 6,146

Total 31,116 32,736

IN % 2004 2003

Fixed division
• The Netherlands 98 97 The table below shows the average numbers of FTEs at each
• International 2 3 division.

Mobile division
AVERAGE NUMBER OF FTES DURING THE YEAR 2004 2003
• The Netherlands 43 44
• International 57 56 Fixed division 18,871 19,245
Mobile division 5,797 5,869
Other activities Other activities 4,243 6,153
• The Netherlands 78 90
• International 22 10 Total 28,911 31,267

Total
• The Netherlands 72 76 The table below shows the total costs of salaries and social
• International 28 24 security contributions*.

AMOUNTS IN MILLIONS OF EURO 2004 2003

The market shares* of the Mobile division are developing
positively: Salaries 1,289 1,302
Pension charges 238 217
Social security contributions 195 184
IN % 2004 2003

KPN Mobile The Netherlands 40.0 40.2 Total 1,722 1,703

E-Plus (Germany) 13.3 12.7 • of which in the Netherlands 1,452 1,440
BASE (Belgium) > 17.0 15 • of which in Germany 207 194
• of which in Belgium 62 69
* Management estimates based on number of customers

* KPN has a reorganization provision for the costs of severance and other payments.

Therefore, these costs do not form part of the costs presented for salaries and social

security contributions.

 KPN and the economy                       

There was a % decrease in the level of salaries and social security The table below shows the costs of purchased goods, materials
contributions as a result of a smaller workforce following and services.
reorganizations and the effects of deconsolidation.

AMOUNTS IN MILLIONS OF EURO 2004 2003

Cost reductions are essential for the future success of KPN and in
 we announced several reorganizations. Most will be carried Cost of materials 1,014 983
out in . KPN sees even more opportunities for improving its Costs of work contracted out and external expenses 3,953 3,999
cost base by reducing the complexity of the network through the
implementation of a network based entirely on IP, rationalization
of the IT environment and simplification of the structure of the
KPN group. Capital providers

The chapter headed ‘KPN and its people’ contains more The price of the KPN share rose by % in  and thus
information about our employees and workforce. performed significantly better than the AEX index and the
Dow Jones Telecom index. There was a strong recovery
of the telecommunications sector as a whole in .
Suppliers KPN also outperformed the aforementioned indices across
the - period.
KPN continued the restructuring of its purchasing function in
 so as to create a more coordinated and professional The Dow Jones Telecom index and the AEX index both take the
purchasing organisation. KPN makes more than one third of all price of the KPN share at  January  as their baselines.
its purchases from a few suppliers. The company additionally
has many thousands of other suppliers. Our policy is to pay our
suppliers ‘on time and in full’ on the agreed payment dates.
In , KPN invested heavily in improving its payment process.
Half of all invoices were paid within the agreed time in 
(compared with one third in ).

SHARE PRICE 2002 - 2004

IN EURO KPN
Dow Jones Telecom Index
AEX

2002 2003 2004

                       KPN and the economy 

 KPN paid less interest charges in  than it did in , because
in  the company repaid its debts both regularly and early.

AMOUNTS IN MILLIONS OF EURO 2004 2003 2002

Interest expense and similar expenses 697 929 1,398

 was the first year since  in which we were able to pay a
dividend, based on  earnings. At the publication of our 
annual results, we expressed our intention of returning all excess
cash to shareholders, in the form of dividend and share buy-backs.
We were quick to keep our promise: in  we allocated a total
of EUR . billion or almost % of our free cash flow. We intend
to maintain this policy of returning excess cash. Over , we
will propose to the Annual General Meeting of Shareholders a
dividend payment of EUR . per share (exceeding our initial
guidance of EUR .), of which EUR . was paid out as interim
dividend in August. For the medium term, we intend to pay out a
regular dividend of between  to  percent of annual free cash
flow, defined as cash flow from operating activities minus capex.
In addition, we intend to continue with further share repurchases,
at a price, which enhances the value for the remaining
shareholders.

The significant reduction of KPN’s debt during the last few

years has had a positive effect on the company’s credit rating.
In January , Standard & Poor’s raised the BBB+ rating
with positive prospects to a rating of A– with stable prospects.
In June, Moody’s reconfirmed KPN’s ratings of Baa with stable
prospects after KPN announced its intention to buy back another
EUR  billion of shares, to make a tender for the -
convertible bond, the - Eurobond and a swap on the
- Eurobond.

KPN’s shareholders’ equity came to EUR , million at year-end

 (compared with EUR , million in ). Provisions
amounted to EUR , million (: EUR , million).
Long-term and current liabilities totaled EUR , million
(: EUR , million). Total assets at year-end stood at
EUR , million (: EUR , million).

 KPN and the economy                       

                       KPN and the economy 
KPN has organised its recycling processes more and more
efficiently and effectively in recent years. Customers can
hand in their discarded or defective mobile phones, small
PBXs and other telecom equipment at KPN’s sales outlets.
The equipment is repaired, replaced or sent to an accredited
recycling company that is able to recycle  to % of
all waste.
KPN and the environment
‘KPN is a follower and not a leader with its
sustainability report. Nevertheless, according to
VBDO’s  transparency benchmark, KPN does
belong to the top  of Dutch listed companies
and that is no mean achievement. Continuous
improvement of the report is a precondition for
remaining in the top , however. It is important
for KPN to adhere to the telecom guidelines of the
Global Reporting Initiative and devote greater
Policy and targets
KPN’s environmental policy was set down towards the end of
. We are currently translating the policy into operational
targets that our divisions will start to put in place in .
The environmental policy of KPN is unambiguous:
‘KPN does business in an environment-friendly way, identifies the
consequences of its operations for the environment, adopts a
progressive approach to solutions and initiatives for environment-
friendly operations, complies with mandatory legislation and
voluntary codes of conduct and pursues for the longer term a
good position compared with other telecom operators.’

attention to the sustainability of its suppliers.

The new policy includes targets that have been planned for 
VBDO is of the opinion that it should be KPN’s and also a few targets for the longer term.

ambition to rank among the leaders as regards

its sustainability report as well.’

Piet Sprengers, Director of VBDO (Netherlands Association of

Investors for Sustainable Development)

Introduction

KPN achieved a number of results in the environmental field in

the Netherlands, Germany and Belgium in . These are the
most important ones:
• % of all KPN properties satisfy the conditions attached
to environmental licenses and the notifications required
under laws including the Netherlands Environmental
Management Act.
• Fuel consumption was reduced by %.
• The volume of waste was reduced by %, continuing the
downward trend that started in .
In , the KPN Board of Management approved the company’s
environmental policy for the coming years. This has set the
direction for the coming years. The policy embraces all facets of
KPN’s operations and firm targets have been defined for each
element of policy.

                       KPN and the environment 

 TARGETS FOR 2005

POLICY FIELD TARGETS

Electricity • KPN will endeavor to define an energy efficiency target in 2005 so as

to be able to intensify management of its energy consumption in the
2006-2008 period.
• For this purpose, KPN will develop suitable parameters that can
establish a relationship with the fast developing telecommunications
technologies and are usable for reporting on consumption and
achieved efficiency.

Product range • KPN will endeavor to raise the subject of the environment in talks with
relevant suppliers. In the longer term, KPN wants to arrange the supply
chain in a more sustainable way and report on its efforts in this regard.
• KPN’s most important suppliers must be able to state in due course
when they will be able to define in concrete terms the environmental
impact of each product.

Paper quality • Internally, KPN now only uses paper that besides requirements
unrelated to the environment also satisfy an obtainable environmental
quality standard or quality mark.

Quantity of paper • KPN offices are attempting to reduce their relative consumption of
paper by 10% compared with 31 December 2003.

Materials and equipment • KPN wants to try to use only materials with a local environmental
quality mark for its main products and goods, insofar as available and
economically feasible, and to introduce these products and goods
based on a replacement plan.

Teleworking • KPN is evaluating the teleworking trial it conducted among its

employees and on that basis will formulate a proposal for policy and
targets to allow more KPN employees to telework and reduce the
number of travel movements.

Waste • The company is endeavoring to achieve a 50% increase in the

separation of paper compared with the total volume of office waste
at 31 December 2001 (a relative decrease).
• KPN wants to use environment-friendly packaging, insofar as
obtainable and for all packaging that KPN adds to its own products.
We are continuously pursuing a lower weight of packaging for every
product that KPN puts on to the market in the Netherlands.
• KPN will formulate a policy for carefully removing waste created as
a result of work at customers’ premises.

 KPN and the environment                       

 POLICY FIELD TARGETS

Horizon and antenna policy • KPN wants to identify situations involving mobile transmitter masts
(base stations) that have resulted in complaints and, together with
the authorities, examine whether modifications are possible.

Environmental licenses & • KPN wants to hold up-to-date environmental licenses for all its
voluntary agreements buildings in the Netherlands. Our objective is to achieve the same
situation in other countries, but it will depend on local legislation.

Radio waves • KPN keeps a permanent watch on the latest situation in this field
and informs the public of new developments.

TARGETS FOR 2006 AND BEYOND

POLICY FIELD TARGETS

Green energy • KPN wants to investigate possibilities for using its own applications of
renewable energy, where it is possible and financially feasible to do so.
In the future, we wish to make a renewed effort to use green electricity
provided that it does not involve any extra costs.

Study into underground cables • KPN uses underground cables and will endeavor in the second half
of this decade to carry out a follow-up study to the one conducted in
2000. The purpose of the study is to examine how cables affect the
surrounding soil.

Fuel • KPN wants to reduce its CO emissions by 15% at 31 December 2007

²
for its entire fleet of vehicles and all leased cars. This will be a relative
reduction compared with 31 December 2002.

Max Havelaar coffee • KPN will endeavor to use fair trade coffee at all its offices in future.

Prevention of Legionnaires’ • KPN wants to take measures to prevent infections with Legionella
disease bacteria.

                       KPN and the environment 

 Environmental impact
Telecommunication and data communication are means of
communicating without environmentally harmful transport
movements. Nevertheless, the commercial operation of
communication services has implications for the environment.
The business of KPN impacts on the environment in the
following ways:
• emissions into the air (including CO ) as a result of transport
²
movements by the company’s vehicles and commuting by
employees, and also the use of energy for the
telecommunications infrastructure and company buildings;
• environmental impact in the supply chain (including the
materials used and the supplied products and services);
• (packaging) waste caused by the sale of products.

FIGURE: THE KPN INPUT-PROCESS-OUTPUT MODEL

PROCESSES

INPUT OUTPUT
AIR

RAW MATERIALS

WASTE

PURCHASING
SOCIETY AND ENVIRONMENT

COMPANY PROCESS KPN; PRODUCTS AND SERVICES

ENERGY
CONVERSION PROCESS

SOIL

WATER

WATER EMISSIONS

LAW AND LEGISLATION

 KPN and the environment                       

Environmental performance

The table below presents the most relevant environmental

parameters for KPN. The figures reflect the GRI indicators (marked
with EN indices) as well as typical indicators of relative
consumption. The figures concern energy (gas and electricity),
CO² emissions and waste.

KPN ENVIRONMENTAL INDICATORS

SITUATION IN THE NETHERLANDS UNIT 2004 2003 2002 2001 2000

Total sales (KPN NL) EUR millions 8,713 9,809 9,716 10,030 11,484
Average number of FTEs (NL) number 18,300 19,192 24,160 33,829 34,311

Use of materials (EN1, EN2, EN14)

Paper consumption tons 3,230 4,436 3,111 3,524 3,487
Paper separation % 41% 36% 34% n.k. n.k.
Waste tons 5,539 7,162 9,743 13,360 14,483

Re-used waste * % 41% 44% 43% n.k. 40%

Cable network x 1,000 km 305 328 319 316 315
Re-use of telecom equipment % 88% 91% 92% 95.6% n.k.

Energy (EN3, EN4, EN17)

Natural gas consumption ** m³ 7,741,272 6,348,060 6,919,375 8,784,970 7,490,3730
Electricity GWh 734 722 640 573 603
Green electricity % 4.0% 11.8% 1.9% 0.3% n.a.
Fuel for vehicle fleet TJ 496,392 512,313 605,264 623,414 664,703
Diesel for generators TJ 5 4 7 12 12

Water consumption (EN5)

Water m³ 337,484 367,130 292,336 409,331 415,163

CO emissions kilotons CO 504 419 472 447 468

² ²
Total CO versus sales tons/EUR millions 57.9 42.8 48.5 44.6 40.7
²
Index for CO versus sales *** 112% 83% 94% 86% 79%
²

* Due to a changed definition and calculation using the method of the Ministry of Housing, Spatial Planning and the Environment, burning with energy recovery

no longer counts as a form of useful application. This resulted in retroactive downward adjustment of the waste re-use percentage.

** Corrected for ‘degree days’.

*** The reference year is .

                       KPN and the environment 

 The main conclusions that can be drawn from KPN’s
environmental performance levels are as follows:
• The company’s natural gas consumption increased again in
 after decreasing for a few years. This is because KPN is
determining its consumption accurately for the first time by
means of meter readings, whereas in the past the consumption
of natural gas was calculated using indicators per m².
• The increase in electricity consumption also stems mainly from
improved recording of meter readings. An expansion of services
caused a slight rise in electricity consumption.
• There has been an increase in CO² emissions caused by burning
fossil fuels and the use of electricity. This is due to the increased
use of ‘gray’ electricity following the abolition of grants
schemes for green electricity.
• The fuel consumption of KPN’s vehicle fleet decreased
compared with . The reduction was achieved through a
decrease in the number of vehicles and the better planning of
routes.
The consequences of the input side of KPN’s activities and
processes are described in the sections headed ‘Legal frameworks’
up to and including ‘Water’. In the subsequent sections, starting
from ‘Emissions into the air, water and soil’ and finishing with
‘The environment and society’, we have described the emissions
resulting from the activities and processes of KPN (‘output side’).
Legal frameworks
THE NETHERLANDS
KPN’s activities in the Netherlands are subject to the
Environmental Management Act. Some of our activities require a
license, while others are covered by orders in council. The latter
category includes:
• shops (Retail Trade Decree);
• offices (Offices and Accommodation (Facilities) Decree);
• telecommunications buildings (Facilities and Systems Decree);
• buildings used for storage (Transport and Storage Companies
Decree).
KPN has signed voluntary agreements the government has
concluded with the business community in order to reduce
environmental impact:
• Packaging Covenant III;
• White and Brown Goods Scheme;
• Battery Foundation (STIBAT);
• Voluntary Agreement on Antennas.
ENVIRONMENTAL LICENSES
If an activity or building requires a license, the part of KPN
concerned is responsible for managing the license. The table
Overview of licensing in the Netherlands shows the situation that
existed in  in the Netherlands at each part of the KPN group.

OVERVIEW OF LICENSING IN THE NETHERLANDS

TYPE OF OBJECT TOTAL NUMBER OF PROPERTIES NUMBER OF PROPERTIES LICENSES ISSUED

SUBJECT TO LICENSING AND/OR

NOTIFICATION REQUIREMENTS

Offices 86 60 100%
Small storage buildings 8 8 0%
Technical buildings 1,823 1,388 98%
Retail outlets 107 107 100%
Transmitter masts 3,842 0 100%
Burum transmitter station 1 1 100%

 KPN and the environment                       

Offices
The premises managed by KPN Real Estate & Facilities are subject
to the order in council that covers buildings used as offices and
accommodation. The licensing obligations for a few premises
ceased to exist in . KPN will file notifications in  for
premises that are subject to the orders in council for transport
and storage companies.
Technical buildings
KPN’s Technical Buildings Service Unit manages the licenses
required for technical buildings (like telephone exchanges).
These premises are subject to the Environmental Management
Act and the order in council covering facilities and systems.
Notifications were filed or license applications were submitted
in  for all premises. The existing licenses for KPN’s  radio
towers will be reviewed in  following changes made to the
allocation of frequencies.
Retail outlets
The Primafoon and Business Center outlets of KPN Retail are
required to file notifications under the order in council covering
the retail trade. It completed the formalities for all license
applications in .
Transmitter masts
The , transmitter masts used for mobile telephony (‘base
stations’) fall under the responsibility of KPN Mobile. The
government has not made these stations subject to licensing
because of the small transmitting power of each mast.
Burum transmitter station
The satellite communication earth station managed by KPN’s
subsidiary Xantic is located at Burum. KPN owns a controlling
interest of % in Xantic. The licensing procedure was started
in  and completed in .
Germany
All E-Plus base stations in Germany have been approved by the
regulatory authority for telecommunication and post (‘Reg TP’).
Germany additionally has numerous laws and by-laws because
of far-reaching implementation of European directives and
regulations. E-Plus holds licenses for all of its buildings and will
make sure in  that they are up-to-date.
Belgium
Most of BASE’s business activities are in the Brussels region.
Although environmental legislation is laid down nationally and
                      
regionally in Belgium, the regions in particular play a major role
in setting rules and making sure they are observed. BASE holds
licenses for all of its buildings and will make sure in 
that they are up-to-date.
Conclusion
KPN holds environmental licenses for % of all its business
premises. We have drawn up a plan to obtain the remaining
licenses in .
Purchasing and suppliers
SUPPLIERS
KPN’s general purchasing conditions include environmental
requirements for product components, waste processing
and re-use. One of KPN’s criteria when selecting suppliers is
how they approach sustainability. This is in line with our
environmental policy. Similarly, we have translated the voluntary
agreements we have signed (like the Packaging Covenant) into
specific requirements. Suppliers are required at our request to
demonstrate their contribution to environmental protection by
means of low-energy products, an energy-friendly production
process and respect of human rights.
ENVIRONMENTAL REQUIREMENTS FOR
PRODUCTS AND SERVICES
Technological advances in microelectronics have enabled KPN to
introduce a low-energy adaptor for a few devices that reduces the
idle mode current consumption from  to  watts. This translates
into a % idle mode energy consumption saving for the
consumer.
KPN pressed ahead with the restructuring of its purchasing in
 to create a more coordinated and professional purchasing
organisation. We aim to reduce the number of suppliers through
strict selection in which sustainability plays an important role.
A small group of suppliers makes it easier for KPN to place greater
emphasis in talks on environmental matters it considers
important. In , this will be a mandatory area of attention
for our different categories of purchases.
The general purchasing conditions of KPN require a supplier to
ensure that its products contain no components that are not
reusable or prohibited by law. This allows KPN to examine how
suppliers and manufacturers take environmental protection into
account when designing and producing products.
KPN and the environment 
 Wherever possible KPN chooses environment-friendly designs
when replacing facilities in its technical buildings. This concerns
central heating systems and new rectifiers with high efficiency
that consume less energy than the old or traditional versions.
A similar approach cannot yet be adopted to telephone
exchanges, because they are purchased as standard market
versions and KPN has little room for maneuver in this global
market.
Cleaning companies that work for KPN are allowed to use only
cleaning agents that are environment-friendly or neutral.
CABLE NETWORKS
The activities of KPN in the Netherlands include responsibility for
managing cables (installation, maintenance and removal). The
cable network is located on land and in the sea. There are two
times at which the cable network impacts on the environment.
Installing underground cables introduces foreign substances into
the soil and interferes with the soil. The removal of cables creates
waste. KPN’s policy is to prevent the use and installation of cables
from contaminating the soil and to stop the spreading of existing
contamination. KPN disposes of removed cables in an
environment-friendly way.

FAIR TRADE COFFEE CABLE NETWORK

A total of . million cups of coffee were consumed at KPN
X 1,000 KM 2004 2003 2002 2001
in the Netherlands in . This corresponds to a volume of
, kilograms. The proportion of Max Havelaar coffee Underground cables, of which:
remained at %. In , we will explore the possibility of Copper-wire cables in service 224 224 224 224
using fair trade coffee in all coffee vending machines. Spare copper-wire cables 4 5 5 6
Fiber-optic cables 46 44 35 34
VEHICLE FLEET Empty protective tubes 31 19 19 19
Since  all new cars and our familiar green vans have satisfied Submarine cables 1.2 1.2 1.2 1.2
the standard that the European Union has laid down for the
coming years. KPN will examine possibilities in  for
stimulating hybrid vehicles (a combination of an electric and The quantity of empty protective tubes has increased because
conventionally powered fuel engine) like the Toyota Prius. KPN pre-installs them at places where work occurs in the ground
KPN will continue looking for clean, safe and inexpensive (building sites, utilities, etc.). At a later stage, we will be able to
transport alternatives. insert fiber-optic cables into the tubes. This reduces costs and at
the same time causes less inconvenience to road and land users.
FUEL EMISSIONS
KPN stopped ordering leased cars that use LPG in  because Underground cables
LPG availability in the Netherlands is decreasing due to more We have retroactively amended the figures for  after
stringent laws. New commercial vehicles are now equipped improving the recorded data. Apart from this administrative
virtually as standard with the new generation of diesel engines. modification, there are no significant differences. In ,
They are cleaner and quieter. These engines use low-sulphur fuels KPN put into service the last cable containing lead. From now
that have fewer harmful consequences for the greenhouse gas on, we will use only cables that have polythene armoring with
effect compared with conventional diesel. a lower environmental impact. The year under review also saw
installation of the first modernized thermoretractable sleeve
in the local network, obviating the need for lead joints.
Raw materials and consumption of materials
Cable drums
KPN needs raw materials and other materials for its business In cooperation with the supplier, KPN has stopped using paint
activities. From an environmental point of view, the most that contains lead, which we traditionally used to preserve cable
important materials are: drums but which was bad for the environment.
• cable networks for direct communication. These contain metals
like lead and copper;
• network hardware (like telephone exchanges) to support the
cable network;
• PCs and paper for supporting activities;
• cooling agents to keep exchanges (and offices) cool.

 KPN and the environment                       

Submarine cables NATURAL GAS CONSUMPTION
KPN is the co-owner of submarine cables in the Dutch part of
X 1,000 M3 2004 2003 2002 2001 2000
the Continental Shelf and a member of consortiums that manage
submarine cable networks all over the world. The deep and Measured consumption
shallow submarine cable base consists largely of fiber-optic in the Netherlands 7,755 6,323 7,408 8,970 8,289
cables. No repeaters containing radioactive substances were Corrected consumption
removed and/or disposed of in . in the Netherlands 7,741 6,348 6,919 8,785 7,490
Measured consumption
PAPER in other countries 1,652 546 n.k. n.k. n.k.
KPN controls the quantities and types of paper that it uses. We
use paper principally for office work, external communication and Total consumption 9,393 6,894 6,919 8,785 7,490
promotion of services and products. The paper we purchase has
an environmental quality mark and the suppliers operate
environmental protection systems. No changes occurred in this We corrected the natural gas consumption in the Netherlands for
respect in . We use ECF (elementary chlorine free) paper in the outdoor temperature by means of the ‘degree days’ method
copiers and printers. and compared it with the -year rolling average. Degree days
are the sum of the number of degrees per day colder than °C
PAPER CONSUMPTION measured over a full year. By applying this correction, it is possible
to make a comparison with previous years. The correction reveals
IN TONS 2004 2003 2002 2001
that natural gas consumption in the Netherlands rose by
The Netherlands 3,230 4,436 3,111 3,524 ,, m³(%). The increase is due to improved recording
Other countries 1,287 n.k. n.k. n.k. methods and meter readings. The degree days in Belgium and
Germany are not known so no correction has been applied to
Total 4,517 4,436 3,111 3,524 consumption in those countries.

For energy management purposes, KPN began keeping records of

Our paper consumption exhibited some fluctuations in 
compared with the previous year. Carbonless copy papers, like
those used in receipt booklets and contracts, are extremely
harmful to the environment and their use is no longer practical.
We continued replacing them by multi-purpose paper in .
Increased electronic communication has enabled us to greatly
reduce the consumption of paper. However, the printing out
of messages and attachments has increased consumption.
Energy
KPN uses primary fuels (natural gas, petrol and diesel oil),
electricity and district heating in the performance of its activities.
NATURAL GAS
Gas-fired central heating systems are used to heat most large
KPN buildings where heating is required.
the most important energy data in  (including natural gas)
for its properties with gas-fired central heating. We determined
the total consumption of natural gas using the available
consumption data according to meter readings. Where necessary,
we extrapolated from these measured values. KPN will keep
systematic records of meter readings in .
Reduction of natural gas
KPN has optimized natural gas consumption by its central heating
systems. We did this by modifying the heating line and by making
central heating dependent upon the weather. Optimization has
produced a saving of , m³. The program for replacing the
older central heating systems will be continued in . The
program involves replacement by high-efficiency systems or the
installation of a central heating system with a smaller capacity.
A transparent picture of the savings this will yield is not yet
available.
FUEL CONSUMPTION BY THE VEHICLE FLEET
The size of the KPN vehicle fleet again decreased compared with
previous years. The total number of company vehicles dropped
to , (a reduction of .%) as a result of a smaller workforce.
We expect a further reduction of the total number of company
vehicles in .

                       KPN and the environment 

 The fuel consumed by the vehicle fleet in  totaled  million
liters, a reduction of . million liters (.% compared with ).
This is due to the smaller number of company vehicles. One of
the factors that influences fuel consumption but is beyond KPN’s
control, is the increasing volume of traffic on the roads and the
number of traffic jams on Dutch motorways. The total length
and duration of traffic jams increased in  by % (source:
Directorate General for Public Works and Water Management).
The average fuel consumption per company vehicle again
increased because more and more new vehicles are being
equipped with air conditioning for user comfort.
The total number of kilometers covered by our company vehicles
decreased from  to  million kilometers. Compared with
, this is a reduction of  million kilometers (–.%). The
main reasons for the decrease are improved work planning, the
outsourcing of activities and a reduction of the number of vehicle
users. Navigational systems are due to be installed in  in the
vehicles of some employees who operate nationwide.
Gas-powered vehicles
The study launched in  into gas-powered vehicles was
supposed to result in a pilot project in . However, KPN
decided not to carry out the project, due to the small amount
of interest among other companies and organizations in
participation in the project. Another reason was the absence
of possibilities for government grants, which would mean high
costs for KPN.
Other countries
The number of company vehicles also decreased in the other
countries where KPN operates (–%). However, this was
accompanied by a % increase in fuel consumption. The increase
is due to a doubling of diesel consumption at E-Plus.
EMERGENCY POWER GENERATORS
Under the Telecommunications Act of the Netherlands, KPN is
required to ensure the uninterrupted availability of the fixed and
mobile networks. To maintain telecommunication services in the
event of power failures, KPN has installed stationary batteries at
several telephone exchanges, which in numerous cases are
supported by emergency power generators that run on diesel oil.
We use mobile emergency power generators in the event of
power failures at smaller assets. The number of emergency power
generators in  remained roughly unchanged compared with
the previous year. KPN had  emergency power generators in
service in the Netherlands in  (compared with  in ).
No changes occurred at E-Plus () and BASE () in .
 KPN and the environment
The Netherlands
Diesel oil consumption decreased in  in proportion to
the number of emergency power generators in service. The
consumption of diesel oil during the testing of emergency power
generators and their use when failures occur cause emissions
of carbon dioxide, sulphur dioxide and other components like
soot particles. The electricity generated during the testing of
emergency power generators is applied usefully. KPN uses
approximately % of the generated electricity for its normal
telecommunications processes. The rest is discharged into the
outdoor air as residual heat.
Reduction of the frequency of servicing has greatly brought down
the consumption of diesel oil since . There was a further
reduction of frequency for some emergency power generators in
. KPN will examine in  whether it is possible to introduce
this reduced frequency for all emergency power generators.
Other countries
Owing to an unexpected defect at a data center that could not
be repaired immediately, E-Plus had to make intensive use of an
emergency power supply at one of its sites. This resulted in an
increase in diesel oil consumption by , liters.
DISTRICT HEATING
KPN uses district heating in approximately  large company
buildings in the Netherlands, including our head office in The
Hague. Consumption decreased from , GJ in  to ,
GJ in . This % reduction is again attributable to improved
recording of meter readings.
ELECTRICITY
KPN’s total consumption of electricity in the Netherlands in 
came to  GWh, an increase of  GWh compared to the year
before. This negligible increase is due mainly to the improved
recording of meter readings.
The fixed telephony network is KPN’s largest consumer of
electricity. In , we started carrying out energy-saving
measures focused on the permissible air temperature in technical
buildings. This was followed in  by an improvement of the
overall management of air in telecommunications rooms.
Together with the optimizing of redundant cooling units, this
resulted in a total calculated annual saving of . GWh.
We have defined consumption standards to facilitate energy
management at our technical buildings. The standards will be
tried out in practice in .
KPN expects a further increase in energy consumption in 
because of modernization of installed equipment. We will
examine the feasibility of using geothermal heat for cooling
purposes.
                      

Green energy
KPN purchased significantly less green energy in  ( GWh
compared with  GWh in ) because of the discontinuation
of grants. We bought green energy only for smaller assets (phone
booths and mobile network sites).
Consumption in other countries
The KPN group companies in other countries consumed almost
as much water in  as they did in  (, m³). This is less
than in the Netherlands because our international affiliated and
associated companies have fewer office employees, relatively
speaking.

Other countries
There was an increase in electricity consumption in the other
countries where KPN operates, namely from  GWh  to
 GWh in . The increase is directly related to the growing
number of mobile network base stations.
Water
In the Netherlands, KPN uses water mainly for the facilities
provided in offices and technical buildings. Besides drinking
water, KPN needs water for cleaning, staff restaurants and toilets.
A small proportion of our overall water consumption (%) is
used to cool technical buildings.
We measured water consumption at  company buildings in
 by recording meter readings. As with energy consumption,
we used the recorded water consumption data to extrapolate
the average water consumption per m². In the case of technical
buildings we made the extrapolation from the number of toilets.
This showed total water consumption to be , m³.
Compared with the previous year, our total water consumption
fell by almost , m³(%) in . The reduction is
attributable directly to the decrease in the number of employees
and the disposal of a few buildings. We further focused attention
in  on improving the recording of consumption data and
obtaining an insight into actual consumption of water.
A small-scale example of ways to promote water-saving can be
found at KPN’s Amsterdam office where toilet users can use a
button to stop running water. If this project proves successful,
Emissions into the air, water and soil
KPN’s processes and activities cause emissions into the air, water
and soil. The emissions into the air consist mainly of greenhouse
gases (like CO²) caused by the burning of fossil fuels (natural gas,
diesel and oil) for the generation of electricity, indoor heating and
transport and of leakage losses from coolants from air-
conditioning systems.
In the past, substances that harm the ozone layer, like halons,
were used in fire extinguishers. KPN ensured in  that it no
longer has any fire extinguishers with halons by switching to
ecofoam wherever possible. No incidents occurred in  that
resulted in the release of halons.
AIR: GREENHOUSE GASES
The main emissions into the air caused by KPN consist of CO²
used in the generation of electricity. For the most part, this CO²
is emitted indirectly. KPN uses electricity generated by national
power stations. A small proportion of the emissions stems from
our use of emergency power generators. Emissions of CO² further
occur because of the use of natural gas and diesel oil for the
heating of rooms and the use of fuels by our vehicle fleet.
CO² EMISSIONS BY EACH ENERGY CARRIER
IN KILOTONS
2004

we will adopt the same approach elsewhere in the Netherlands. 2003

2002
Prevention of Legionnaires’ disease
KPN takes measures to prevent Legionella risks in its office 2001

buildings. Various fact-finding exercises were carried out in  2000

and we took measures in our water supply network. We wrote
���� � ��� ��� ��� ��� ��� ���
to the tenants of buildings asking them to take steps to prevent
Legionella. Grey electricity

Natural gas

Vehicle fleet fuel

Diesel oil for emergency power generators

Green electricity

                       KPN and the environment 

 The Netherlands
The operations of the Dutch parts of the KPN group caused
a total emission of  kilotons of CO² in , an increase of %
compared with . The increase was due largely to the
purchase of less green electricity.
Other countries
Emissions of CO² in the other countries where KPN operates went
up from  kilotons in  to  kilotons in . The principal
reason for this increase is the improved recording of data. We did
not start keeping records of environmental data in the other
countries until .
AIR: COOLING AND EXTINGUISHING AGENTS
KPN uses coolants in cooling systems for the generation of
conditioned air. Telephone exchanges and rooms that contain a
lot of electronic equipment must be kept cool to avoid damage
being caused to the equipment. Our cooling systems contain
only coolants permitted by law.
Emissions of coolants occur through leakages in the cooling
system. Each year KPN has all of its cooling systems inspected
by a certified company. Nevertheless, a closed system may leak
coolants. The implementation of a data recording system to
obtain a greater insight into leakage losses is planned for .
COOLANTS AND LEAKAGE LOSSES
NUMBER OF TOTAL TOTAL
SYSTEMS CAPACITY FILL-UP
(KG) (KG)
The Netherlands 856* 6,737* n.k.
Other countries 2,198 6,558
* Excludes cooling systems in technical buildings
KPN no longer had any extinguishing agents containing halons
in . We have switched to ecofoam wherever possible.
WATER: EMISSIONS
The quantity of released waste water is roughly the same as
the quantity of water brought in for facilities (toilets, cleaning,
consumption).
Using indicators provided by the Union of Water Boards, we
calculated the contamination load of KPN’s waste water in
 KPN and the environment
the Netherlands in terms of pollution units. For waste water
discharged from offices, we applied a conversion factor of
. pollution units per FTE (average over ). This produced
a figure of , pollution units.
In Belgium, the conversion factor used for offices is . pollution
units per FTE. The conversion factor in Germany is not known
so we made calculations using the Dutch factor of ..
The contamination load of waste water discharged at BASE
and E-Plus totals  pollution units.
SOIL-THREATENING ACTIVITIES
KPN stores diesel oil for emergency power generators and indoor
heating in tanks above and below ground. The capacity of the
tanks varies from , to , liters. Tanks have been installed
at various offices and technical buildings.
The Netherlands
The total number of tanks is . Every year a certified company
inspects the tanks in accordance with the Storage in Underground
Tanks Decree. Observed defects are repaired immediately. KPN
also annually inspects the quality of the groundwater near the
tanks to identify and limit any soil contamination at an early
stage. No incidents occurred in . However, KPN did remove
underground tanks that failed to pass the regular -year
inspection.
Other countries
BASE and E-Plus have negligible fuel storage capacity for
emergency power generators ( m³). Outside the Netherlands
we have no underground tanks in use.
0
Waste
KPN’s operations cause waste. We make a distinction between
facility waste, technical equipment, hazardous waste, cable
remnants, assorted process waste and commercial materials.
An increase has occurred in our production-related streams
of waste (commercial waste and cable remnants) (see figure
‘Total waste volume in ’). The other streams exhibit a
decrease. Minor fluctuations have occurred in our reporting
on waste streams because of the introduction of a different
coding system (EURAL).
                      
TOTAL WASTE VOLUME IN 2004 CABLE REMNANTS AND TECHNICAL EQUIPMENT
The situation regarding cable remnants and technical equipment
IN TONS
has not changed much. Against less technical equipment there
has been a slight rise in the volume of cable remnants. Improved
2004 collection means that less cable remnants and technical
2003 equipment are being disposed of as residual waste. This has
improved the re-use and recycling of equipment.
2002

2001 HAZARDOUS WASTE

2000 KPN defines hazardous waste as batteries, accumulators, scrapped
electronics, gas discharge lamps and minor hazardous waste.
� ����� ����� ����� ������ ������ ������
The volume of hazardous waste decreased by  tons in 
Commercial waste from  to  tons. KPN removed asbestos during two clean-up
Process waste operations in buildings. We observed all safety regulations and
Technical equipment certified companies disposed of the asbestos safely.
Cable remnants

Hazardous waste ASSORTED PROCESS WASTE

Facility waste
The figure indicates a continuation of the downward trend that
started in . Reasons for this include a reduction of the size
of the workforce and the quantity of residual waste and also
the improvement of collection receptacles. The increases are
primarily due to expansion of the infrastructure (especially ADSL)
and once-only clean-up operations in buildings.
The total volume of waste at KPN has decreased year on year in
recent years, as the table below shows.
WASTE STREAMS
2004 2003
Total 5,539 7,162
FACILITY WASTE
Facility waste is the largest stream of waste that occurs at KPN
(it includes paper and residual waste). This category decreased by
, tons in . A matter that KPN is continuing to address is
the reduction of residual waste in relation to total facility waste.
We achieved a separation figure of % for paper in .
Intensified action for the separate collection of paper is designed
to lead to a % separation figure in .
KPN has additionally launched initiatives for innovative
collection systems and processing techniques. The expansion
of environmental lines at parts of the group is resulting in a
decrease in the volume of residual waste and an increase of
the re-use percentage.
Process waste is waste that occurs during KPN’s primary processes
and includes wood, rubble, construction waste and demolition
waste. The created streams are completely reusable. The quantity
of process waste decreased by  tons compared with .
COMMERCIAL MATERIAL
Commercial material consists of returned equipment (mobile
phones, small PBXs and other telecommunications equipment)
disposed of under KPN’s responsibility. Customers may hand in
defective telecommunications equipment at our retail outlets
(Primafoon shops and Business Centers). Equipment covered by
a guarantee is repaired or replaced. If it is not possible for the
supplier to repair or take back equipment, the equipment counts
towards KPN’s waste stream. KPN’s Primafoon and Business
2002 2001 2000
Center outlets disposed of  tons in .
9,744 13,360 14,483
The Netherlands
The handsets returned to KPN are gathered together and removed
to a certified processing company. The processor specializes in
re-use and recycling of handsets. Over the first three quarters of
, KPN sent for processing  batches of equipment containing
approximately , handsets. This equipment falls into three
categories:
. old products that customers hand in to KPN;
. defective products for which KPN no longer receives
reimbursement from the supplier;
. products that have become unmarketable.

                       KPN and the environment 

 During processing we achieve a re-use/recycle rate that varies
between % and %. Most handsets are suitable for re-use.
The other handsets, the accessories and the packaging are
recycled according to category. An attempt is first made to
recover from the handsets any parts that are reusable. Out of
the , handsets that were returned, approximately ,
(%) were reusable.
PHONE CARDS
KPN’s range includes two types of phone cards:
• chipcards for use in payphones;
• pre-paid/post-paid or top-up cards for mobile phones.
The table below shows sales of both types of card.
SOLD PHONE CARDS

NUMBER OF CARDS
Other countries
X 1 MILLION 2004 2003 2002 2001 2000
E-Plus collects returned mobile phones and sends them to
Greener Solutions (GS). GS is a company that repairs and resells Chipcards
defective mobile phones. If repair is not possible, the company • for payphones 4.0 5.4 6.6 7.3 7.7
re-uses as many parts of the handsets as possible. In , % Mobile cards
of handsets were repaired and resold, % of the parts were • Top-up cards 6.0 10.8 n.k. n.k. n.k.
recycled and % of the parts were disposed of as waste. • Pre-paid and post-paid 1.9 1.5 1.4 15.5 14

For every returned mobile phone, E-Plus donates a fixed amount

to AIDS research.
Products and services
It is possible to influence the environmental impact of
products and services at various times. When purchasing
telecommunications equipment and other products, KPN is
able to stipulate in its general purchasing conditions the
environmental requirements that suppliers must satisfy. KPN’s
market position is not strong enough to allow us to impose on
suppliers without consultation requirements for the composition
of their products. On the other hand, KPN is able to exert an
influence on environmental impact through product innovation.
Our marketing departments can influence the composition and
appearance of packaging.
PRODUCT INNOVATION
Innovation is achievable by introducing new and improved
products and services. When launching new products,
KPN endeavors to ensure that the packaging is environment-
friendly. Developments in microelectronics (like low-energy
adaptors for which the idle current consumption has been
reduced) also make it possible to save energy in the use
consumers make of KPN products.
Chipcards
The number of chipcards being sold for payphones is decreasing.
This is due to the ongoing increase in the use of mobile phones
and the possibility to top-up chipcards. Half of all chipcards are
made of ABS (Acrylonitrile Butadiene Styrene) that is less harmful
than PVC (Polyvinyl Chloride).
Mobile phone cards
There was again a slight increase in  in the number of
pre-paid/post-paid cards, from . million to . million (+%).
The quantity is less than a few years ago because mobile phones
and SIM cards now remain in service longer.
An important development occurred in  in the top-up
transactions for pre-paid cards. Approximately  million top-up
transactions took place using top-up terminals in an increasingly
dense nationwide network that is replacing the cards. Slowly but
surely, these terminals are replacing the scratchcards used until
 to top up call credits. Consequently, less paper is being
consumed for the production of scratchcards and fewer cards
need to be distributed.

 KPN and the environment                       

The environment and society

ASBESTOS, HEALTH AND THE ENVIRONMENT

Asbestos was used intensively in the past on account of its good
properties like durability and insulation. The health risks did not
become apparent until later.

In KPN’s technical buildings, we began undertaking inventories

of materials containing asbestos in  when we launched
our program to replace door locks. Subsequently, a specialized
certified company removed all doors containing asbestos.
This concerned a few dozen doors. Parts containing asbestos
not removable separately or simply were visibly marked with
warning stickers.

Materials containing asbestos were discovered in  at four

office buildings managed by KPN. Two of the sites were cleaned
up in . The others are not currently in use and do not require
clean-up. For safety reasons, the asbestos parts have been marked
with warning stickers. One of the four buildings has been sold
and KPN ensured that the contract of sale defined the buyer’s
environmental responsibilities.

Other countries
All buildings of E-Plus and BASE are free of asbestos. No asbestos
inventories have been undertaken.

                       KPN and the environment 

The world has never stopped changing, but the changes are
now occurring faster and faster, particularly in the telecom
sector. The reality and developments associated with these
changes necessitate making changes to our strategy,
organisation and working methods. It is important to enter
into talks with each other and to continue the dialogue.
This applies externally as well as internally. Meetings with
the Board of Management, employees and customers gave
KPN a deeper insight in  into customers’ wishes and
needs and how we can respond to them better and faster.
KPN and its people
‘I warmly recommend that people who want to
familiarize themselves with the surprising world
of corporate social responsibility should read
‘The profit of values’, which the Social and
Economic Council published in . It portrays
a business as a joint venture by various
stakeholders. The business is typecast in the
role of a balancing artist who must achieve
a balance between sometimes conflicting
because there is still insufficient compensation from sales of new
services. Therefore, the staffing that KPN requires will continue to
decrease in the coming years. The decrease will be intensified by
technological advances and higher productivity through
improvements to operational processes and automation. All in all,
HR has set a clear course towards flexibility and individualization,
partly thanks to its focal points in recent
years. KPN must achieve a lot in a short time.
The challenge is to go on shaping this HR policy without
impairing the practical responsibility that exists for employees
and society, the quality of working conditions and the
opportunities for personal and career development.

interests. In other words, the KPN Board of

Management must balance on a cycle on a
wire at the top of the circus tent. I would say
‘Get on with it, look ahead and continue cycling
vigorously!’. This same message is evident from
KPN’s Sustainability Report: KPN must deal
with numerous interests, but is cycling firmly
onwards.’
EMPLOYMENT OPPORTUNITIES
At year-end , KPN had a total of , employees
(, FTEs), of whom , employees (, FTEs) in the
Netherlands were covered by the KPN collective labor agreement
or had individual contracts of employment with KPN.
E-Plus had , employees in Germany at year-end . BASE
had  employees in Belgium at year-end . The rest of the
employees work at KPN’s other affiliated and associated
companies.
AGE DISTRI BUTION

YEAR-END 2004 NUMBER PCT

Agnes Jongerius, Deputy Chair, FNV (Dutch Trade Union
Federation) 16 - 19 7 0.0%
20 - 24 182 1.0%
25 - 29 1,064 5.7%
30 - 34 2,506 13.4%
Introduction 35 - 39 3,449 18.5%
40 - 44 3,188 17.1%
The future of KPN will be determined in large measure by the 45 - 49 3,207 17.2%
quality and commitment of its employees, our fully-fledged 50 - 54 3,473 18.6%
participation in market developments and a cost-aware manner 55 - 59 1,496 8.0%
of doing business. Our human resources policy helps us move 60 - 65 73 0.4%
in that direction by giving substance to a new vision of the
quality of recruited employees and of lasting employability.
LENGTH OF SERVICE

Employment at KPN YEAR-END 2004 NUMBER PCT

< 1 year 210 1.1%

KPN is creating new prospects for the company, employees and 1-4 years 2,347 12.6%
stakeholders by launching initiatives in new markets like digital 5 - 9 years 3,163 17.0%
TV. This requires the modernization of knowledge and 10 - 14 years 2,660 14.3%
competences among employees and management alike. At the 15 - 19 years 2,324 12.5%
same time, the focus in our conduct of business remains firmly 20 - 24 years 2,212 11.9%
on achieving positive financial results. This is essential because > 24 years 5,729 30.7%
of the shrinking market for traditional services, the more so

                       KPN and its people 

 GEN DER AT EACH DIVISION In , KPN announced three reorganizations at the Fixed
division, all with consequences for personnel. The reorganizations
YEAR-END 2004 MEN WOMEN MEN WOMEN
are aimed at being able to market the division’s services more
Mobile 1,441 703 67.2% 32.8% effectively and at a lower cost now that sales are under pressure.
Fixed 10,442 2,315 81.9% 18.1% In January , KPN announced its intention to shed  FTEs
Other 2,443 1,301 65.3% 34.7% at the Fixed division, including  involuntary redundancies and
the rest through natural attrition. KPN made known in October
Total 14,326 4,319 76.8% 23.2%  that  jobs would be lost at KPN EnterCom Solutions
(part of the Fixed division), of which  immediately and the
rest in . In November , KPN unveiled plans to reorganize
FULL-TI M E / PART-TI M E the IT activities within the Fixed division. Between early 
and mid-, this reorganization will result in the loss of
YEAR-END 2004 FULL-TIME PART-TIME FULL-TIME PART-TIME
approximately  FTEs. In all of these cases, KPN wants to avoid
Mobile 1,668 476 77.8% 22.2% involuntary redundancies to the fullest extent possible, but
Fixed 11,080 1,677 86.9% 13.1% cannot rule them out.
Other 2,783 961 74.3% 25.7%
KPN has taken on board the multi-faceted task of structurally
Total 15,531 3,114 83.3% 16.7% lowering its costs by reducing the complexity of its network by
implementing a network based entirely on IP, rationalizing the IT
organisation and simplifying the structure of the group. Over the
NUM BERS AT EACH DIVISION coming five years, we expect a substantial downsizing of the
workforce, including the reorganizations already announced at
YEAR-END 2004 NUMBER FTES
KPN EnterCom and in the IT field.
Mobile 2,144 2,027
Fixed 12,757 12,303 MOBILITY
Other 3,744 3,428 The mobility of its employees is vitally important to KPN’s future.
Internal and external mobility are currently insufficient to bring
Total 18,645 17,758 about the workforce reduction that is required. This is part of the
reason why it is difficult to achieve the higher level of knowledge
that is required.
NUMBER OF EMPLOYEES*
The number of KPN employees in the Netherlands decreased
YEAR-END 2004 NUMBER
by  in . This is the balance of the shedding of
2000 37,380 , employees and the recruitment of  employees.
2001 30,647 Out of the total reduction of  employees ( FTEs) in ,
2002 21,489  employees ( FTEs) left the company through the
2003 19,542 outsourcing of non-core activities. Another  employees
2004 18,645 ( FTEs) left the company as a result of reorganizations.
The remaining reduction of  employees ( FTEs) came
* Number of employees at year-end in the Netherlands who were covered by the KPN through natural attrition. At year-end , approximately
collective labor agreement or had individual contracts of employment with KPN.  employees had found a new job through the Mobility Shop.

Mobility Shop
KPN introduced a Mobility Shop in  to assist employees in
moving from job to job. We make a distinction between three
target groups: supernumerary employees, employees who must
reintegrate and employees for whom mobility is desirable
because they may lose their jobs over time.

 KPN and its people                       

For the Mobility Shop itself,  was a transitional year. The
shop previously acted as an intermediary when reorganizations
occurred. In the years ahead, it will act as an intermediary based
on the new requirements the company expects employees to
meet. Instead of the expected  new mobility cases, there were
in fact , new cases. This was mainly due to intensified efforts
by managers to create employee mobility. The Mobility Shop
expects to provide assistance in approximately , cases in
.
HR SERVICES AND DEVELOPMENT OF TALENT
One of the recognizable consequences of the modernized
conduct of business at KPN is the more intensive use of the
performance appraisal system in the HR sector. To bring about
the required way of working by managers and employees, the
company gives a clear opinion about the performance and
competences of its employees. KPN attaches unambiguous
consequences to these opinions in terms of mobility. KPN
sheds as well as recruits employees based on the quality of
their performance and competences. Professional HR service
provisioning is crucial to the success of this approach.
The modernized manner of conducting business also requires
the development of new competences and talents among
employees. To move the company forward, we need people who
are determined to win and are capable of producing results in
teams. KPN expects them to adopt a different approach, with a
greater leaning towards change and a willingness to take risks
and act proactively with a focus on the customer. Corporate HR
and Job Development and Assessment are the HR departments
that must give substance to the way forward by defining a new
profile for strategic recruitment and management, by improving
employee advancement and exiting based on a performance
matrix that provides an insight into an employee’s results and
behavior, and by introducing a new leadership program.
REMUNERATION POLICY
The KPN divisions are under heavy pressure to bring their costs
into line with their operating revenues. With this in mind, the
divisions have critically reviewed arrangements under the
collective labor agreement. This is one of the reasons why the
remuneration policy has been made more performance-related
in recent years.
KPN currently has a coordinated policy on employee benefits,
with a single collective labor agreement, a single social plan and
a small number of group regulations. As a result of the collective
labor agreement that came into effect on  January , KPN
                      
has discontinued annual salary increments in pay scales  to 
inclusive. The performance of an individual employee in  will
be the basis for awarding a pay increase from the start of .
Besides this new remuneration policy for individual employees,
in  KPN introduced performance-related pay for groups of
employees. We reward groups for achieving challenging pre-
defined targets, particularly for reducing costs, increasing sales
and raising customer satisfaction. The maximum performance-
related bonus that is attainable is .%. KPN paid out % of this
in March  to its employees. Apart from performance-related
pay, in August  KPN awarded employees a one-off
performance bonus equal to % of twelve monthly salaries.
KPN has a modern pension scheme linked to average salary up to
EUR , and disposable premiums for the part of salary above
that amount. Pensionable age at KPN is  with possibilities to
retire early at  or continue working until . The scheme is a
non-contributory one for employees. KPN has built into the
scheme a range of options for the employee.
EMPLOYEE MOTIVATION
Each year KPN conducts a survey to determine employee
motivation and commitment. The motivation survey consists of
approximately  questions and each division has the possibility
to add extra questions. The survey is important because it
provides pointers for improvements.
Every employee can take part in the survey anonymously. The
results of the survey are prepared at the lowest departmental
level and are presented to the department. We also cluster results
to show a picture at higher organizational levels. The survey is
conducted largely online. The results are accessible to all
employees via the intranet.
In , % of KPN employees participated in the motivation
survey. Noteworthy positive results were achieved in the field of
management style: managers were found to be receptive to
suggestions from employees (the score was .) and confidence
in the manager (score .). The scores were lower for the
contribution made by performance-related pay to better
achievement of targets (score .) and the influencing of
performance-related pay through personal effort (score .).
KPN has already drawn up an improvement plan to address
these matters.
KPN and its people 
 EDUCATION AND TRAINING
The shift from hardware to software activities in KPN’s technical
environment, the heavy emphasis on IT services and the fierce
competition that exists make it essential for KPN to have an
optimally trained workforce. Training and education are essential.
For that reason, we took training in technology and customer
satisfaction very seriously in the year under review. This is
reflected by a large number of new initiatives.
In the fourth quarter of  alone, KPN employees attended
a total of , half-days of training. Web-based training now
accounts for .% of all training at KPN. Approximately % is
training provided in the traditional way. The rest is self-tuition.
In the year under review, more than , employees took
training in how to approach customers, both theory and practice.
These courses devoted special attention to working in teams.
Managers received training in how to stimulate and improve a
customer-driven approach among teams of employees.
Other courses concentrate on improving the professional skills
of employees, like those of the planners who schedule the work
engineers perform on the network and at customers’ homes.
Special attention was devoted to the importance of resolving
complaints quickly and accurately.
The technological advance of phoning via the Internet resulted
in a new training program called ‘Voice over IP’. Employees have
received training in the usage and technological sides of this new
form of telecommunication. In some cases, technological advance
leads to positive environmental effects. The introduction in the
fixed network of a new type of physical connection using thermo-
retractable sleeves – which means using plastic instead of lead –
has an attractive side-effect on the working conditions of
engineers and cable jointers.
KPN offers employees the opportunity to obtain professional
qualifications in the regular education system, at intermediate
and higher vocational level, in technical, commercial and
information science subjects. A total of  employees are
taking advantage of this opportunity.
 KPN and its people
TRADE UNIONS AND EMPLOYEE PARTICIPATION
Employment opportunities will continue to decrease at KPN in the
coming years. The company’s requirements concerning education
and work experience will also change. There is a shift in emphasis
from a physical infrastructure to a software structure and this
necessitates a different kind of know-how. To make this transition,
the company will regularly consult with the unions and works
councils.
In the year under review, the company discussed with the central
works council and the divisional works councils the current and
coming reorganizations like those at the Fixed and Mobile
divisions. The main item discussed at a national works councils
day in autumn was the transition from a traditional telecom
company to a software-driven ICT company that is capable of
withstanding competition in the global telecommunications
market. The unions participated in this discussion.
The company worked with the unions and the central works
council in autumn  on a new mobility agreement. Clearly
defined intentions were set down about active workforce
planning, including training courses to improve employee
quality and stimulate lasting employability and mobility.
E-Plus and BASE also consulted regularly with the central works
council and unions. In , E-Plus agreed a new collective labor
agreement with the central works council. BASE agreed a new
social plan with the unions in  that includes modernized
regulations for severance.
HEALTH AND SAFETY
Like every other company, KPN must satisfy the requirements of
the Health and Safety Act. The Act seeks to guarantee safety,
health and welfare at the workplace. Among other things,
the Act requires an employer to enlist the services of experts for
such matters as policy on absenteeism, risk analyses and risk
assessments. The Act also defines rules concerning safety and
accidents at work.
Health and safety
KPN devotes considerable attention to the health and safety of
its employees. We have an extensive range of policy measures in
place to address these subjects. A risk analysis was carried out to
define the risks at each division for employee health and safety
to allow managers and employees to take measures. The risk
analyses at KPN are carried out by the Health & Safety Service in
consultation with the works council. In , (complete or partial)
analyses were performed at six of the  parts of the KPN group.
                      
Special attention was directed in the year under review to the
dangers of microwave links for our personnel and safety during
work at telephone exchanges.
The risk analysis was followed by the framing of a plan of action
that clearly describes how problems will be resolved. This is a
multi-year plan under which a report will be produced each year
on the matters that have been addressed. Similarly, the company
will agree with the works council each year whether the risk
analysis is up-to-date. An update occurred at several parts of the
KPN group in .
Employee safety is the number-one consideration during work
that involves hazardous substances, glass and rockwool, ladders
and laser equipment. At its offices, KPN devotes attention to the
set-up of workstations and has produced instructions for
working with monitors. We have set down special guidelines
for ensuring health and safety during work employees perform
at our customers’ premises, for example at great heights or in
contaminated soil, and for teleworking from home.
Four large parts of the KPN group were certified in  under
the ‘Contractors Safety, Health & Environment Checklist’, an
objective and structural examination of health, safety and welfare
at service-providing companies.
We also performed a risk analysis at the  mobile sites of the
mobile network (MobiRail) that Netherlands Railways put into
service. Some sites were modified on account of the health and
safety of employees.
In preparation for the planned amendment of the Health and
Safety Act with regard to the risks of radio waves, KPN performed
a risk analysis and assessment in . It was approved by the
accredited health and safety organisation Arboned. The
assessment showed that the risk is minimal for KPN employees
and other people. Talks held with the Labor Inspectorate and the
works council focused on the provision of instructions for work
involving risks. KPN is a front-runner in this field and will do its
utmost in the years ahead to optimize the safety of its own
employees and third parties.
Together with the other mobile operators, KPN has developed a
free software package that allows other companies that perform
work on roofs where GSM, UMTS and other antennas are located
to make a risk analysis and assessment at each location.
                      
Accidents at work
KPN has a legal obligation to keep records of accidents at
work and to report serious accidents to the Labor Inspectorate
(a requirement under Section  of the Health and Safety Act).
We have put in place a special procedure for this purpose.
The KPN Security & Integrity Helpdesk keeps records of every
reported accident and regularly reports to the KPN Board of
Management. There were no serious workplace accidents
in .
The recording and analysis of accidents and near-accidents at
work and unsafe situations and activities are important tools in
determining measures and improvements to prevent accidents.
SICK LEAVE
Following the substantial .% drop in absenteeism through
sickness at KPN in the Netherlands in , there was a further fall
in , from .% in December  to .% in December .
The sick leave rate in Germany was .% in . In Belgium
it was .%.
The ongoing reduction of sick leave is a trend observable at
other companies as well. The reduction of sick leave at KPN in
the Netherlands by .% within one year was achieved through
means including a fast reintegration process. Two other factors
play a role. Firstly, an employee is reintegrated primarily in his
or her own position. KPN provides assistance in finding other
suitable work only if an employee is medically unable to perform
his/her own work any longer. Secondly, KPN strictly applies the
guidelines of the NVAB (Dutch Association for Medical Services
in Industry) concerning ‘psyche’ and ‘exercise’ and conflicts
at work are not allowed to result in a person reporting sick.
Similarly, KPN does not report employees sick if they are on leave
to care for another person (child, a partner, parent), although
subject to consultation there is scope for finding an acceptable
solution.
The annual influx per  employees was .% in .
This compares with .% in the previous year.
COMPANY EMERGENCY SERVICES
KPN maintains an in-company emergency services organisation
in accordance with regulations laid down by law. A total of
, employees are voluntary members of our in-company
emergency services. They receive training in elementary first aid,
elementary fire fighting and evacuations. Each year there are
refresher courses. In , a total of  voluntary members
received a refresher course. Constant attention is devoted to
KPN and its people 
 keeping evacuation plans and maps in the company’s buildings Special consultants of KPN Security carry out internal
up-to-date. At one of its large offices, KPN is conducting a trial investigations into integrity issues. They perform their work
with the ‘Automatic External Defibrillator’ (AED) for resuscitation. within the constraints of the procedure for integrity investigations
The safety employees at E-Plus receive special training each year and the code of conduct for integrity consultants.
on how to act in the event of accidents and health problems.
The company consulted with the central works council in 
DIVERSITY AND RESPECT on the use of disciplinary measures within KPN. Based on the
The position of women in the KPN organisation and their outcome, the company has set down a sanctions policy in a
opportunities to build careers received explicit senior ‘Procedure for disciplinary measures’.
management attention in . Among other things, there
was a meeting with female employees with career ambitions
so as to launch more initiatives in this field. KPN has facilities
designed to remove obstructions standing in the way of female
employees’ careers. They include childcare, part-time work and
saving for care leave.

KPN is working in various ways to prevent discrimination.

The company recognizes the need to choose words carefully
when communicating internally and externally. This is one of
the matters covered in the KPN Company Code. Employees
who consider management decisions discriminatory or
inappropriate are able to submit the matter to KPN’s general
complaints committee and the KPN Security & Integrity Helpdesk.

COMPLAINTS PROCEDURE AND DISCIPLINARY POLICY

KPN has rules and a procedure for dealing with complaints. An
employee who believes that he/she has been disproportionately
prejudiced by a decision or act by the company has the right to
lodge a complaint. Before making a decision on the complaint,
the manager concerned is required to seek the advice of a
complaints committee according to a procedure laid down in
consultation with the central works council. The same procedure
applies to discussions concerning possible adverse consequences
of reorganizations for individuals. A total of  complaints were
lodged at KPN in .
E-Plus and BASE have their own complaints procedures. E-Plus has
made preparations for introducing a whistleblowers procedure.

Employees may report violations of the KPN Company Code to

the KPN Security & Integrity Helpdesk. Employees confronted
with inappropriate behavior at the workplace are able to contact
a specially appointed confidential counselor. The KPN collective
labor agreement and Company Code set out the company’s
disciplinary policy in the event of breaches of the Company Code,
other violations or inappropriate behavior.

 KPN and its people                       

                       KPN and its people 
 The healthcare sector is under pressure because of an ageing
population, spending cuts and personnel shortages. ICT can
significantly increase the sector’s efficiency and effectiveness.
Together with key partners in the healthcare sector, KPN is
providing solutions to issues (including medical issues) caused
by these circumstances. In association with Amsterdam’s
AMC hospital, KPN has developed a mobile broadband
solution for safer movement of intensive care patients by
ambulance from one hospital to another.
KPN and society
‘KPN is literally a promising CSR company. It has
all the ingredients. It’s now a question of seizing
those opportunities. Through its history, KPN is
firmly rooted in society and does a lot to fulfill its
role in the community. But there are still some
gains to be made in terms of the underlying
vision and its embedding in the organisation.
The difficult times KPN is now experiencing make
it essential to search for the opportunities that
corporate social responsibility offers’.
Johan Wempe, Director, CSR Netherlands
Introduction
Telecommunication has become an indispensable part of the
lives of most people and companies. It is no exaggeration to
say that telecommunication is one of today’s necessities of life.
As a telecommunications company, KPN operates at the heart
of society. We chose our company’s slogan – ‘Always in touch:
KPN’ – to reflect this situation. KPN believes that its products
and services bring people closer together.
Society
CONTINUITY AND AVAILABILITY
Telecommunication was designated in  as one of the ‘socially
vital’ sectors. KPN directs considerable attention towards the
continuity and availability of the services that it provides. Within
the Fixed division, for example, we have launched a program to
strengthen the availability of the KPN network even further and
improve it where possible.
KPN loyally plays its part in discussions and initiatives in
society, like:
• the National Telecommunication Continuity Plan (Nacotel);
KPN made an active contribution in  to the modernization
of the Nacotel Covenant (Nacotel II);
• the National Anti-Terrorism Action Plan (vulnerability and
cohesion of vital infrastructures); KPN cooperated in  in
                      
the vulnerability analyses the government carried out as
part of its anti-terrorism efforts;
• Vulnerability on the Internet (KWINT).
INFORMATION SECURITY
More and more companies are outsourcing their ICT infra-
structures to KPN. This gives KPN shared responsibility for the
security of the business operations of its customers. We have
aligned our information security policy to international standards
(BS , the Information Security Code in the Netherlands and
the Baseline of the Federal Office for Information Security for our
activities in Germany, with guidelines for privacy and protection
against data loss). The Dutch Central Bank (De Nederlandsche
Bank) requires affiliated banks to satisfy the Basel II agreement
that prescribes BS  certifications. With this in mind, KPN has
certified one CyberCenter; the others are ‘BS -compliant’.
Large companies as well as banks attach great importance to
the uninterrupted availability of business-critical data and to
certification. Various parts of the KPN group began work on
certification in  based on the Information Security Code.
These steps demonstrate to our customers and the government
that KPN’s management has taken measures to make services
and privacy-sensitive data secure. KPN makes its contribution
to initiatives in society in this field and is a member of the
Information Security Committee working group of VNO/NCW
(Confederation of Netherlands Industry and Employers).
KPN has its own Computer Security Incident Response Team
(KPN-CERT). The team proactively supports customers in assuring
the security of their company networks, and also the networks
across which KPN provides its services to its customers. KPN-CERT
works closely with European CERT/CSIRT teams for companies and
authorities and participates in the Forum on Incident Response
and Security Teams (FIRST). This forum exists to ensure effective
cooperation and harmonization in the prevention of misuse of
the Internet.
RESPECTING PRIVACY
The Netherlands has numerous laws and regulations to protect
the privacy of private individuals. KPN observes all of the rules.
Among other things, we adhere to the provisions of the Data
Protection Act by notifying the Dutch Data Protection Authority of
our processing of personal details of our customers. The authority
oversees compliance with and application of privacy laws. To
provide all our customers with information about how KPN
respects their privacy, we have published a brochure entitled
‘What KPN does with your personal data’. The brochure is also
available on the Internet at www.kpn.com. KPN has further
KPN and society 
 devoted attention to the subject of privacy by means of various
newsletters and enclosures with telephone bills, concerning
such matters as ex-directory phone numbers. E-Plus and BASE
have clearly set out their privacy protocols on their websites.
COMMUNICATION DURING DISASTERS
KPN safeguards communication between authorities like
ministries, municipalities, fire brigades and the police in the
event of disasters. The National Emergency Network was created
for this purpose. KPN manages the network on behalf of the
Ministry of Economic Affairs. It is a national network for voice,
fax and data communication (via modem) and is largely separated
from the public networks. The National Emergency Network is
used if the regular networks fail for reasons such as major
breakdowns, floods or local disasters.
On the government’s instructions, in  KPN introduced the
uniform European emergency number  for emergencies where
every second counts. KPN ensures that  calls originating from
other fixed and mobile operators are also handled correctly.
We monitor the working of the  service continuously by
means of an advanced  test system known as Call Generator
. Extra measures have been taken to increase the availability
of help in emergencies reported on , by such means as circuit
reservation that always keeps a line free for  calls on the main
trunks in the infrastructure. The Ministry of the Interior and
Kingdom Relations renewed the contract with KPN for this service
for five years in December .
KPN introduced a new service for municipalities and other
authorities in . It is called ‘Crises and Disasters Services’.
The service was developed to safeguard the continuity and
reachability of municipalities and other authorities during
disasters. Research conducted by NIBRA (the knowledge and
training center of the fire brigade, emergency medical services,
crisis control and disaster prevention) and the Red Cross revealed
that in many instances the normal infrastructure is not able to
cope with the enormous stream of communication that occurs
following a disaster. KPN’s services were hitherto provided on
an ad-hoc basis. With the new ‘Crises and Disasters Services’,
KPN has made sure that in emergencies municipalities
and other organizations will immediately have essential
telecommunications facilities at their disposal. KPN provides
the service on a subscription basis for a low monthly tariff and
does not bill incurred costs unless a disaster actually occurs.
 KPN and society
Products and services
KPN plays a leading role in developing broadband Internet and
distributing information. The growing use of mobile and data
services is driving a growth in the fixed networks. Literally and
figuratively, the fixed telephone network is the backbone of
telecommunication and of the networked economy. KPN
recognizes that it is only possible to provide reliable high-quality
communication services if the fixed networks offer sufficient
quality and capacity. Communication solutions and infrastructures
have been seamlessly connected to offer customers dependable
and safe access to information and applications.
CONSUMER HEALTH AND SAFETY
KPN recognizes the importance of safeguarding the health and
safety of its customers. We always choose the right equipment,
technologies, employees, partners and access. All the products
and services that we offer at least satisfy European and
international legislation.
Mobile communication and health
Mobile communication was in the news frequently in  with
reports about radio waves and safety. KPN began rolling out its
UMTS radio network in . This has been accompanied by the
building of hundreds of base stations, which caused considerable
disquiet among concerned residents. KPN is convinced that
mobile communication is safe, but we recognize that members of
the public have questions about its health aspects. At KPN we are
sincerely committed to making sure that our conduct of business
does not jeopardize public health. Not all consequences of mobile
communication have yet been conclusively identified for the long
term. For that reason, we added safety margins (a factor of ) to
the scientific standards currently known for installing antennas
and their transmitting power. This offers ample basis for safely
continuing our current conduct of business while at the same
time increasing scientific knowledge.
Scientific proof
At present no scientific evidence is available to show that
exposure to radio waves below the ICNIRP guidelines poses a
threat to health. TNO published a research report (Cofam) in 
that suggested a possible relationship between a reduced sense
of wellness and the proximity of UMTS or UMTS-like radio waves.
However, the Dutch government sees no reason, even after
consulting bodies like the Netherlands Health Council, to alter
government policy concerning the installation of GSM and UMTS
base stations; but a follow-up study (replication study) has been
initiated to obtain greater clarity. The results of this Swiss study
will be announced in the course of . The Health Council,
                      
which consists of a group of leading independent scientists,
keeps a permanent watch on any scientific facts that contribute
to the general insight into radio waves and health. The council
reaches conclusions based on multiple studies and critically
examines the quality of the test method and measured results.
Research
KPN’s responsibility does not end there. We fund research
because a greater insight into this matter is in everybody’s
interests: the public, the business community and the
government. In , E-Plus spent EUR . million on this specific
research alone. With the other Dutch mobile operators and the
government, KPN agreed the National Antenna Policy in ,
which includes provisions limiting the exposure of people to
fields originating from antenna systems. This voluntary
agreement further includes safeguards that justify the assumption
that the actual exposure will generally be substantially less than
the reference values. The agreement further embodies a consent
procedure for occupants of residential buildings where operators
want to install a base station. KPN is watching developments in
this field worldwide and continues to apply stringent safety
standards for base stations and mobile phones.
SERVICES FOR PEOPLE WITH LIMITATIONS
People with physical limitations are extra reliant upon
telecommunication for their participation in mainstream society.
For this group of people, KPN offers some specific services: the
text telephone service for the deaf and hard of hearing and the
telephone directory service for the blind and people with
impaired eyesight. The text telephone service is an adapted
service that allows the deaf and hard of hearing to communicate
with the hearing world. Employees are available at the call center
day and night to convert a spoken message into written text that
can be read out on a specially designed device, and vice versa.
For this service KPN keeps people available round the clock
seven days a week to assist the deaf and hard of hearing.
Telecommunication helps bridge the divide between deaf and
hearing people. In , the text telephone service dealt with
, calls compared with , the year before. One of the
reasons for the decrease is that some people in the target group
are making more intensive use of other means of communication
like mobile phones and the Internet.
KPN offers the telephone directory service in association with
the Dutch Council for the Chronically Ill and Disabled for people
unable to use normal telephone directories because of a visual
limitation. The service comprises a helpdesk and the freephone
number . A total of , people used this service in ,
the same as in .
                      
Thanks to new developments, KPN’s products and services are
becoming accessible to a growing group of users. Mobile phones
contain more and more features that are useful to various target
groups. MMS, mail, SMS and vibrating batteries are usable to
good effect by the deaf and hard of hearing, for example. KPN is
therefore integrating adapted services into its product portfolio
to the fullest extent possible.
The KPN range further includes the Biarritz telephone for the hard
of hearing. The set has an amplifier and an inductive loop for
hearing aid users. In cooperation with the National Police Services
Agency (KLPD), KPN makes sure that the  emergency number
is always reachable via the text telephone service by people with
a limitation.
KPN attaches considerable importance to ensuring the
accessibility of its website www.kpn.com to people with
a limitation. We endeavor to keep the site as far as possible
in line with the ‘Get rid of thresholds’ declaration that we
signed in .
KPN regularly consults with the authorities and interest
organizations with a view to meeting specific needs. Some
products adapted for or indispensable to the disabled qualify for
reimbursement by insurance companies or are tax-deductible.
Since , BASE has been urging and defending the freedom
of communication under the ‘Freedom of Speech’ banner. Partly
for that reason, BASE signed an agreement with the FFSB, the
Walloon society for the deaf, concerning mobile telephony for the
deaf and hard of hearing. The agreement provides for a low-cost
tariff plan based on i-mode (mobile Internet). BASE is also holding
talks with other Belgian associations that represent the deaf.
Since February , the deaf have been able to obtain more
information on a separate page of the BASE website at www.base.
be/nl/FSSB.html. E-Plus has no services specifically for this target
group.
KPN and society 
 DEVELOPMENT OF BROADBAND SERVICES FOR THE
COMMUNITY
KPN is not merely a company that installs broadband
infrastructure for fixed networks (ADSL, fiber-optics) and mobile
networks (UMTS). We also develop broadband services that serve
the community. At KPN we believe that fixed and mobile
broadband solutions have significant advantages for society.
The company is actively involved in various initiatives in the
community in the fields of education, safety and healthcare,
in each instance with partners who need services of this kind.
Examples in  are Home Care Online and the pilot projects
of KPN Mobile with the AMC university hospital and the Waag
Society of Amsterdam.
The purpose of all these projects is to study and demonstrate
the usefulness of broadband applications for society. First and
foremost, KPN wants to give substance to its role in society as
a major player in the Dutch telecommunications market. The
objective in the long term is to generate business. For a certain
period of time, KPN is providing means and knowledge free of
charge. After the pilot phase, we will examine whether these
initiatives are viable commercially.
Broadband services for education
The most important project launched by KPN in  in the
educational field was the offer of free broadband Internet access
to all schools in the Netherlands. For three years, schools can
take advantage of this offer via KPN’s subsidiary XSALL. More
information can be found in the paragraph Social sponsorship.
In cooperation with the Montessori school in Amsterdam,
KPN and the Waag Society have started an innovative ‘mobile
learning’ project. It is a city game that uses the UMTS network
to let junior grade secondary school pupils experience history
actively instead of passively. The players go around the city in
groups. Mobile video communication gives them contact with
a base from which they receive instructions via a GPS system.
KPN and the Waag Society regard this as an experiment that
provides a good opportunity to gain experience with using this
new technology in education. Pupils played the game for the
first time in early  during a ‘game week’.
 KPN and society
Broadband services for safety purposes
As the country’s largest Internet provider, KPN takes its social
responsibility seriously, particularly as regards safe use of the
Internet by children. Parents need information to be able to give
their children a good ‘Internet upbringing’. Since February ,
the website www.mijnkindonline.nl has been meeting this need.
The site was created by KPN’s Internet service provider Planet
Internet in cooperation with Parents Online (www.ouders.nl),
the largest Internet community for parents. By analogy with this
step, KPN launched the website www.mijnleerlingonline.nl in
cooperation with Planet Internet in November . This site
provides tips for primary school teachers on how to ensure the
safe use of the Internet in education. The restyled Kids Planet
was launched early April ; the site has not only been made
more interactive and playful, it is now a calm and above all
safe Internet environment where children can use the Internet
without problems.
Besides providing commercial security products like spam
filters, anti-virus programs and firewalls, Planet Media Group
devotes permanent attention to preventing and combating
the distribution of spam and viruses by its own customers.
The Abuse department has four employees who work full-time
on these activities. The department consults with competitors
on the shared problem of spamming and the spread of viruses
and participates in international consultations on this global
problem.
KPN Mobile is involved in a UMTS-based service called Crash
Recovery System. The service is a new initiative of Moditech
Rescue Solutions that focuses on the rapid provision of
information for the security and emergency services sector.
Crash Recovery System combines a very extensive database of
vehicle data with provision of high-speed data connections to
emergency service workers. This gives the emergency services,
particularly the fire brigade, instant access at the scene of an
accident to the information needed to deal with accidents quickly
and properly. The chief focus is safely and quickly freeing victims
of road traffic accidents. KPN helped make this new service
possible. The pilot projects conducted in  in the Groningen
and central Gelderland regions were successful. The fire brigade
organizations will examine in  whether they wish to
purchase this system.
                      
E-Plus provides positioning services for road traffic accidents and
breakdowns. An accident or breakdown can be reported to the
incident room of insurance company GDV. Callers who are unsure
of their exact location can give their permission for it to be
determined by means of their mobile phones.
Broadband services for the care sector
The care sector is under pressure because of an ageing population,
spending cuts and staff shortages. ICT can significantly increase
the efficiency and effectiveness of care. Together with key
stakeholders in the care sector and its business partners, KPN
provides solutions to the issues – including medical issues –
that these circumstances have created. They are not purely
technology-driven solutions, but they were created out of a
medical need or for the purpose of supporting a new way of
providing care. Examples are MedWire, Tele-Acs, Home Care
Online and Clinic Lounge. Mid- KPN will launch a website
on www.kpn.com which will be aimed specifically at the care
sector.
MedWire
MedWire and Tele-Acs are cardiological pilot projects in the
Zwolle region. Numerous different institutions and care providers
are involved in providing cardiological care. They include
hospitals, general practitioners and dispensing chemists. They
use different systems that are not always properly harmonized.
The result is that communication and the exchange of data
between these parties is less than perfect, sometimes with far-
reaching consequences. MedWire is improving communication
without the need for any care institution to make radical changes
to its automation system. Calculations have proven that better
communication can prevent  fatalities in the Netherlands
each year and save EUR . billion.
Tele-Acs
Thanks to Tele-Acs, cardiologists can see what is happening
in ambulances and make life-saving decisions. This service
sends data (like ECGs) and images from an ambulance to the
cardiologist via GPRS and UMTS of KPN. Using this information,
the cardiologist is able to determine what treatment is necessary
and where it can best be provided. This is important because the
closest hospital is not always the most suitable one. Therefore,
MedWire and Tele-Acs have double advantages: they increase
the chance of survival of heart patients and enable hospitals to
improve utilization of their staff and specializations.
                      
MICU-Connected
A similar research project is MICU-Connected that KPN Mobile
launched mid- in association with the AMC university
hospital in Amsterdam. Owing to a shortage of beds or because
of the need for better care, intensive care patients sometimes
have to be moved between two hospitals in the Netherlands.
The purpose of this project is to transport and tend IC patients
with greater safety with the help of GPRS/UMTS. During the
journey, all the patient’s data are recorded and transmitted via
GPRS to the AMC. The intention is for the hospital to have live
video links with the ambulance via UMTS in due course and for
the doctor to provide effective support during a journey from
a location outside the ambulance in the event of a need for
resuscitation.
Home Care Online
The demand for care at home is growing explosively because of
an ageing population and shorter hospital stays. Care institutions
can provide care remotely by means of ThuisZorgOnline (Home
Care Online). Using a touch-screen monitor, senior citizens can
contact the home care organisation at any time to consult a
medical expert. The expert immediately sees the patient’s details
on the screen. If necessary, the patient can be referred to a doctor
or another care provider. The senior citizen and home care worker
can even have a chat if they wish. This helps protect older people
from social isolation. It will be possible in due course to expand
the platform effortlessly by adding non-commercial and
commercial services, ranging from ‘self-management’ by the
chronically ill to tele-monitoring and maintaining contacts with
people in a similar position. KPN will support this service
commercially from .
Clinic Lounge
Clinic Lounge is an initiative of Groningen’s Martini Hospital
and AT Osborne management consultants. It is an Internet-based
environment where patients can view information about their
medical condition and quickly find their way through the medical
world. Clinic Lounge helps a patient through self-management.
A patient can monitor and manage his or her health at home.
Twenty diabetics and kidney dialysis patients are participating in
the pilot project. The offered services include ordering medicines,
making an appointment online, e-mailing X-rays and test data for
online diagnosis, digital consults and electronic patients’ records.
KPN provides a closed healthcare environment that includes
hardware and hosting.
KPN and society 
 ACCESSIBILITY OF PRODUCTS
A cash prize was awarded on  January  for a competition
focused on ADSL. The competition was set up by KPN’s Internet
service providers Planet Internet and Het Net. Residents of
municipalities were invited to get as many ADSL applications as
possible in their town or village. The one with the most ADSL
applications for ADSL of Planet Internet and/or Het Net received
the bonus prize. KPN made the winning area ready for ADSL after
receiving  entries. The competition definitely contributed to
the faster opening-up of rural areas for ADSL. There is now %
ADSL coverage of rural areas in the Netherlands.
To simplify the switch to ADSL for consumers, KPN introduced
an offer of free installation by an engineer. As not everybody is
able or willing to know everything about computers, KPN offers
its ‘In-House Service’. If a computer problem is not due to the
Internet connection, the helpdesk can send a KPN engineer to
the customer’s home to provide assistance in resolving problems
in the computer hardware, modem or other equipment.
QUALITY
KPN focuses strongly on customer satisfaction and quality. We
attach great importance to raising customer satisfaction and
strengthening customer loyalty. An independent organisation
regularly measures customer satisfaction for us. The results
published in monthly and quarterly reports reveal areas where
customers expect better performance. KPN has initiated targeted
improvement projects centrally and locally to sharpen its
customer focus.
Together with the TNS NIPO research institute and pupils from the
Nova college of Amsterdam, KPN carried out a survey in  and
early  to determine customer satisfaction and Internet usage
among ethnic minorities in Amsterdam. The purpose was to
familiarize pupils with the Dutch business community and with
the performance of market research and customer surveys.
KPN is a business partner of the Netherlands Quality Institute
(INK). INK supports KPN in its drive for business excellence. The
institute presented a quality award in  to part of the KPN
group (Carrier Services business unit) based on an external audit
(INK Improvements Certificate). This recognized the business
unit’s continuous and systematic improvement of performance.
KPN became a member of Questforum (Quality Excellence for
Suppliers in Telecom) in . Questforum has developed a
quality system called the TL  standard for controlling
suppliers of telecom operators. It is based on the ISO 
standard, but focused on the relationship that exists with
 KPN and society
a telecom operator’s suppliers. KPN began using the quality
system in  for a select group of suppliers. We expect this
to produce a better insight into and control of the quality of
the products and services provided by suppliers.
IDEAS MANAGEMENT
Ideas submitted by KPN employees in  produced a net
saving for the company of EUR . million. This is an increase
of EUR . million (%) compared with . KPN paid out a
net total of EUR , to reward employees for their ideas.
The active involvement of employees clearly earns money for
KPN and its employees alike.
A total of , ideas were sent in during . This is an increase
compared with the , received in the . The overall saving
for KPN is made up of numerous small savings and some large
ones. No fewer than  employees received a payment of EUR
, or more, including five who got the maximum EUR ,.
ADVERTISING
KPN has formulated basic principles for its advertising in the
contract with its advertising agency. Among other things, we
require that all marketing activities and results satisfy all legal
requirements and other regulations concerning communication
for marketing purposes. All our commercial advertising is checked
for compliance with the Netherlands Advertising Code.
KPN received  complaints through the Netherlands Advertising
Code Committee in . The commission ruled in  of these
cases that KPN had breached the Netherlands Advertising Code.
Another two complaints were subsequently withdrawn by the
people who lodged them. No action was taken on six complaints.
Reasons for the complaints vary. In many cases, the Advertising
Code Committee holds advertising to be in violation of Article 
of the Advertising Code. This article stipulates that advertising
must not be misleading, particularly as regards price, content,
origin, composition, properties or usefulness of offered products.
The Committee held that under the Code KPN should have
provided fuller information in its advertising about a certain
special offer or the obtainability of certain services for which
nationwide coverage does not yet exist.
Our internal Marketing Communication Board discussed the
complaints and judgments. KPN produces an annual overview of
the number and types of complaints received. We have set down
guidelines for matters we must take into account – sometimes
mandatory – as a result of the amended Telecommunications Act.
                      
Social sponsorship
After a few difficult years financially, KPN announced in 
that it would again invest in the knowledge economy of the
Netherlands. A first step in this direction was to offer free
broadband Internet access and services to all schools in the
country. By way of a follow-up, we formulated a new policy for
social commitment and sponsorship. The central theme of the
policy is bridging the divides that obstruct participation in
mainstream society and the information society. KPN wants to
tackle these divides by deploying its business activities and/or
employees. Our activities focus on the care and education sectors.
Physical and mental loneliness is an important divide in the care
setting that KPN wants to help bridge through its
telecommunications products and services. Our focus in
education is on ensuring early participation in the information
society and knowledge economy. The most important project is
our offer of free Internet access to schools.
FREE INTERNET FOR ALL SCHOOLS
KPN is making a substantial contribution to the Dutch knowledge
economy by offering three years of free Internet access to primary
schools, secondary schools and vocational/adult learning
institutes. It gives young people an early opportunity to familiarize
themselves with broadband Internet and, more importantly, with
the applications and services it makes possible. A well-educated
working population is good for the competitive position of
the Netherlands in the long term. KPN obviously has an interest
in future employees and customers being able to take full
advantage of ICT applications.
Competitors brought legal action against KPN’s offer. KPN lost
a summary hearing on  November  on the grounds of
misuse of a dominant position. We lodged an appeal against
this ruling and won the case on  March . On  April ,
KPN announced the exact details of the offer.
More than , of the , eligible schools have already taken
up the offer of free broadband Internet access that KPN offers
through its subsidiary XSALL. The surplus ICT budget that
schools now have because they take free Internet access from
KPN is being spent mainly on items like computers and software
packages. Through free Internet access, primary schools can
save up to EUR , over a three-year period. The benefit for
secondary schools can be as much as EUR ,.
KPN organizes school panels a number of times each year
to give stakeholders in education an opportunity to make
known their needs. This allows KPN to arrange its offerings as
                      
effectively as possible. Panel discussions and research by Planet
Media Group revealed the need for a website that provides tips
about safe use of the Internet in the classroom. The website
was launched in November  (www.mijnleerlingonline.nl).
JOHAN KOOIJ FELLOWSHIP
An example of how schools can use their broadband Internet
access for education is the Global Teenager Project, which KPN
has been supporting for some years through the Johan Kooij
Fellowship. In its newsletter sent to schools, KPN drew their
attention to the possibility to participate. Many schools
responded.
KPN has been providing the Johan Kooij Fellowship with annual
contributions of EUR ,. In  we will increase this amount
to EUR ,. The Fellowship was set up in  in memory of
Johan Kooij, former member of the KPN Board of Management
and a champion of communication by means of ICT. The
fellowship wants to reduce the digital divide between North and
South. KPN is cooperating with the International Institute for
Communication and Development (IICD) and Libert Kooij-van der
Kolk. Besides transferring knowledge by educating ICT trainers
from developing nations, the Fellowship undertakes network
activities that bring together secondary school pupils from
various countries via the Internet, the Global Teenager Project.
Ten schools from different countries form a digital community
(‘learning circle’) for six months as part of this project. By means
of chatting and e-mailing, the school children address a variety
of subjects, like freedom, fashion and nature, and get to know
each other’s cultures and customs.
DONATIONS
Senior citizens are an important target group for KPN. The Fixed
division underscored this importance in  by donating EUR
, to the Dutch National Help the Aged Fund to celebrate the
milestone of the one-millionth BelPlus subscriber. The fund will
use the money to set up a telephone helpline that senior citizens
can call for answers to all kinds of questions. The helpline is due
to be launched in autumn .
KPN also made a donation to the Reading and Writing Foundation
that is chaired by HRH Princess Laurentien. The foundation exists
to identify and prevent illiteracy problems in the Netherlands.
Centrally and regionally, KPN has a few other projects that,
within the constraints of its social sponsorship policy, it supports
financially or through services, products or employees.
KPN and society 
 Art
KPN Art & Design regularly cooperates with exhibitions and
museums in the Netherlands and other countries. By lending out
works free of charge, KPN plays an important role in the art and
museum world and at the same time presents its ‘business card’
as a socially committed company. KPN donates reproductions no
longer in keeping with the collection to the Pallieter children’s
hospices.
There are also other ways in which KPN Art & Design gives
expression to the company’s social awareness. By following young
artists at academies and in galleries, KPN fulfils the role of a
modern-day patron. The curator of the KPN collection was one of
the judges of the Young Talent competition in  (a competition
among the most promising arts academy graduates in the
Netherlands) and the design of a phone card was made a project
for students of graphical design at the Utrecht School of the Arts.
KPN Art & Design cooperated in  in a documentary about
artist Jan Schoonhoven, in the production of an educational
DVD by the Groninger Museum about artist Per Kirkeby and in
a postgraduate study at the University of Amsterdam into the
history of art and design at KPN, TPG and the former PTT Telecom.
By joining other companies in the Netherlands in the ‘Netherlands
Corporate Collections Society’ we have established sustainable
cooperation with major corporations like Akzo Nobel, TPG,
ABN AMRO Bank, Rabobank, ING, Interpolis and the large
university hospitals. This allows the organizations to improve
their exchange of knowledge about the different ways corporate
arts collections can play a role in business and society.
We have formulated distinct codes for several matters. They
include an Insider Trading Code that describes how our employees
must treat information regarding ownership of and transactions
in KPN shares. We also have a Code of Conduct for Competition
that provides guidance on how to approach competition issues.
This is extremely important in a market with fierce competition.
KPN does not provide financial contributions to any political
organizations or parties.
The KPN Company Code states that we are in favor of intensive
and fair competition in the interests of customers. Fair
competition means that market players must not misuse the
market situation to win or retain customers. KPN does not
misuse its position as the manager of major communication
networks. We obtain and use information about our competitors
honestly and fairly. In , KPN launched a compliance program
to increase employee awareness of competition and
telecommunication laws. A substantial number of our employees
will attend a mandatory training course as part of this program
in .
KPN neither gives nor takes bribes, either directly or through
agents, and we do not accept any gifts or invitations capable
of influencing decision-making.

A number of KPN managers are supporting cultural institutions

through the Art & Business Foundation. The foundation exists to
strengthen sustainably the management of cultural institutions
by putting them in touch with knowledge and expertise from the
business community.

Doing business fairly

The KPN Company Code sets out what KPN stands for and may be
held accountable for. The code is built on the key values that we
pursue. KPN is aware of its social and ethical responsibilities and
wants to be clear about them. After all, KPN is a company at the
heart of the community. We are a company that influences society
in the same way that society influences us. That is why we expect
all KPN employees to be familiar with the code and to observe
and pursue it in their everyday work.

 KPN and society                       

GRI references
GRI CHAPTER SECTION

Reporting elements
Vision and Strategy
1.1 Vision and Strategy Foreword by the Chairman of the Foreword by the Chairman of the
Board of Management and CEO; Board of Management and CEO;
KPN and corporate social KPN and corporate social
responsibility responsibility (in part)
1.2 Statement from CEO Foreword by the Chairman of the Foreword by the Chairman of the
Board of Management and CEO Board of Management and CEO
Profile
2.1 Organizational profile The company Profile
2.2 Products and services Profile
2.3 Operational structure Profile (in part)
2.4 Organizational structure Profile – Organizational structure
2.5 Countries Profile
2.6 Legal form Corporate Governance – Legal
structure of the company
2.7 Markets served Profile
2.8 Scale of organisation The company Profile – Key financial figures and
workforce
2004 Annual Report 2004 Annual Report
2.9 Stakeholders Foreword by the Chairman of the Foreword by the Chairman of the
Board of Management and CEO Board of Management and CEO
2.10 Contact person(s) for report Foreword by the Chairman of the Foreword by the Chairman of the
Board of Management and CEO Board of Management and CEO
2.11 Reporting period Foreword by the Chairman of the Foreword by the Chairman of the
Board of Management and CEO Board of Management and CEO
2.12 Date of previous report Foreword by the Chairman of the
Board of Management and CEO
2.13 Boundaries of report KPN and corporate social KPN and corporate social
responsibility responsibility (in part)
2.14 Organizational changes The company Profile – Organizational structure
2.15 Comparability with previous KPN and corporate social KPN and corporate social
reports based on organisation responsibility responsibility
2.15 Comparability with previous KPN and corporate social
reports based on information responsibility
2.17 Application of GRI principles The GRI principles have mostly
been applied
2.18 Criteria/definitions used KPN and the economy KPN and the economy
KPN and the environment Environmental performance
KPN and its people Employment opportunities
2.19 Changes in measurement KPN and the environment Energy
methods
2.20 Policies and internal systems Not reported
to enhance accuracy
2.21 Independent assurance KPN and corporate social KPN and corporate social
responsibility responsibility
2.22 Additional information Foreword by the Chairman of the Foreword by the Chairman of the
Board of Management and CEO Board of Management and CEO

                       GRI references 
 GRI CHAPTER SECTION

Governance Structure and

Management Systems
3.1 Governance structure The company Profile – Organizational structure;
Corporate Governance –
Supervisory Board; Board of
Management (in part)
3.2 Independence Corporate Governance
3.3 Board members’ expertise Not reported
3.4 Board-level overseeing Corporate Governance (in part)
processes
3.5 Executive compensation Not reported
3.6 Organizational structure below Not reported
board level with regard to
corporate social responsibility
3.7 Internal principles and codes of Not reported
conduct for corporate social
responsibility
3.8 Mechanisms for shareholders Corporate Governance
Stakeholders
3.9 Selection of stakeholders Not reported
3.10 Approach to consultation Not reported
3.11 Information generated by Not reported
consultation
3.12 Use of information generated Not reported
by consultation
Policies and Management
Systems
3.13 Explanation of precautionary KPN and its people Health and safety
approach KPN and society Products and services; Doing
business fairly
3.14 Externally developed sets of Foreword by the Chairman of the Foreword by the Chairman of the
principles / codes with regard Board of Management and CEO Board of Management and CEO
to corporate social KPN and corporate social KPN and corporate social
responsibility responsibility responsibility
The company Corporate Governance
KPN and the environment Legal frameworks; Purchasing
and suppliers
KPN and its people Employment opportunities;
Trade unions and employee
participation; Health and safety
Society; Products and services;
KPN and society Doing business fairly
3.15 Principal memberships Not listed
3.16 Policies for managing impacts KPN and the environment Waste
3.17 Managing indirect impacts KPN and society Products and services
3.18 Decisions regarding operations The company Profile – Organizational structure
KPN and the economy Personnel
KPN and its people Employment opportunities;
Mobility

 GRI references                       
 GRI CHAPTER SECTION

3.19 Programs and procedures Foreword by the Chairman of the Foreword by the Chairman of the
pertaining to corporate social Board of Management and CEO Board of Management and CEO
responsibility The company Corporate Governance
KPN and the environment Policy and targets
KPN and its people Health and Safety; Company
emergency services; Complaints
procedure and disciplinary policy
Doing business fairly
KPN and society (in part)
3.20 Status of certification KPN and its people Health and Safety
KPN and society Society
Economic Performance
Indicators
Direct Economic Impacts
Customers
EC1 Net sales Foreword by the Chairman of the Foreword by the Chairman of the
Board of Management and CEO Board of Management and CEO
KPN and the economy Introduction; Customers
2004 Annual Report 2004 Annual Report
EC2 Geographic breakdown of The company Profile
markets KPN and the economy Customers
Suppliers
EC3 Cost of all goods, materials, KPN and the economy Suppliers
and services purchased
EC4 Percentage of contracts paid in Suppliers
accordance with agreed terms
EC11 Supplier breakdown Not reported
Employees
EC5 Total payroll and benefits Not reported
Providers of Capital
EC6 Distributions to providers of KPN and the economy Capital providers
capital
EC7 Retained earnings 2004 Annual Report 2004 Annual Report
Public Sector
EC8 Taxes 2004 Annual Report 2004 Annual Report
EC9 Subsidies Not reported
EC10 Donations KPN and society Social sponsorship
EC12 Total spent on non-core Not reported
business infrastructure
development
Indirect Economic Impacts
EC13 Indirect economic impacts KPN and society Products and services –
Development of broadband
services for the community

                       GRI references 
 GRI CHAPTER SECTION

Environmental Performance
Indicators
Materials
EN1 Total materials use other than KPN and the environment Raw materials and consumption
water of materials
EN2 Recycling Raw materials and consumption
of materials
Energy
EN3 Direct energy use KPN and the environment Energy
EN4 Indirect energy use Energy
EN17 Initiatives to use renewable Energy
energy sources
EN18 Energy consumption footprint Not reported
EN19 Other indirect energy use Not reported; chain data are not
known at this stage
Water
EN5 Total water use Water
EN20 Affected water sources Not reported; negligible
consequences for water sources
EN21 Withdrawals of ground and Not reported; no withdrawal of
surface water surface water
EN22 Total reuse of water Not reported; no reuse of water
Biodiversity
EN6 Locations in biodiversity-rich Not reported; as far as is known,
habitats not in biodiversity-rich habitats
EN7 Impacts on biodiversity Not reported; negligible
consequences for biodiversity
EN23 Land for production activities Not reported; data are not known
for entire organisation at this
stage
EN24 Amount of impermeable Not reported; data are not
surface relevant to KPN
EN25 Impacts of activities and Not reported; negligible
operations on sensitive nature consequences for sensitive nature
areas areas
EN26 Status of natural habitats Not reported; negligible
consequences
EN27 Programs for protecting and Not reported; no action planned
restoring ecosystems
EN28 Number of IUCN Red List Not reported; negligible
species consequences
EN29 Planned operations in Not reported; no action planned
protected areas
Emissions, Effluents, and
Waste
EN8 Greenhouse gas emissions KPN and the environment Emissions into the air, water
and soil
EN9 Use and emissions of ozone- Emissions into the air, water
depleting substances and soil

 GRI references                       
 GRI CHAPTER SECTION

EN10 NO x , SOx , and other significant Not reported

air emissions
EN11 Waste Waste
EN12 Significant discharges to water Emissions into the air, water
and soil
EN13 Significant spills of chemicals, Emissions into the air, water
oils, and fuels in terms of total and soil
volume
EN30 Performance of suppliers with Not reported
regard to environmental
aspects
EN31 Production, transport, import, Waste
or export of any hazardous
waste
EN32 Consequences of water Not reported; negligible
discharges for water sources consequences
Suppliers
EN33 Suppliers Not reported
Products and Services
EN14 Significant environmental KPN and the environment Environmental impact;
impacts of principal products Environmental performance;
and services Products and services
EN15 Percentage of the weight of Waste (in part)
products sold that is
reclaimable
Compliance
EN16 Non-compliance with treaties Legal frameworks (in part)
and regulations
Transport
EN34 Significant environmental Not reported; negligible
impacts of transportation consequences
Overall
EN35 Total environmental Not reported; data are not known
expenditures for entire organisation at this
stage
Social Performance
Indicators: Labor Practices
and Decent Work
Employment
LA1 Breakdown of workforce KPN and its people Employment at KPN –
Employment opportunities
LA2 Net employment Employment at KPN – Mobility
LA12 Employee benefits beyond Employment at KPN – Health and
those legally mandated safety; Diversity and respect;
Training and education; Sick
leave; Remuneration policy

                       GRI references 
 GRI CHAPTER SECTION

Labour / Management
Relations
LA3 Percentage of employees
represented by trade union
organizations
LA4 Labor relations, employee
participation
LA13 Provision for formal worker
representation in decision-
making or management,
including corporate
governance
Health and Safety
LA5 Practices on notification of
occupational accidents and
diseases
LA6 Formal health and safety
committees
LA7 Sick leave
LA8 HIV/AIDS policy or program
LA14 Compliance with ILO guidelines
LA15 Formal agreements with trade
unions covering health and
safety at work
Training and Education
LA9 Training per employee
LA16 Programs to support
employability of employees
LA17 Policies and programs for
lifelong learning
Diversity and Opportunity
LA10 Diversity
LA11 Composition of senior
management and diversity
Not reported
Employment at KPN – Trade
unions and employee
participation
The company Corporate Governance
KPN and its people Employment at KPN –
Employment opportunities;
Health and safety
Employment at KPN –
Employment opportunities;
Sick leave
Employment at KPN –
Employment opportunities;
Health and safety
Sick leave (in part)
Not reported; no company
responsibility
Not reported
Not reported
Employment at KPN –
Employment opportunities;
Training and education
Employment at KPN –
Employment opportunities;
Training and education
Employment at KPN –
Employment opportunities;
Training and education
KPN and its people Employment at KPN –
Employment opportunities;
Diversity and respect (in part)
Not reported

 GRI references                       
 GRI CHAPTER SECTION

Social Performance Indicators:

Human Rights
Strategy and Management
HR1 Policies and monitoring KPN and its people Employment at KPN –
mechanisms regarding human Employment opportunities;
rights Complaints procedure and
disciplinary policy (in part)
HR2 Procurement and human rights Not reported; no changes in
relation to 2003
HR3 Performance and human rights Not reported
HR8 Employee training and human Not reported; no changes in
rights relation to 2003
Non-discrimination
HR4 Non-discrimination policy KPN and its people Employment at KPN –
Employment opportunities;
Diversity and respect (in part)
Freedom of Association and
Collective Bargaining
HR5 Freedom of association and KPN and its people Employment at KPN –
collective bargaining Employment opportunities; Trade
unions and employee
participation
Child Labor
HR 6 Child labor Not applicable
Forced and Compulsory Labor
HR 7 Forced and compulsory labor Not applicable
Disciplinary Practices
HR9 Description of appeal practices KPN and its people Employment at KPN –
Employment opportunities;
Complaints procedure and
disciplinary policy
HR10 Grievance system Employment at KPN –
Employment opportunities;
Complaints procedure and
disciplinary policy
Security Practices
HR11 Human rights training for KPN and its people Employment at KPN –
security personnel Employment opportunities;
Company emergency services
Indigenous Rights
HR12 Indigenous rights Not applicable
HR13 Jointly managed grievance Not applicable
mechanisms
HR14 Share of operating revenues Not applicable
redistributed to community

                       GRI references 
 GRI CHAPTER SECTION

Social Performance Indicators:

Society
Community
SO1 Policies to manage impact on Not applicable
local community
SO4 Awards Not applicable
Bribery and Corruption
SO2 Policy and procedures KPN and society Doing business fairly
addressing bribery and
corruption
Political Contributions
SO3 Policy for managing political KPN and society Doing business fairly
contributions
SO5 Money paid to political parties Not applicable
and institutions
Competition and Pricing
SO6 Court decisions regarding KPN and society Social sponsorship
cases pertaining to anti-trust
and monopoly regulations
SO7 Policy for preventing anti- Doing business fairly
competitive behavior
Social Performance Indicators:
Product Responsibility
Customer Health and Safety
PR1 Customer health and safety KPN and society Products and services – Consumer
policy health and safety
PR4 Non-compliance with Not listed
regulations concerning
customer health and safety
PR5 Complaints upheld on the basis Not listed
of health and safety
PR6 Codes of conduct Products and services – Consumer
health and safety
Products and Services
PR2 Product information policy Not reported
PR7 Non-compliance concerning Not reported
product information
PR8 Customer satisfaction policy KPN and society Products and services – Quality
(in part)
Advertising
PR9 Codes of conduct related to KPN and society Products and services –
advertising Advertising
PR10 Breaches of advertising Products and services –
regulations Advertising
Respect for Privacy
PR3 Respect for consumer privacy KPN and society Society – Respecting privacy
PR11 Substantiated complaints on Not reported
the basis of consumer privacy

 GRI references                       
Annexes
TABLE 1. PAPER CONSUMPTION

IN TONS 2004 2003 2002 2001 2000

Paper (internal usage)

Annual Report 23 0 14 n.k. n.k.
KPN Nu 33 38 35 n.k. n.k.
Vacancies newssheet 25 35 48 n.k. n.k.
MZ Krant 6 0 11 n.k. n.k.
PV-KPN 11 0 7 n.k. n.k.

Subtotal internal usage 98 73 115 0 0

Copier paper

Subtotal copier paper 720 703 456 421 0

Internal usage
Multi-purpose paper 41 48 117 385 394
Sets (carbonless copy paper) 4 29 198 222 243
Chain forms 357 1,284 456 513 656
Notepads, etc 0 0 58 71 98

Subtotal internal usage 402 1,361 829 1,191 1,391

External usage
Letterhead paper 121 102 185 193 198
Leaflets, brochures 1,196 1,357 998 1,034 1,204
Labels (self-adhesive) 38 0 51 78 82
Envelopes 753 913 592 607 612
User manuals 92 110 n.k. n.k. n.k.

Subtotal external usage 2,108 2,372 1,826 1,912 2,096

Total the Netherlands 3,230 4,436 3,111 3,524 3,487

International paper consumption

BASE
• for internal use n.k. n.k. n.k. n.k. n.k.
• for external use n.k. n.k. n.k. n.k. n.k.
Copier paper 30 40 n.k. n.k. n.k.
E-Plus
• for internal use 114 0.5 n.k. n.k. n.k.
• for external use 1,050 n.k. n.k. n.k. n.k.
Copier paper 93 91.5 n.k. n.k. n.k.

Total international 1,287 132 0 0 0

Total KPN 4,517 4,436 3,111 3,524 3,487

                       Annexes 
 TABLE 2. CALCULATED NATURAL GAS

2004 2003 2002 2001 2000

Correction factor based on

‘degree days’ in relation to
ten-year rolling average 99.8% 100.4% 93.4% 97.9% 90.4%

Consumption at offices m³ 3,568,532 4,251,056 1,868,035 2,448,510 3,720,971

Consumption at technical buildings m³ 3,393,849 2,007,830 5,034,529 6,336,460 3,511,853
Consumption at Xantic m³ 74,375 84,179 16,812 n.k. n.k.
Other consumption (Retail) m³ 704,515 4,995 n.k. n.k. 257,548
International consumption m³ 1,651,700 545,972 n.k. n.k. n.k.

Total consumption m³ 9,392,972 6,894,032 6,919,375 8,784,970 7,490,373

Floor space at offices m² 565,000 650,000 850,000 1,100,000 n.k.

Floor space at technical buildings m² 1,240,000 1,240,000 1,240,000 1,240,000 n.k.
Floor space at Retail outlets m² 32,590 25,000 n.k. n.k. n.k.
International floor space m² 0 97,409 n.k. n.k. n.k.

Total floor space 1,837,590 2,012,409 2,090,000 2,340,000 0

Consumption at offices TJ 113 135 59 77 118

Consumption at technical buildings TJ 108 64 159 201 111
Consumption at Xantic TJ 2 3 1 n.k. n.k.
Other consumption (Retail) TJ 22 0 n.k. n.k. 8
International consumption TJ 52 17 n.k. n.k. n.k.

Total consumption TJ 298 218 219 278 237

TABLE 3. CALCULATED ELECTRICITY

IN GWH 2004 2003 2002 2001 2000

Green electricity 29 85 12 0 0
Office buildings 80 107 112 104 115
Technical buildings 550 471 460 462 480
Mobile 57 52 50 n.k. n.k.
Other (Burum, Retail, OSG) 18.5 6.4 6.2 7.0 8.2

Total consumption the Netherlands 734 722 640 573 603

International 224 181 n.k. n.k. n.k.

 Annexes                       
TABLE 4. NUMBERS OF LEASED VEHICLES AND FUEL CONSUMPTION

2004 2003 2002 2001 2000

Number of vehicles (the Netherlands) 7,329 7,592 8,500 9,446 9,790

Passenger cars 3,505 3,883 4,332 4,709 4,640
Delivery vans (< 3,500 kg) 3,816 3,701 4,121 4,622 5,036
Delivery and freight trucks (> 3,500 kg) 8 8 47 115 114

Fuel consumption (in 1,000 liters)

Leaded Super 2.0 1.0 0.8 0.7 0.6
Unleaded Super/Normal 4,070 4,180 4,490 4,259 4,539
LPG 186 689 1,103 1,175 2,743
Diesel 9,932 9,939 11,961 12,629 12,474

Total fuel consumption 14,190 14,809 17,555 18,064 19,757

Total fuel consumption (in GJ) 496,392 512,313 605,264 623,414 664,703

Fuel consumption per vehicle

(litres/100 km) 7.2 7.0 6.4 6.4 6.5
Specific consumption (MJ/100 km) 252 241 222 221 219

Total kilometers covered (x million) 197 213 273 282 304

Number of vehicles (international) 1,224 1,385 n.k. n.k. n.k.

International fuel consumption (in GJ) 122,382 105,840 n.k. n.k. n.k.

Total international kilometers covered

(x million) 34 17 0 0 0

                       Annexes 
 TABLE 5. CALCULATED CO EMISSIONS
²

IN KILOTONS 2004 2003 2002 2001 2000 1999

Calculated CO emissions
²

Indirect energy consumption

Grey electricity 454 370 413 384 405 398.574
Green electricity –19 –57 –8 0 0 0

Direct energy consumption

Natural gas 14 11 13 16 15 15.986
Fuel for vehicle fleet 37 38 45 46 49 41.35
Diesel oil for emergency power
generators 0.3 0.3 0.5 0.9 0.0 0.898

CO Total the Netherlands 484.8 362.2 463.6 447.2 468.0 456.8

²

Calculated CO emissions
²
international

Indirect energy consumption

Grey electricity 150 121 n.k. n.k. n.k. n.k.
Green electricity 0 0 n.k. n.k. n.k. n.k.

Direct energy consumption

Natural gas 3 1 n.k. n.k. n.k. n.k.
Fuel for vehicle fleet 9 8 n.k. n.k. n.k n.k.
Diesel oil for emergency power
generators 3.6 10.2 n.k. n.k. n.k. n.k.

CO Total international 165.8 140.5 n.k. n.k. n.k. n.k.

²

TABLE 6. WASTE QUANTITY

IN TONS 2004 2003 2002 2001 2000

Waste streams
Facility waste 4,319 5,729 7,380 10,062 9,.934
Hazardous waste 25 36 46 83 121
Cable remnants 167 133 551 1,096 1,209
Technical materials 79 95 103 221 694
Process waste 625 898 1,261 1,311 1,772
Commercial waste 322 271 403 586 752

Total 5,539 7,162 9,744 13,360 14,483

 Annexes                       
TABLE 7. STORAGE TANKS

SITUATION STORAGE TANKS NUMBER OF TANKS TOTAL STORAGE CAPACITY

(X MILLION LITRES)

2004 2003 2002 2001 2004 2003 2002 2001

Above ground Netherlands 201 198 198 198

Below ground Netherlands 139 146 146 146

Total the Netherlands 340 344 344 344 3.44 3.47 3.20 3.20

International situation
Above ground international 207 228 n.k. n.k.
Below ground international 0 0 n.k. n.k.

Total international 207 228 n.k. n.k. 0.12 0.12 n.k. n.k.

                       Annexes 
 Colophon
Published by
Koninklijke KPN N.V.
P.O. Box 
 GA The Hague
The Netherlands

Chamber of Commerce The Hague,

registration number    

Graphical design
Smidswater strategy > concept > design, The Hague

Editorial support
Poseidon Communicatie, Voorburg

Translation
DBF Communicatie B.V., Alphen a/d Rijn

Photography
Jeroen Dietz, Amsterdam

Coordination
Corporate Communications

 Colophon                       