Ladies and gentlemen, I would like to welcome all of you on the annual shareholder meeting from our headquarters in Rotterdam. We are very happy that, again, this year we can welcome you both physically and virtually. This means thet our shareholders can be present here in person or in the virtual space, and can take part to this meeting, including asking questions and casting their votes. As the Chair of the Supervisory Board, I will chair the meeting of today. I would like to appoint Mr. Spanbroek as secretary of the company and also secretary of the meeting. I'd like to introduce the people present here behind this table. We have the members of the Executive Board and Supervisory Board, and also here in the room we have Mr. Verhagen and Mr. Momb of EY Accountants. Ms. Leemrijse, notary in Amsterdam.
She will draft the minutes of the meeting. On behalf of the Central Works Council, represented here by the daily board, and Rike Kroesen, the candidate members of the Supervisory Board, Messrs. Nooteboom, Heemskerk, and Dijkhuis, here at the front, and you will see them later on, and they will talk to you when we get to the item of the agenda of appointments. The meeting was convened in a timely manner and in conformity with all the formalities and legal requirements by placing a convocation on the website of KPN on the 1st of March, 2023. Before I continue with a number of formalities and announcements, I would like to point out the press release that was issued on the 27th of March in relation to the composition of the Executive Board. In this press release, it was announced that Mr.
Fouladi and Mr. van Overbeke will step down from the Executive Board as per the 1st of May. The intention was announced to appoint two new members in the Executive Board as per the 1st of June, Mr. Stammeijer and Ms. Vergouw. She currently is a member of the Supervisory Board, and she will step down from that board as soon as she is part of the Executive Board. We will organize very soon a extraordinary meeting of shareholders that will take place on the 31st of May. We will have on the agenda the Supervisory Board nomination, and also we will address the vacancy that will occur because of Ms. Vergouw stepping down from the Supervisory Board. That press release of the 3rd of April states the following, we also have the intention to nominate .
Ms.De Jager as a member of the Supervisory Board. Looking at these two nominations not being on the agenda for the meeting today, I would like to address all the other issues, not these ones. Again, some formal announcements, amongst which, first of all, a remark about the voting process. Those who are participating virtually can cast their votes real-time, remotely, if they are logged in on the voting platform through their own smartphone, computer or tablet. Shareholders who are present here also have their smartphone to vote with, or tablet, or they were given a tablet upon registration. To cast your vote, again, you need to be logged in to the voting platform. With the registration desk, you have received instructions.
To the extent that you have not logged in yet to the voting platform, I would like to ask you to do so now, because we will close the registration in a few moments. You can cast your vote on all voting items already, if you wish, now, if you are logged in on this voting platform. Only at the end of the meeting, however, before any other business, the voting will be closed, and then the results for all voting items and resolutions will be announced after any other business. This is how we keep the meeting orderly, and we keep it without delays, and we hedge for possible internet connection problems. Another remark about the language. The language spoken in this meeting is Dutch.
Some members of the executive board and supervisory board do not speak Dutch, and to the extent that they will speak, they will make a contribution in English. For the Dutch translation of that, you can use the headphones and press option one, which is translation into Dutch. Questions can be asked both in Dutch and English. A remark for our foreign guests. The meeting will be translated in English and questions can be asked in English. Answers will be given in Dutch and translated into English. About asking questions. As announced on our website, the following possibilities have been included for asking your questions. For those of you present here, if you wish to take the floor during the meeting here in the audience, please raise your hand so I may give you the floor.
For shareholders who are participating through the e-voting system, it is also possible to ask questions through a separate video connection, similar to shareholders in the audience. For that, you have received a separate email with a link to the video environment. In that video environment, you then must click the virtual hand if you wish to ask a question. Then, through an operator, you will be connected to the room here. I would like to point out that there might be a slight delay on the video connection, and therefore, we will first deal with the questions from the audience here, and then we will proceed to virtual participants. To help people drafting the minutes, I would like to ask you as a shareholder to please state your name and domicile when you ask a question. Please formulate your question or comment as concrete as possible and brief.
For the sake of reporting, we also have audio recording. I hope we have an informative and interesting meeting together. Let's now proceed to item two on the agenda, unless there are questions about the voting procedure. I think there's one question here at the very front. The microphone will be brought to you, so please wait.
Ca n you hear me?
Please repeat your question. Now the microphone's here. You were referring to audio recordings, and also I don't think I have a voting machine.
Can I please get a voting machine?
You can go downstairs, and someone will help you at the registration desk.
Yes.
You will receive assistance, so please make sure that you go there.
Okay, let's get started with item two on the agenda, which is a report by the Board of Management for the fiscal year 2022. In the presentation, we will look at the financial statements, the entire financial year 2022. You will be able to ask questions about the presentation afterwards.
Thank you, Gerard. Welcome, everybody. It is very nice to see that you are actually here. Obviously, also a warm welcome to our digital participants. It is, of course, fitting with a company like KPN to have a hybrid form of meeting and this digital era. It is good to see that we have people present here and online. Let's now look at our Accelerate to Grow Strategy and the progress that we're making.
At the end of 2020, we determined our strategy for the period 2021 to 2023 and shared it with the market, we have a pathway to growth. In the second year of our strategic period, 2022, again, we made important progress, we demonstrated successes. The three important pillars of our strategy are building, managing, and using the best networks and the correct infrastructure, strengthening and growing our customer base, and thirdly, simplifying and streamlining our company and our business model. During the presentation of today, Chris and me will take you along in the progress on these three strategic themes. 2022 was a year in which we as a society again were tested.
Turbulent times in the world, war in Ukraine is obviously terrible, the geopolitical tension brings pressure in the Netherlands as well and in the supply chain. Energy costs increase. There's pressure on the labor market. There's a strong inflation, and purchase power is also under pressure. Despite all of that, we can look back on a good year. We made progress when it comes to our strategy, and we reached our financial goals. We are accelerating the installation of optic fiber, and we prepare our mobile network for 5G. We improve the digital customer experience with delivering new and service with existing services. That is important for the Netherlands and for us as a company, and we are the front runner when it comes to digitization of the country. Again, we have more turnover, and that is quite a while ago.
I think this is the first time since 2007. What is striking here? Revenue from B2B services grew for the third quarter in a row, that is an important milestone. We are convinced that we have reached a tipping point. Revenues from fiber optics and mobile services for consumers also grew, revenues from wholesale keeps on growing because of our open network policy. Predominantly driven by this growth in turnover, EBITDA grew by 2.4% in 2022, free cash flow grew with over 10%. We strongly invested in our infrastructure, the networks, the platforms, together with Glaspoort, we have connected a record number of households to fiber optics. That's the joint venture, right, with APG.
We have activated the first phase of 5G in our mobile network, we received a lot of acknowledgment for the quality of our networks and our services. That's great news for everybody, obviously, who works very hard on this at KPN. The return on invested capital rose, improved to 13.1% in line with the plans to create value. We invested in our infrastructure and in our services. We also invested in our colleagues, training, remote working, in compensation for working from home. We have increased the collective labor agreement by 2.6% in 2022. To also mitigate the pressure on purchase power over the past year, we paid out extra compensation twice to our colleagues, and especially those colleagues with the lowest wages received most.
At the end of last year, we also came to great CLA agreements for this year, we will see an increase of 6% to almost 10% for those who have a lower wage. In 2022, we also continued with our purchase buyback share buyback program, which is a reflection of our solid financial position and the confidence in our strategy. In 2022, we bought back EUR 300 million in shares, we plan to pay out EUR 0.143 in dividend per share, which adds up to EUR 850 million that we pay out to our shareholders, slightly less than the free cash flow that we realized this year. We reached our goal for 2022. EBITDA ended at EUR 2.4 billion, in line with expectation.
CapEx was EUR 1.2 billion, and free cash flow was around EUR 862 million, slightly above expectation. We repeat our promise of annual dividend growth, and we plan again to pay a regular dividend of EUR 0.143 per share. We don't only have a focus on financial goals, we also look at our social impact. KPN is part of Dutch society, and we take our responsibility in that field and in the field of sustainability very seriously. Our efforts were acknowledged and recognized again in 2022 by several benchmarks, like you can see in the overview. CDP, the Carbon Disclosure Project, put KPN again on the A list of companies worldwide as a climate leader.
For the coming years, we have an ambitious agenda in the field of corporate social responsibility, like the ambition to be almost 100% circular in 2025 in all our activities. Chris will also talk about this and what our targets are when it comes to sustainability and diversity. Let's now look at the details of our strategy. Let's look at our mobile infrastructure and landlines. Rolling out of fiber optics is on the move. Together with Glaspoort, a joint venture with APG, throughout the year, we have connected 544,000 households. Almost half of all households in the Netherlands have a connection by us, and we are well underway to have 80% of the Netherlands connected by the end of 2026.
We're not only investing in our landlines, we will obviously also keep investing in our mobile network. We prepared our mobile network for the 3.5 GHz auction, so that we can supply an even better 5G experience if this spectrum becomes available. We expect this auction in the second half of this year. The latest or most recent news was October. We are fully focusing on investments in our networks and services, and we made good progress to improve our customer processes, and we are now seeing a return on those investments. The important benchmarks, those of umlaut and Ookla, also confirm that we have the best mobile network. On top of that, Tweakers has awarded us with a best mobile service provider award and best internet provider.
The Consumer Association sees in KPN the best all-in-one broad brand provider, which is great. It's a nice sign of appreciation for our products and services, not only when it comes to fiber, but also for copper. Our brand, Simyo, again, was awarded with the highest Net Promoter Score in the Netherlands for mobile service provider. Servicing our customers in a simple, clear, and efficient way is what we get better at every day. Let's take a look at that. In the consumer segment, revenue from mobile services is growing. We see a movement from KPN clients or customers to in growth of the successful Unlimited proposition. We see a growth in the number of customers. The market for landline services is competitive. The total revenue was under pressure, which was caused by decreasing turnover of older services like telephone services.
Broadband is something that we see increasing by 16%, turnover on our copper network is decreasing 12%, which is something that we are confident about because we see that the best digital experience is in fiber optics. Customer satisfaction was doing really well. We're the highest in the market. We did experience a slight dip in Net Promoter Score in Q4, so we ended one point under the year 2021. This was predominantly caused by consumers who are concerned about the costs of life. This is a sentiment that slightly decreases that number. We see that with business customers as well, but I'm confident that this will change. Let's look at some important KPIs. Broadband remained more or less stable.
A solid influx for fiber optics. We have activated over 168,000 customer. This means that we have now more people in fiber optics than on copper. The average turnover per user has slightly increased. Turnover from mobile services keeps on showing growth. The number of mobile subscription grew by 111,000. The average turnover per customer increased by 2%, driven by a mix of effects. Again, a movement towards the more expensive Unlimited and a strong growth in the cheaper Simyo, and the price increase that we introduced October last year on our mobile subscriptions.
Let me move to the business market, because there, of course, we have shown a very good performance last year. The business turnover grew for the third consecutive quarter, and that was a very important milestone for us, perhaps even the most important one for 2022. We're convinced that we have reached there the tipping point. Also in the business market, we lead when it comes to customer satisfaction, and here too, we saw some pressure in the fourth quarter on the NPS due to concerns about inflation. Nevertheless, the consumer satisfaction score still remains positive. SMEs. They are really the engine behind the growth within the entire business market. The success of KPN One, KPN Eén platform where entrepreneurs can easily purchase various products and services is at the basis here.
Also turnover from LCE, large corporate clients, showed a positive development. The third segment, Tailored Solutions, once again performed in line with expectations. Last year, we introduced new combinations for the business market of connectivity and security, and we'll continue to do so. Cybersecurity, of course, is a topic that is very important to companies. I won't have to explain that to you. At KPN, security has the highest priority, both for our own organization and in our service provision to customers. We ensure that security is always part of our portfolio. Let me move to the wholesale segment. KPN has been applying an open network policy for years. This means that other providers, so the wholesale customers basically, can use our network to offer their telecom services, right, to end users.
As a result, the network is better used, with which we can also partly recover our investments. Wholesale continues to perform well with nearly 4% revenue growth over the past year. The Dutch market in 2022 remained pretty competitive and our wholesale providers showed solid growth. Last summer, the ACM declared our renewed wholesale commitment binding, and this gives all players in the Dutch broadband market clarity and certainty for a period of eight years so that the market can remain competitive. That is good for the consumer 'cause they then can continue to enjoy sufficient freedom of choice, and it also gives certainty to the other providers. Of course, that is very good for the rollout of our fiber optics program.
For now, I would like to thank you all very much for your attention. I will now give the floor to Chris to take a deeper dive into our financial and sustainability performance over the past year. Go ahead, Chris.
Thank you, Joost, and good afternoon, everyone. As he said, we have achieved our financial objectives from last year. We're very confident that we will do so again this year, 2023. The financial results of 2022 were solid. They provide an excellent basis for a healthy financial development in the coming years. I will briefly explain a few results. The clean sales for 2022 grew by 1.4% compared to the previous year. This was driven by the increase in turnover in the business market and in mobile services to customers.
We also see a solid revenue growth in wholesale. The adjusted EBITDA after leases, our operating profit, increased by 2.4% in 2022. In addition to the aforementioned increase in sales, we saved EUR 38 million in costs, and our EBITDA margin thereby improved by 40 basis points year-over-year to 45.1%. In recent years, we've seen the year-over-year growth of our EBITDA increase and our margin also improve annually. We invested more than EUR 1.2 billion last year, and the free cash flow amounted to EUR 862 million, a growth of almost 10% compared to 2021. 16% of our service revenues.
The return on capital used has improved significantly to 13.1%, which is an increase of 210 basis points. The group revenue from services increased by 1.5% compared to 2021, and this was mainly caused by the strong growth in the business market. If we then look at the segments, we see the following. Sales in the wholesale segment grew with 3.9%. Business services revenue increased by 2.1%, mainly driven by the SMEs. The turnover growth in the business segment is sustainable and also increasingly based on multiple growth pillars. In addition to the SMEs, we also expect a sustainable turnover growth for the LCEs in 2023. Compared to last year, turnover from services within the consumer market has remained stable.
While mobile revenue showed a healthy growth, the landline services declined slightly due to sort of like a shrinkage in our legacy business. Broadband sales have grown slightly. The adjusted EBITDA after leases grew 2.4% compared to last year, driven by revenue growth from services and lower indirect costs, partly offset by EUR 54 million in higher direct costs. The increase in direct costs was mainly due to higher spending on handsets and hardware, which in turn are related to non-service revenues. A higher connection cost for third parties such as Glaspoort and a change in revenue mix in the business market. Our personnel costs have decreased by EUR 35 million, driven by increased efficiency, digitization, and natural turnover.
Our personnel costs also include two one-off payments to our staff to help them cope with the high inflation and the energy prices. Digitization also reduces IT costs. However, this saving was overshadowed by higher energy costs. In summary, we have saved EUR 38 million in indirect costs last year. The result of our continuous focus on more efficient operations were partly put under pressure by inflation on energy and labor costs. If we take into account both the growth in turnover and the development of direct costs, we see an increase in our coverage contribution, so the contribution margin of approximately EUR 15 million. And if we add this to the EUR 38 million lower indirect costs, we see a substantial growth in our EBITDA of more than EUR 50 million, which basically explains the growth of our EBITDA, right?
We look ahead to 2023, we expect to see the impact of a wage indexation and higher energy costs reflected in our main costs. We estimate the gross impact of the higher wage costs of the new collective labor agreement at approximately EUR 45 million in 2023. The total energy cost. Given that we purchase 20% of our energy needs on the spot market during 2023, we expect the cost for 2023 to be EUR 50 million-EUR 55 million higher than last year. In the first months of the year, we've been able to purchase energy a little more cheaply than initially assumed. Depending on the price development on the spot market, the result could therefore deviate slightly from this margin.
The operating free cash flow, measured as operating profit minus CapEx for 2022 amounted to EUR 1.2 billion, and the free cash flow in total of EUR 862 million was approximately 10% higher than last year and has risen to 16.2% of turnover. This was mainly due to higher EBITDA. In conclusion, we can therefore say that KPN has further strengthened its profitability in the recent years. We're ending the year with a strong balance sheet. At the end of last year, our gross debt was around EUR 5.9 billion and the net debt at EUR 5.4 billion. Our liquidity position is currently strong enough to meet our debt obligations through 2024.
We've been active in the capital market last year, we've issued a green hybrid bond, our leverage ratio remained constant 2.3 x, and this puts us well below our ceiling or a cap of 2.5. The ROCE, the return on capital used, improved by 210 basis points to 13.1, consistent with improving value creation. The ROCE increased thanks to the increased operating margin, which was mainly driven by a solid cost control. In our continuous pursuit of long-term value creation, we see room to further improve our ROCE in the coming years.
On to the sustainability performance. Joost already said it, sustainability is in our genes. Let me take you along in the progress we're making on our targets on sustainability and diversity.
Our own business operations have been climate neutral since 2015 already. That is why we have now shifted the focus to the entire chain. Scope 3 emissions, the emissions from the chain, make up 75% of our total emissions. We want to achieve net zero emissions throughout the chain by 2040, and in this way, we contribute to the maximum warming of 1.5 degrees, as agreed in the Paris Agreement. Now, to achieve this, we've set out various actions, including reducing the energy consumption of the equipment in our network. Our energy consumption in 2022 was 48% lower compared to the consumption in 2010, and we're working hard to further reduce this.
For example, we've reduced the energy consumption of modems and TV receivers in consumers' homes, and we're making our transport more sustainable and improve cooperation with suppliers, for example, by switching to green energy. At the beginning of the year, we've already seen good further progress in reducing our energy consumption. In addition, last year, we signed an agreement for the purchase of offshore wind energy from 2027, and this energy, which will be supplied by Eneco, is clean and helps us to keep a grip on the energy costs in the long term. Now, to ensure that we can accurately and transparently track our progress on the targets, we regularly carry out checks on the way to measure the targets. During 2022, we examined the method of measuring Scope 3 emissions and as a result, adjusted the historical numbers.
This adjustment is described in detail in our annual report for 2022. We invest in improving our control framework for non-financial indicators, and this allows KPN to continue to report accurately and transparently on its targets. Finally, last but not least, we also do our best to ensure diversity within KPN. For example, the executive board and supervisory board have been made up of at least 1/3 of women, and half of the executive board will be women after the proposed appointments. In addition, we strive for a higher percentage of female colleagues throughout the company. Thank you for listening to this explanation. I'll give the floor back to our chair.
Thank you, Joost and Chris. Ladies and gentlemen, I would like to point out that the sheets of this presentation will be available on the website of KPN afterwards.
Does anyone have any questions? Either in the room or via the video connection. The microphone will reach you in a moment.
Thank you, Mr. Chair. My name is Mr. Stevens. I'm from Kerkdriel, and we've had fiber optics since 11 years already. Yes, I think I'm from a municipality that was very, very forward at the time. To start out with, we've had some extra work to be able to understand the figures, that started on page 138.13.2. I would like to hear the auditor say something about this. I don't know if this is an error in the annual report or whatever happens, but you have two green, eternal hybrid bonds that you issued of more than EUR 500 million.
One is equity, listed as equity, and one as a liability. Those bonds perhaps, you know, are simple bonds, but I don't really understand. It also says somewhere that this was to purchase electrical cars and to install fiber optics. They are eternal hybrid bonds, probably there will be some prepayment or buyback at a certain point, right? My question is, what's going on with these? Do you do a buyback or what's gonna happen? Given that one is listed as equity, there's no interest charged on it, but it is treated as dividend, it seems. When I was a student, a long time ago, but I always learned that loan capital is not the company's own money.
How do we explain this? I took a look at the cash flow, and we saw some net payments under the heading of financing. The result is of course the same, but the justification is then done in a different way. Why did you do it like this? If you look at the remuneration policy, which of course I know is a separate item on the agenda, and we'll be able to vote on it. You know, the bonus then. The height of the bonuses. Cash flow is part of the bonuses, right? We have the impression that you've done this to just be able to pay out higher bonuses. Perhaps you can address these questions first. Because we really don't understand this construction here. Thank you for your questions.
Look, it is great to hear that you've had fiber optics already 11 years. It would also be great if you've already been a shareholder for 11 years. You are? Good. No complaints, I see, right? Okay. 'Cause that's what in the end it is all about, right? Your three questions. I think they are all sort of like about the same thing, all about the bonds that were issued. For that, I will give the floor to Chris to give his explanation, including the aspect that this has nothing to do with the bonus payments. Chris, can I give the floor to you?
Sir, if you read it like this, I mean... If things are unclear, then of course you start to guess, like, is it for this? Is it for that? I had expected this to be expla ined in the presentation that was just given.
Well, Chris will explain it to you.
Yes. Look, there are a number of hybrid loans indeed. One is in dollars. The end date of the dollars was dated. There was a dated loan, not a perpetual loan. You're saying the equity qualification, the other one is a liability, is a debt, right? That's not our choice. It's not conscious policy. It's a consequence of the characteristics of the loan.
Second, we issued loans in the U.S. dollar in the past. Now we do that in euro. I of course prefer to do that in Euro so that you don't have to swap it back to the Euro. It's always more attractive in euro also because we have more investors in the euro market. Of course, the investors that, you know, by nature will look more towards KPN invest in euro. We've announced a loan that will be called. We said, one, the old loan will be called, so we're gonna be repaid. It's gonna be repaid. It's going to be replaced by a new hybrid, which automatically, of course, will then turn into a euro loan because we prefer to issue loans in euro.
even, you know.
In the euro market, a perpetual loan is a perpetual loan. If you want to do an early redemption of that loan and then replace it by a new hybrid loan in euros, automatically you end up in a perpetual loan, 'cause that's the way the market is. That is also the way accounting works. The moment that you say, "We keep the hybrid loan," and you no longer want to do it in dollars, automatically you roll on to or switch to a loan in euros. That's just the technicality. There's not much you can change about it. We've decided to replace the old hybrid by a new hybrid loan and because of course there is going to be a limit to the issuance of hybrid loans.
Our weighing was that we want to be able to use the instrument for now, so let's, you know, redeem the first loan and then, replace it by another one, in euro. It was a bit of a technical process in which, you know, you optimize the balance structure and keep access to the financing instrument. I can assure you that this has nothing to do with the bonus, bonuses, because it had no effect on the target to 2022. It did have an effect on 2023, but the target was only established after the bonds had been issued. The objectives already included this impact on the cash flow. Indeed, if you issue a loan and qualify it as equity, then of course the payment is outside of your free cash flow.
That's again, a technical thing. That's not something I can change. For 2022, it didn't have any effect because the interest payments only took place in 2023, and in 2023 it was already part of the target setting. The free cash flow target for this year is quite ambitious. The biggest point, by the way, is the fact that we'll pay more taxes this year, but it's also related to the impact of the increased interest. The part that is variable has an impact also, the restructuring charges and the EBITDA growth is a little lower than last year. The free cash flow target is going to be challenging.
I have also informed everyone that in the reporting there is a bit of a tailwind because there is certain interest that you don't have to report on, you don't have to include, which we explained very clearly, but it really has no effect whatsoever on our bonus 'cause the targets were set after this bond was issued. It's not the order in which you propose it.
It's two loans of a total of EUR 1 billion and not one loan of EUR 1 billion. Now it just occurs to me, if you look at KPN's market value, that's now EUR 500 million less, or what am I missing?
Well, we already had one loan, a dollar loan of $146 million that was just redeemed, and the other one was the 2% and one loan was added. We didn't spend EUR 1 billion, we spent EUR 500 million. It's partly existing and partly new. No, it's not that KPN's value has decreased. It doesn't become different because of the fact that we take out a loan. We replaced one thing with another, simply. You're saying the loan is equity, right? That is how it qualifies? You know, if you do the math, the company is worth EUR 500 million less because of that, right? No, EUR 500 million is added because, you know, it replaces, you know, debt that we don't have now because we have the loan.
Then I'll ask the auditor about this because it's not clear.
You will definitely have the opportunity on the next item of the agenda to ask the auditor about this. In summary, what goes on here is nothing more and nothing less than one loan being replaced by another one. The risk was reduced, so a dollar loan replaced by a euro loan. The interest rate is lower. That is something Mr. Figee didn't even mention. Thirdly, it doesn't change anything to the bonus scheme because it was already before it was set. Then you may have one more question, then we'll proceed to others.
Again, the question about 5G then. What is the planning? What are your phases? There will be an auction. What is your policy this year when it comes to 5G? Because, you know, with the auction things will change. You know, in the past we've seen some auctions already. It gives me the creeps. I really wanna know what your strategy is. Thank you.
Yes. Auctions are always very interesting. Coincidentally, both boards actually took a good look at this this morning because it's coming up, and you can rest assured that we are fully focused on that. It's a coincidence we actually talked about that today. I'd like to give the floor to Joost for that, to elaborate a little bit further on the imminent auction.
Well, 5G is obviously, that auction is an important moment in time. Last year was very important as well. We invested significantly in our mobile network to be ready for 5G and the first spectrum.
the megahertz
To have the national coverage, we have already activated that. If you have a recent head set, then you will see 5G there, right there. But the real 5G will come with the spectrum that the Ministry will put into the auction in second half of this year. Everybody needs to just wait and see what that beginning of that quarter will bring. There are many things that still need to happen. Again, the Ministry has announced the rules and the design of the auction, and in itself, it looks better actually than the auction that you were referring to. It seems very rather transparent and designed in such a way that all operators could buy their share. There is also an obligation for those who buy spectrum to invest in the network, so really activate it.
We believe that the obligations could be stricter, so we will definitely announce that to the Ministry. In the meantime, on the operational side, we need to do a couple of things in the north of the Netherlands, where the Ministry of Defence is using that spectrum and Inmarsat, who provide services at sea. That's something that will migrate to another country, and then we will get the auction. Again, it is a fairly robust and from at a glance, let's say it's looking good than, looking better than the past. You know, there are some things that we will definitely address the Ministry for, in the meantime, KPN is ready for that auction by really investing in the mobile network.
At this moment, we have the best mobile network in Netherlands, actually we have the best mobile network in the world, which was never a goal, but it's nice to have. You know, thanks to my colleague, Mr. Fouladi, and he did that with his team. We are ready and we are still talking to the ministry, and we hope that things will go well from the operational side. We are very confident, and we are ready for that auction.
My name is Gerben Everts from the VEB Securities Association. My compliments when it comes to rolling out the fiber optics together in Glaspoort joint venture. Maybe it is not as fast compared to planning. You're still on schedule, nevertheless. Especially when it comes to global perspective, you're a leader.
Also compliments for getting those financial goals and strengthening your strategy and of course, your growth of over 13% like we saw in 2022 and further growth that you have talked about. Obviously the reporting is transparent, clear KPIs for remuneration and also the performance of the board. Two small things. A relatively large part of remuneration consists of non-financial KPIs. We understand that, but that's 30% of the annual bonus and 30% of the share-based bonus. I have some question marks with how desirable some of those non-financial goals are. For example, gender diversity. The question is whether it's desirable to give a strong financial incentive to executives for diversity. In this way, you wouldn't maybe get the best candidate. We do know that this is important from a social perspective.
With the new appointments today, we see that diversity is fully there with the competent people in the right place. You know, it is going towards 30%. It's going really well. Really, should you as an executive, have a bonus or an incentive of EUR 360,000 in bonus? Congratulations, by the way. Should that be an annual party? The goals were met, I think you should say now that you need another goal to bring KPN to the next level. This particular KPI should expire. My question to the Supervisory Board is, you know, now that we've achieved that goal, what is your position on that? Cash flow and impact on bonus. I think there was a correct question from the audience already.
We as a VEB, we talked about this in an article, and we understand the answer of Mr. Figee, and we understand completely, and we are very confident that when he says it had no effect, then, and also that it was included in the KPI criteria for 2023. It really demonstrates the use of a meeting today because it was difficult to sort of distill all of that simply from the financial statement. This is an important explanation that you gave here today, and it really puts my mind at ease. I have no further questions about that. A question about the sustainability information. In paragraph of the external accountant EY here in the audit, there are key assurance matters, something with the sustainability information.
It says there the Scope 3 energy data, so emissions in the chain, has to be reviewed because of inflation adjustment and refinements of data used, quoting. In the annual report, this is elaborated on. I understand very well that KPN wants to be a front runner when it comes to sustainability and reporting on that. I also understand that this is complex. Could you please talk about as to why this did not go well in first instance? Are these the teething problems when it comes to providing sustainability information? We will have a whole stack of new regulation coming at you, so this has to be a piece of cake, something that doesn't need to be corrected by the external auditor later on. That's for the accountant.
How can you give us the confidence that this will be better year-over-year so that we don't have to keep on correcting this? Thank you.
Thank you for your questions. I will address the first part. When it comes to the non-financial goals within the bonus system. Yes. As a company, what do you wish to focus on? Where do you want to progress? The example that you were mentioning is one. We are at the eve of reviewing our remuneration policy. Next year in the Annual General Meeting, we will present our new policy, your suggestions, ideas, and comments will be included in our deliberations. We will have consultation rounds with all relevant stakeholders, when it comes to remuneration, we always do that. For now, it is what it is.
Looking forward to next year, we will be very careful in designing a new remuneration policy. Your second question was more of a conclusion, rather. Then the third point, Chris, can you say something about the sustainability information?
Yes. It's a review, and we found this sort of mistake ourselves. When you look at Scope 3, there is some inflation numbers that became relevant, so we actually added the Scope 3 volumes, which is not the same as the monetary value of that. It was just, you know, when a car becomes more expensive, it doesn't emit more. It's a mistake that we found. We corrected it ourselves and then reported it to the external auditor. You know, these are the things that still happen, so you correctly refer to them as teething problems.
Again, we now have much more information about Scope 1, , and 3, and we realize that, you know, when it comes to emissions, et cetera, you have to be solid in your reporting. We have now a CSRD project together with other companies. You know, what do you need to report, and how do we report so that everything is consistent? I'm not concerned that we don't have the information, but the biggest investment would be how auditable that information becomes in the end. We're focusing on it. It is something we're learning. I think you should audit the financial part and the sustainable part, and it's a journey of discovery, but we dedicate a lot of attention to that, you can rest assured, and we will end at a very high level of quality.
Thank you, Chris. I see someone else who has a question.
My name is Matthew Schutters. I'm here on VBDO, Investors for Sustainable Development. We asked two questions in a letter in English. Question one.
2024 onwards, the EU's Corporate Sustainability Reporting Directive, die net benoemd is, the CSRD will apply. The CSRD requires companies to report extensively on sustainability topics, especially those that the company considers material. VBDO wonders if KPN will include a double material-materiality assessment in its next annual report, and whether KPN expects that biodiversity and supply chain management will be considered highly material next year. Een tweede vraag. VBDO introduced lobbying as a new engagement theme this year. Since InfluenceMap discovered that 89% of the European industry associations are not always lobbying in line with the Paris Agreement, companies such as KPN can and should play a proactive role by engaging with aligned industry associations on their lobby activities.
VBDO wonders whether KPN is also willing to, in its next annual report on the direct lobby objectives on specific legislation, and whether KPN believes that the lobby activities of aligned industry associations are in line with KPN's lobby and sustainability objectives and the specific industry association membership costs.
Thank you. Good to hear that you have questions on the annual report of next year. First question is for Chris. You know what we are going to do next year, and the second question will be answered by Joost. Chris, go ahead.
We are looking at developing a double materiality. This is very important to us, that double materiality, we're looking at it and also we're looking at what impact it has. That will obviously result in some factors that will be weighed. The things that you mentioned were definitely on it, but we will include them indirectly. The answer is yes, we did a double materiality assessment.
I also already have something in our annual report 2022. We will develop it further, also in the light of that CSRD project that you were referring to as well. How do we think we can strengthen that double materiality assessment? Well, there is an appendix that relates to that. The things that you were mentioning were on our wish list, so to speak, not as a highest priority to correct. That's what I can tell you about that.
Yes, your second question. Yes, responding to what Chris was saying. Yes, my apologies. Our concern obviously is what you see is that companies consider certain matters not as material. Therefore they don't have to intensively report on it. We saw the biodiversity and supply chain, like Scope 3 emissions and climate change.
You know, it's predominantly caused by the supply chain, right? Biodiversity, supply chains, these are things that should be considered as a materiality or, but of course, the company determines that. It has an effect on the extent to which you report on it. That's just, yes, very briefly responding to that. This is why we have external stakeholders. People from society are consulted because we are consciously looking at other stakeholders when it comes to that. It's not only us who determine what is important. We are dedicating more and more attention. We work together with other providers, but also with people from Naturalis in Leiden. We look at what effect it has on biodiversity.
You know, wherever we open up the streets for fiber optics, you know, we also include other parties where they can make it greener once we've done our work, for example. There's many, many initiatives to support biodiversity, for example, and that's something we include in our matrix as well. It depends not only on us, but also on our stakeholders. This is a process that we're mapping at this moment. Yes. We are a member of several platforms to obviously lobby and consult. We are a smaller telecom company, and when, especially when it comes to Scope 3, we are in a huge supply chain. This is why it's very important that we do this together with other parties to sort of influence that supply chain. It's very important.
We also have proposed our goals, and obviously we follow the guidelines. I'm not sure whether we can clearly report on that next year. We definitely intend to do that, but I cannot guarantee anything. I take your recommendations to heart.
Thank you, Joost. Any further questions about this subject? I see no further questions. I also see that online we have no questions, and I conclude that we have no further questions, and we can finalize this subject. Item three, the adoption of the financial statement. The financial statements have been included in the integrated annual report that was available through the website of KPN. The financial statements have been audited and confirmed by an unqualified opinion of EY. During the year, EY discusses the reports with the executive board, Audit Committee and Supervisory Board.
Obviously these reports and meetings are subject of the meetings between Supervisory Board and Board of Management. Next to that, the chair of the Audit Committee and the chair of the Supervisory Board have separate meetings with the external auditor about the activities and findings of the external auditor. The relationship with the external auditor can be characterized as open, critical, professional and constructive. Current subjects have been non-financial KPIs, the fiscal positions, for example, latent tax claims, important estimations in the financial statements, the appreciation of immaterial and financial fixed assets. Of course, the joint venture of Glaspoort with APG, the internal controlling environment. Is it robust enough? The IT environment.
Based on several meetings both, also the contents of the board reports of EY, we as Supervisory Board concluded that the relevant subjects and considerations are being dealt with in a very careful and transparent manner between the management and accountant, and is a fair reflection in the numbers of KPN. I would like to give the floor to the external auditor, Mr. Verhagen, who is present here in the room to talk about the auditing activities that EY conducted for KPN. To be able to be very transparent toward shareholders, EY, for this opportunity, was given permission to not adhere to secrecy for this time.
Mr. Chair, thank you very much for the opportunity to explain our work in more detail. assembly, my name is Juul Verhagen, I'm a partner of EY, and I've been involved in KPN's audit since 2021, and the external auditor of KPN since 2022. In this presentation, I will discuss the following parts of the audit of 2022 financial statements. Control approach and the focus, our main outcomes, the main points of attention, the key audit matters, the topics going concern, fraud, and non-compliance or compliance with laws and regulations. I will also address ESG sustainability, our control plan for 2023, and the way we communicate and interact with the company. Let me start with the control approach and the focus.
We've audited the separate and consolidated financial statements of KPN. We have also examined whether the annual report meets the legal requirements, whether the content corresponds with the picture of the annual accounts, and whether the annual report matches the knowledge we gained about the company. These are legal requirements for KPN's audit. In addition, the company has also given us the following tasks: to assess the sustainability information, and we have included that, the results of that in the integrated audit report. We've also checked the fiscal country-by-country reports over 2022. This is an extension of the scope of our assignment compared to 2021, and the results of that reporting have also been included in the integrated audit report.
We've also been involved in press releases in response to the quarterly figures, the half-yearly figures, and the annual figures. We've carried out reviews of the quarterly and biannual figures. As the external auditor, I am ultimately responsible for the audit. To be able to take on that responsibility, I've put together an experienced and expert team with relevant industry knowledge. In addition, there are some topics at KPN for which I've engaged EY experts. For example, valuation of intangible assets such as goodwill, the Glaspoort JV, financial instruments, taxes, IT, cyber and fraud risks. We work closely together with the internal audit department of KPN. We coordinate our work and planning with each other. We also share the results of our activities.
We use materiality to check the annual accounts, the materiality that we've used in the audit of the consolidated financial statements amounts to EUR 45 million, and this is based on 2% of EBITDA after leases. Our audit is designed in such a way that we can detect material deviations, and that we can offer a high degree of certainty that the annual accounts give a true and fair view. By the way, we do not use the same materiality for all balance sheet and profit and loss account items. In the case of certain additions, like for example, remuneration of management, we only see and accept minor deviations. All errors above EUR 2.25 million are discussed with the executive board and the supervisory board.
Based on the materiality used and the risk we have estimated, we have then carried out our work. Let me address the main outcomes of our audit. First, the annual accounts. We've provided an unqualified opinion on the financial statements, and there are no audit differences or deviations that still need to be corrected. I can also inform you that there was no difference of opinion with the Executive Board regarding the estimates, and that the we generally qualify the estimates made by KPN as balanced. We've also assessed the management, the Executive Board and the report and the Board of the Supervisory Board, and we found no material inaccuracies, and so the information is consistent with the financial statements. We've done this in our role as auditors and with the knowledge that we have of the company in that capacity.
We've also established that the report complies with the Dutch Corporate Governance Code requirements. With respect to the remuneration, we've established that the required information was included in accordance with SRD II. The annual accounts have made an assessment of the going concern assumption for the 12 months following the date of the financial statements when preparing those financial statements. We've assessed their analysis, and we found no material uncertainties. Let me address the sustainability information. We've checked the CO2 emissions, Scope 1 and 2, and also the energy consumption, and we found it, we approved it. We've also assessed all other information regarding sustainability, including the EU Taxonomy information for material accuracy, and we've also found no deviations there.
With respect to the Scope 3 emissions, as Chris Figee mentioned before, there was a restatement made in 2022 with regard to the previous years, and we've reviewed that restatement, and we agreed to it. The country-by-country reporting on taxes complies also with the GRI standard 207. The key audit matters. So on the slide, you can see an overview of the key audit measures that largely are the same as last year. These are the matters that have received most attention by us in our audit, and I'd like to address two of them in more detail. Firstly, the valuation of the Glaspoort joint venture, and also the reliability of IT systems and the risk of cybercrime. Let me start then with the Glaspoort joint venture. Since 2021, KPN participates in a joint venture called Glaspoort together with APG.
In the fall of 2022, ACM declared the fiber optics fees offered by Glaspoort binding. During our audit, the focus was on the valuation of Glaspoort, including the assessment of a possible impairment, lowering of value. In this context, we've assessed, among other things, the updated business plan and also the underlying, the other underlying assumptions, and we agree with the valuation, the reporting, and also the explanatory notes. There is no impairment in our view. The second key audit matter, which is the re-reliability of IT systems and the risk of cybercrime. KPN's administration is highly automated, and there is also an increased risk of cybercrime for companies in the telecom sector as such. Cybersecurity in itself is not an object of our audit.
We carry out a work to gain insight into the risks, the cyber risks, that could have a serious impact on the financial statements. That's why we have included a cybersecurity expert in our audit team. If KPN had paid insufficient attention to security, there would have been, or there would be a threat in the proper functioning of the internal audit structure, right? That's why we check who has access to certain information systems and in which way KPN controls changes in data access and in its programs. We also look at KPN's cyber risk management process, KPN's monitoring of cyber measures, and the cyber incident management process, including resilience in the event of an actual occurrence of such threats.
We also look at the results of the tests that KPN itself carries out to assess the security of its systems, and we also assess the activities of the risk management internal audit and CISO, which is the chief information security officer department. Internal audit and the risk management department assess also on a quarterly basis whether the internal procedure are properly complied with, and they make it verifiable for us. Our conclusion is that KPN has set up its cyber risk and incident management in a good way. With respect to the cyber risks, we have seen no indications that material cyber incidents have occurred that have not been reported on or, not, have not been acknowledged. The topic fraud and non-compliance with rules and regulations.
The topic of fraud and non-compliance with laws and regulations is totally in the public eye. We believe that it's very important to take our role and responsibility as the auditor very seriously, and for us, we, this topic is very high on the agenda. It's important to oversee the entire chain, right, including the executive board, Supervisory Board, eternal supervisor, and also the government and the investigative authorities. If I look at our work and activities, we have forensic experts that we've involved in our audits and in our risk analysis. We have taken into account also the risks of material deviations as a result of fraud, whereby we're extra alert to fraud signals. We've discussed the risk factors and our audit approach with the executive board, Supervisory Board, et cetera, and we've also included them in our audit plan.
We've also discussed it with risk management, legal and compliance, and other important departments. In the context of fraud risk, we've paid specific attention to the revenue recognition of large complex contracts in the business market, and we looked at the possibility of management adjustments. We also have regular meetings with the board and corporate security, compliance, legal, and audit departments. Fraud and non-compliance are, by the way, also periodically discussed with the management of the different business units. We've also taken note of any correspondence with regulators, and given the importance of the new Telecommunications security and integrity regulation, we have also held frequent meetings with the responsible management, and we've assessed reports in this regard. We also have reviewed important manual bookings, so basically the journal entry testing.
Our conclusion is that KPN put fraud and non-compliance high on the agenda and is alert to fraud signals and also provides adequate follow-ups. We've also established that the Supervisory Board is periodically informed in an adequate way by the board about the risks of fraud and non-compliance. Sustainability. As said before, the attention for climate and biodiversity has enormously increased on a global level, which is clearly reflected not only at a European level, at a Dutch level, but also the European level, and the measurability of the impact is becoming more and more concrete. Let me say something about Taxonomy, because since the 1st of January last year, of 2021, listed companies have to include additional non-financial information on the basis of the Taxonomy Regulation Directive.
For 2021, this was limited to two of the six climate objects. The obligation was only to report on eligibility. That means to what extent the activities fit within the criteria of the Taxonomy Regulation and thereby potentially contribute to achieving the climate objectives. For the first time in the 2022 reporting year, it was necessary to report on the extent to which the activities for these two objectives are aligned. Our conclusion is that the non-financial information contains the required information as included in the Taxonomy Regulation. Now, let me look ahead with respect to the reporting expectations, right? Because listed companies from next year on will have to report more extensively on sustainability information. The EC published draft standards in November, and we expect them to be adopted in June of this year.
The planned changes to the existing legislation are intended to provide more transparency in the field of sustainability. KPN already carried out a gap analysis last year and is preparing also on a project basis for the further implementation of these European standards. Finally, also with respect to climate risks, when preparing the annual accounts, the executive board has to check whether the consequences of climate-related risks and obligations have been properly accounted for and also properly explained. The management conducted this analysis and determined that climate risks do not materially or seriously affect the valuation of assets and liabilities. We agree. After checking it, we agree with this conclusion. Looking ahead to our control plan. Later this month, we will discuss it with the executive board and supervisory board.
Just like last year, there will be a top-down risk-based approach. Based on our draft control plan, we see no significant adjustments necessary in our audit approach, strategy and materiality. Of course, we will take any changes in the KPN organization into account, such as the implementation of new systems, developments in the field of sustainability reporting and other developments also in, you know, rules and regulations in our audit plan for 2023. We already spoke about the way we collaborate and interact. We have regular meetings with financial management, with the Executive Board and the Supervisory Board. Our relationship with KPN is very transparent, is critical, independent and can be basically characterized as very good. The various departments all strive for a high level of quality, and they have, you know, professional and knowledgeable attitude.
We issue a quarterly board report, as I said, to the Executive Board and to the Supervisory Board. In addition to the key audit matters, topics that we report on include tax and legal matters, ensuring continuity of automated data processing, and also our vision on, you know, important prognosis, valuations, et cetera. We have determined that the Executive Board and Supervisory Board and management take our findings and also the findings, by the way, of internal audit, risk management and compliance seriously. Again, they take adequate follow-up measures. On behalf of EY, I would like to thank the KPN organization for the very good and constructive cooperation over the past year. Thank you very much for your attention and the trust you've given me.
Thank you, Mr. Verhagen. Does anybody have questions to the auditor or the board? Mr. Stevens.
Right. I already prepared you for what I was about to ask. When we saw this, we looked into the financial statements immediately. You simply signed off, and we were quite surprised. We actually thought that you were going to make a remark about that EUR 500 million loan. How did you audit that, Mr. Verhagen?
I think Mr. Chris Figee already explained this. IFRS regulation looks at the conditions of the loan concerned, and this new loan meets the requirements as listed in classification under equity, which means that payments or redemptions for this loan classify as dividends. It's fully in line with the regulation and therefore there was no reason for any remark or comment.Thank you.
Thank Any further questions? Mr. Evers.
Thank you indeed. Gerben Everts, VEB. Very good that we have the auditor here. Obviously, you have your auditing object and we are your clients. It is quite an extensive overview that you have presented to us, but it's quite procedural, factual, and just listing the responsibilities that any external auditor has. I'm going to try to get more details from you. We talked about risk management, especially in sustainability. That was already a question to the board. That same question to you, Mr. Verhagen. How do you look at the risk management? Can you simply say, "Yes, as far as we know and what we saw, this was a well-developed part"? Or are there other teething problems that need to be reviewed later on? Especially what you explicitly addressed, the cyber risks.
How can assess EY KPN because there's not many customers like KPN in the Netherlands. How aware and exceptional can KPN be when it comes to this risk, cybercrime? What frame of reference do you have here to say as an external auditor the cyber risks have been managed correctly then? 1,118, of course, many discussions about amongst auditors to what extent can you do this? Of course, this requires that you coordinate with the chairs of the Audit Committee. Can you talk about what kind of coordination took place with that chair of the Audit Committee? What things did you have to do or things you would have liked to disclose, but you couldn't? Well, that's a discrete question.
First of all, the first was about your internal control framework within KPN, and I think Mr.
Figee already said that it's important to make a distinction between financial and non-financial information. For non-financial information, KPN has a very robust control framework, Aver Grip, and this is periodically reviewed. All the measures have been assessed and documented and reported on, and also to what extent inefficiencies were found, and then follow-up takes place. When it comes to that information, there is a robust control system. If you look at non-financial, it doesn't only apply to KPN, by the way, but any other company, it is a subject that is under development, which means that information at this moment cannot be assessed in the same way. Sometimes the spreadsheets are used, and that is susceptible for mistakes. I think it's just very relevant that the internal control framework for non-financial information is further developed and that it has priority.
The regulator also reported on this extensively, AFM. You know that documentation as well as I do, and I think the conclusions from that report apply to the entire corporate life in the Netherlands. Yes. In addition to that, we indeed allowed Mr. Verhaag to talk about his activities and not maintain confidentiality, so there's no problem whatsoever. Okay, that brings us to cybersecurity then, which is indeed a subject of which you say that, you know, it needs attention. Yes, we have had IT auditors for years now, especially also with the external audit of KPN. Over the past two years, we also engaged cybersecurity experts in the auditing activities. They frequently talk to the CISO when it comes to latest developments and also looking at integrity, security of telecommunication, which steps have to be taken.
Looking at all ways possible to mitigate security or cybersecurity risks and looking at whether this is in conformity with the standards that we have. We also look at the monitoring of cyber actions that KPN has, and if there are incidents, how follow-up takes place. That is what you do in your capacity as external auditor, and we do that. We have a solid collaboration with KPN for that. Your final comment. Yes. Well, obviously, we had a consultation meeting with the company and a number of aspects have been applied, and I am not aware of any aspects that, you know, I couldn't disclose today.
We both, you know, did agree, you know, what I was going to include in our presentation needs to be relevant, and I think, there were no barriers to disclose anything and, you know, that is because we have a healthy relationship with the company.
Thank you, Mr. Verhaag. Any further questions about this item? No further questions, also not online. I conclude that there are no further questions, and we can proceed to go to the first resolution. The secretary will now talk about the number of present shareholders and number of votes represented, and also he will explain to you how you can cast your vote. Jasper.
Thank you, Chair. Ladies and gentlemen, at this meeting, we have 23 shareholders, all representatives of shareholders. There's one shareholder who is online.
A total of 3,087,175,137 shares with an equal number of votes represented here, which is 76.71% of the issued share capital. Of these shares, over 2.3 billion votes have been given to Ms. Leemreize, a notary, through a power proxy, and also I have a proxy for a number of votes. These are all proxies with voting instructions that have already been introduced into the voting system and therefore are already included in the voting results. A brief explanation about the voting process. The virtual participants can cast their vote when they are logged in or if they are logged in through their own smartphone on the platform. Those of you present in the room will cast their vote on the smartphone or tablet.
You are logged in. On the website or on your own phone, you received instructions upon registration. You are logged in. If this is not the case, please raise your hand. There are people who can help you. I see one hand. Unsuccessful so far. Well, okay. You were logged off unexpectedly. Someone will come to you. You will have some time to vote. On the screen, you will see your options in favor, against, or abstain. You can just simply press. The screen will indicate what your vote was. You can now cast your vote, or you can do that later on in this meeting. For all items on the agenda that are a resolution, you can cast your vote until the end of the meeting. They will all remain open. You can also change your vote if you wish.
As indicated, all voting results will be announced at the end of the meeting. Any questions at this moment? If not, Chair, the floor is yours.
Thank you, Jasper. I would now like to invite you to cast your vote. It concerns the adoption of the financial statements for the fiscal year 2022. Thank you. We will now move to item four, the remuneration report for the fiscal year 2022. We would like to inform you about the remuneration policy for the management board and Supervisory Board over the past fiscal year. From 2019 and onwards, you have been able to cast an advisory vote. I will come back to that later. I would like to give the floor to Mr. Hartman as chair of the Remuneration Committee.
He will inform you about the execution of the remuneration policy for the management board and the supervisory board in 2022. Peter.
Thank you, Chair. The Remuneration Report 2022 was drafted in line with the requirements that come from the current law and regulation. As an introduction, I would be happy to outline the starting points of the current remuneration policy for the management board. The remuneration policy of the management board of KPN is based on market and society-conformed starting points. The composition of the remuneration package for the management board consists of a base salary, a short and a long-term variable remuneration, and extra secondary labor conditions. The short-term variable remuneration is based on cash with an on-target level of 90% of the base salary for the CEO and 60% for the other members of the management board.
The remuneration depends on whether or not certain financial and non-financial KPIs are met with respectively a weighing of 70% and 30%. The long-term variable remuneration is based on performance-related shares with an on-target level of 135% of the base salary for the CEO and 90% of the base salary for the other members of the management board. This remuneration also depends on whether or not certain financial and non-financial KPIs were met with a respective weighing of 70% and 30%. If we look back on 2022, I would like to first highlight the outcomes of the variable remuneration arrangements over the past period. Outcomes of it are on the screen.
The outcome of or result of the short-term variable remuneration incentive scheme for calendar year 2022 for the total lies at 90.54% of the on-target payout level. Compared to the original financial goals as was set at the beginning of this year, the free cash flow performance and the service of revenue performance between the on-target level and the maximum level, it lies in between. EBITDA performance ended at almost on-target level. When it comes to non-financial goals as laid down at the beginning of the year, the NPS performance is the instrument for customer satisfaction and it ended at between minimum and on-target level. Broadband-based performance is the measure for the number of active commercial broadband lines, which was under the threshold value, mainly driven because of competitive dynamics in a broader market.
These results then lead to an outcome of 90.54% of the on-target payout level. In line with the existing remuneration policy, half of the short-term variable remuneration will be paid out through shares if the executives have not reached the maximum for share possession. This guideline or regulation for share possession for CEO is based on 250% of the base salary, and for the other members of the management board based on 150% of the base salary. All executives will have reached that intended STI 2022 level at the moment of payout, so that the STI 2022 will be paid out in cash.
The long-term variable or long-term incentive scheme concerns the outcome based on the LTI Plan 2020, for both, including financial and non-financial goals that were measured over the years 2020, 2021, and 2022. The performance of the LTI ended at 121% of the on target payout level. This outcome is the result of performance of financial goals in the field of relative total shareholder return, so that's TSR, and free cash flow, and the non-financial targets in the field of reputation and sustainability. The relative TSR performance is measured compared to the STOXX Europe 600 Telecommunications Index. That's the so-called benchmark or reference group that consists of 21 companies.
KPN is in fourth position when it comes to that reference group and performs with that above the threshold value for vesting, which is on the median of that particular reference group. The free cash flow performance measured as an aggregated target over the years 2020, 2021, and 2022 ended between the threshold value and the on target level. The non-financial targets then, as set at the beginning of the three-year performance period in 2020, is the circularity target based on reuse and recycling of materials above, and it ended at the above the maximum level. And the reputation target based on the three specific focus fields, positive influence on society, well-organized company, and excellent manager, ended at the maximum level.
KPN performs in the field of reputation and has been performing for several years, not only above the benchmark in the industry in the Netherlands, but also well above the average of the top 30 of companies in the Netherlands and the international benchmark as well in the telecom industry. KPN in 2022 was awarded by CDP, MSCI, and EcoVadis with one of the most sustainable telecom companies in the world. Based on this performance, the realization of the two non-financial targets in the field of reputation and sustainability ended at the maximum level. On screen, you will see the number of shares that will be acquired based on the LTI plan in April. The shares acquired cannot be sold for a period of three years. It's the lock-up period.
The Remuneration Committee also has assessed over the past year whether the COVID pandemic could give rise to taking specific measures in relation to the remuneration of the management board. The Remuneration Committee has concluded that there was no reason to deviate from the agreed remuneration policy. The gross annual salaries for the individual members of the management board were increased per the first of October 2022 by 2%. The supervisory board took that decision considering that no change was made in the gross annual salary since the appointment in 2019. Looking at the developments of the CLA wages within KPN and the developments within the peer group, as explained in the remuneration policy. In the Remuneration Report 2022, it is also explained what the pay ratio of the company is.
This ratio is based on the relationship between the highest earning officer, the CEO, compared to the average remuneration for any other coworker. The pay ratio is calculated based on IFRS starting points and ends in 2022 in 32. For a more detailed calculation and the method used, I would like to refer to the relevant clauses in the Remuneration Report. During the previous annual general meeting, we also talked to you about the non-financial targets, especially when it concerns the LTI, and we indicated that these non-financial targets were adjusted for certain parts. For the STI and LTI 2023 plans, we will continue these non-financial targets. For the STI 2023, we include, next to the financial targets, the Net Promoter Score, NPS, and the number of broadband connections.
For the LTI 2023, we will include, next to the standard financial goals, reduction of the supply chain CO2 Scope 3 emission in our complete chain and the balance or ratio men, male-female in diverse management layers of the organization. We feel that these targets connect best with our purpose, strategy, and ambitions. At this moment, board and colleagues are stimulated in the right way by realizing value creation on the long term.
Thank you, Peter. Does anyone have any questions about this topic? No questions. Good, that means that there are no questions, and that means that we can now cast your vote or actually a so-called advisory vote on the 2022 remuneration report. You can vote just as usual. You know, if you agree with it, you say that you are in favor. If you are against, then you're against, and you can also abstain. Your vote will not have any consequences for the remuneration granted for this year, but we will take it into account in the implementation of our policy for the future. You can ask a question now or keep it for the other other business.
Now let me move on to agenda item 5. Chris will give an explanation about the financial and dividend policy.
Thank you, Gera. We have concluded the year with a very strong balance position. At the end of 2022, we had a total liquidity of almost EUR 1.5 billion, of which EUR 500 million of cash was on the balance sheet and EUR 1 billion in on-draw facilities. This already covers the expected repayments for the next two years. We're also fully committed to maintaining a strong credit profile. This also is evident from the solid ratings of all three rating agencies. An attractive dividend in combination with a solid financial profile is of course important for not only KPN but also our stakeholders. Therefore, financial soundness is paramount.
KPN has also announced its intention to pay a dividend of EUR 0.143 per ordinary share for the financial year 2022. After deduction of the interim dividend payment of EUR 0.048 per share, which represent a total amount of EUR 196 million paid on the 4th of August last year, proposed final dividend of EUR 0.095 per ordinary share remains, meaning EUR 383 million, depending a bit on the progress of the share buyback program. If the meeting approves, the final dividend will be paid on the 19th of April. The dividend for the financial year amounts to approximately 67% of the free cash flow of the year 2022.
As I said, we focus on creating long-term value, so we invest heavily in the digital infrastructure of the country, we're convinced that this will deliver value for all stakeholders. The execution of our strategy is also successful. I mean, we're financially healthy. That's why we can supplement the annual growing dividend with structural additional distributions to our shareholders. We have repurchased EUR 300 million of shares, and we will continue the repurchase program also this year. We have started the repurchase of our own shares, of EUR 300 million for 2023, yesterday we already announced that the bank was given the order. This means that when we're done, we will have paid approximately EUR 875 million to our shareholders.
That makes the total distribution to our shareholders approximately equal to the planned free cash flow for this year. That was my very, very brief summary on the dividend and for the return policy. I give the floor back to the chair.
Thank you, Chris. Let's move to the questions on this agenda item. Does anyone have a question or want to make a remark, either in the room or via video? No question. That means that I can note that there are no more questions, and that means I can conclude the discussion of this agenda item. I can note that the General Meeting of Shareholders has been informed about KPN's financial and dividend policy. Now let's move on to agenda item six, which is the proposal to adopt the dividend for the financial year 2022.
On the 23rd, sorry, 31st of January 2022, KPN announced its intention to pay a dividend of EUR 0.143 per ordinary share, sorry, on January this year, over last year. An interim dividend was already paid in August, EUR 0.048 per share. In line with the previous intention, we now propose to pay a final dividend of EUR 0.095 per share. That means that the total dividend will indeed, as said, amount to EUR 0.143 per share. The total profit for the year 2022 allocated to KPN shareholders amounts to EUR 760 million. On the 23rd of February of this year, the executive board, with the approval of the supervisory board, allocated an amount of EUR 181 million from the profit to the other reserves.
Taking into account the interim dividend already paid, EUR 196 million, the remaining part of the profit for 2022 will be an amount of EUR 383 million. That is available and is proposed to be paid out as a final dividend, this amount corresponds also with the EUR 0.095 per share that I just mentioned.
The executive board therefore proposes, with the approval of the Supervisory Board, to the General Meeting to determine a total dividend of EUR 0.143 per ordinary share to be paid. If you agree with this proposal, the final dividend for the year 2022, of the amount of EUR 0.095 per ordinary share, taking into account Article 33 of KPN's Articles of Association will be paid out on the 19th of April. Let's see. Are there any questions about this agenda item, either in the room or via the video connection? There seem to be no questions, that means I can invite you now to vote on this agenda item.
The vote will now concern the proposal to adopt the dividend and to establish it at the amount of EUR 0.143 per share. As said, you can either cast your vote now or later during the meeting, up until the moment of the any other business item on the agenda.
Thank you. Agenda item seven and eight. Seven concerns the proposal to grant discharge to the members of the Executive Board, and eight, the discharge to the members of the Supervisory Board. Like every year after the annual accounts have been adopted, we ask you to grant discharge to the Executive Board and Supervisory Board members. This concerns their policy shown or shown in the financial statements or disclosed to you in any other way.
We've already discussed this in agenda item two with the report of the executive board over the financial year 2022. A distinction is made in the vote between the executive board and supervisory board. Since you can vote on all agenda items throughout the meeting, I would ike to combine the discussion of these two agenda items in one go. The discharge of the executive boards concerns all the current directors and for the supervisory board, also all current members and the former supervisory directors, Mr. Sickinghe and Mrs. Zuiderwijk. Does anyone have any questions about these topics or anything to add or remark, either in the room or via the video link? No questions. You are requested to vote again.
Again, your votes now concern the proposal to grant discharge to the Executive Board, agenda item seven, and the Supervisory Board, which is item eight. Again, you can vote until the any other business item. Thank you. Agenda item nine, proposal to appoint the external auditor for next year, financial year 2024. The Audit Committee has evaluated the performance of the external auditor and also the developments in the relationship with the auditor. The Audit Committee has taken into account the observations of the Executive Board and the review of the performance of the auditor by the financial department. We have given it a very good score of eight out of 10.
The evaluation highlighted the good cooperation, the critical but constructive attitude of EY, the professionalism of the team members, and also the good price quality ratio, among other things. In accordance with best practice provision 1.6.1 of the Corporate Governance Code, the Audit Committee has reported on this evaluation to the Supervisory Board, and the Audit Committee also issued a positive opinion on the nomination of EY as the auditor for the annual accounts audit for the year 2024, and it is fully supported in this by the Executive Board. In line with this advice, the Supervisory Board now proposes to order or commission EY to examine the financial statements for the financial year 2024. Does anyone have any questions or remarks about this topic, either in the room or online? I see no questions.
No questions. That means that we can vote on this item as well. Your vote concerns the proposal to appoint EY as the external auditor to audit the 2024 financial statements. If you've not yet cast your vote, you can still do that until the end of the meeting, up until the any other business. Good. We can now move on to agenda item 10. You can make recommendations for the appointment of a member of the Supervisory Board. At the close of this meeting, the term of appointment of Ms. Sapp and Mr. Hartman will expire. Ms. aillard already previously indicated that she would resign from her duties at the close of this meeting, and that is due to personal circumstances.
Now, in order to ensure continuity after a number of changes in the composition in a relatively short period, the supervisory board now proposes to reappoint Ms. Sapp as a supervisory member for a third term of two years, also with effect from this meeting. As a result, the supervisory board will temporarily consist of nine members. The supervisory board intends to fill the vacancies that have, of course, you know, will now be created by nominating three candidates for appointment by this GMM. In addition to the reappointment of Ms. Sapp, about which I will say a little bit more in a moment. On behalf of both boards, I would now like to first thank Mr. Hartman and Ms. Guyard for their important contribution provided to KPN. Mr.
Hartman has been a member of the Supervisory Board since already 2015. From his appointment, Mr. Hartman was the chair of the Remuneration Committee and a member of the Nominating & Corporate Governance Committee and the Strategy and Organization Committee. In the last, in the past year, Mr. Hartman also helped me as a vice-chair of the Supervisory Board, for which I'm very grateful. Because of his extensive managerial experience and also his knowledge of the international business world and also the relationships he has between the business community and society, Mr. Hartman was of a great value to the Supervisory Board and the Executive Board.
As a chair of the Remuneration Committee, he has also been able to steer the discussions about executive remuneration in the right direction, focusing on a fair remuneration from the perspective of employees, the company, and society. Therefore, we will miss him very much, and therefore, we would all like to thank him so warmly for his important contribution to the company and also his dedication to KPN employees and shareholders. Peter, thank you so much. Ms. Guyard has been a member of the Supervisory Board since 2020, and from the moment she took office, she was a member of the Audit Committee, and also she chaired the Audit Committee in 2021, from 2021 onwards. She ensured the soundness of financial reporting and also a very prudent management of company finances.
Her very keen eye and broad business experience kept both boards very alert, and therefore we will miss her very much. Of course, we would also like to thank her very, very much for her important contribution to the company and her dedication to KPN, the employees, and the shareholders. Catherine, thank you so much. The Supervisory Board, like I said, intends to fill the vacancies that have been opened by nominating candidates for appointment by this General Meeting of Shareholders. The new vacancies have to be fulfilled in accordance with the profile of the Supervisory Board. In particular, the Supervisory Board aims to have a diverse competition in terms of experience, professionalism, age, and gender.
In addition, candidates will need to have knowledge of or experience with the management of a large company and also with national or international business, finance, and/or relations between companies and society. Moreover, candidates must have also an affinity with the telecom and IT industry world. In addition to the reappointment of Ms. Sapp, we would want to intend to propose Mrs. Noteboom, Heemskerk, and Dijkhuizen to be appointed today. I'd like to stipulate here that the composition of the Supervisory Board at the time of this meeting, and even if the intended appointments are adopted, will still continue to meet the legal requirements that apply with respect to a balanced composition in terms of gender distribution. For the sake of completeness, as already said, Ms. Vergouw will only step down from the Supervisory Board when she joins the Executive Board.
We wish to fill the vacancy that this creates immediately by having Mr. Jager step on as a member of the Supervisory Board, all this will happen on the 31st of May. In this way, the Supervisory Board will continue to comply with the legal requirements, right, regarding the balanced composition of the Supervisory Board, even if, you know, or, you know, with Ms. Vergauwe's resignation. Having said that, in accordance with the Articles of Association, I give the General Meeting the opportunity to exercise their right to make a recommendation for the appointment of a member of the Supervisory Board for the vacancies that now exist and for which the nominations have been put on the agenda of this meeting. Does anyone in the room or via video connection have a recommendation to make for a candidate?
I can note that the General Meeting has not made a recommendation for a candidate. We can move on to agenda item 11. That's a proposal to reappoint Ms. Sapp as a member of the Supervisory Board. First of all, the Supervisory Board nominates Ms. Sapp for reappointment as a member of the Supervisory Board. Let me briefly explain this nomination, and for the rest, I would like to refer you to the further information in the agenda. The nomination for this position is subject to the reinforced right of recommendation of the Central Works Council, which, by the way, recommended her nomination. This was taken over by the Supervisory Board. The Executive Board supports her nomination, and the recommendation of the Central Works Council can be found on the company's website, which was part of the meeting documents as well.
Ms. Sapp meets all requirements of the Supervisory Board's profile, in particular, her extensive knowledge of and experience in the public sector and her knowledge about relations between society and the business community. She's very much appreciated for her contributions to the Audit and Remuneration Committee, especially with respect to ESG topics and also because of her relationship with KPN employees. Ms. Sapp is considered independent within the meaning of the Dutch Corporate Governance Code. Ms. Sapp has fulfilled her duties in a good manner and always to the satisfaction of the Supervisory Board.
She's provided valuable contributions and good insights, including as a member of the Audit Committee and the Remuneration Committee. The supervisory board, like I said before, believes that for continuity, it's desirable to reappoint her after a number of changes in the composition of the supervisory board in a relatively short time. That means that I'd like to propose now that Ms. Sapp be reappointed as a member of the supervisory board as included in the agenda, right, for a period of two years, which will end at the close of the annual meeting of shareholders to be held in 2025. Does anyone have any questions, either in the room or via video? Mr. Stevens.
Thank you, Mr. Chair. Mr. Stevens from Kerkdriel. We would like to hear from Ms. Sapp. What motivates you to add yet another two years to your experience as a supervisory board member? I am sure that you will do that very happily.
Indeed, Chair, thank you, Mr. Stevens, for your question. Of course, after being active in a company for eight years, you wonder whether you know, are still sufficiently curious and willing to really take a deep dive into it, I am very much so. This is partly because of the, you know, wonderful and interesting colleagues that I will have, which will create an entirely new dynamic, it also relates to all the interesting challenges that we will be faced with over the next few years, especially with respect to ESG policy. I would love to keep contributing to that together with KPN.
As said, the Audit and Risk Committee, I've contributed to it with great pleasure, I think it's important to have the right continuity there. I will continue my efforts there too. Thank you, Gerard van de Aas.
Does anyone else have any questions about this topic? No questions. That means that, since there are no questions, we can cast our votes. You can cast your votes on this. The vote concerns the proposal to reappoint Ms. Sapp as a member of the Supervisory Board. Again, just like with the others, you can cast your vote until the any other business item. We can now move on to agenda item 12, which is the proposal to appoint Mr. Noteboom as a member of the Supervisory Board. Let me also briefly explain his nomination. For the rest, again, you can...
I would like to refer you to the agenda. In our opinion, Mr. Noteboom is a very valuable addition to the board, and he also meets the requirements of the profile. In connection with the resignation of Mr. Hartman, the Supervisory Board would like to supplement his managerial knowledge and expertise, especially in a Dutch context. With his very extensive track record in managerial and currently also supervisory positions in different industries and his, you know, very good anchoring, so to speak, in Dutch, in the Dutch business society, Mr. Noteboom meets this profile and complements the Supervisory Board very well. He's also considered independent within the meaning of the Dutch Corporate Governance Code.
His nomination is supported by the executive board and the Central Works Council, and the position of the Central Works Council with respect to his nomination can be found on the company's website. For these reasons, the Supervisory Board would now like to nominate Mr. Noteboom for appointment as a member of the Supervisory Board for a period of four years, in this case, ending at the close of the annual meeting of shareholders to be held in 2027. Mr. Noteboom is attending this meeting, and for that, I would like to give him the floor for a brief introduction.
Good afternoon, ladies and gentlemen. I would like to introduce myself briefly. My CV has been added to the agenda, so I will not address that. Why KPN? That was the same question to Ms. Sapp. I would like to answer that question. I was very motivated to do something for companies that contribute to society, and I must say that KPN is of crucial interest to Dutch society. This is why I had no doubts when I was asked whether I was interested to take this position. The welfare of the Netherlands is connected to companies like KPN, and I would like to really contribute to that. Then the second factor is how do you do that?
Randstad, the company that I was with for a long time, has described the concept of stakeholder interest, but it means that you take into account all decisions that are made and what effect it has, and I think KPN does that. I've seen it all today. It is all very well thought for shareholders, for colleagues, for the environment. This is why I'm very much motivated to contribute to this company. Thank you.
Thank you. Are there questions about this item on the agenda? Mr. Stevens.
Thank you, Chair. Again, Stevens from Kerkdriel. Yes. For all three candidates, we have the same question. Is that all right that I ask them straight away for all three of them, you can put them forward to all three candidates, and then they can answer it
We were wondering how KPN got in touch with you or you with KPN. Did you use a headhunter or a recruitment agency? If yes, what was the profile? What was the assignment? You know, did you have a shortlist? How did the procedure go of selecting a candidate? Again, was there a shortlist? Was it discussed in a committee, a recruitment committee? Who was in it, and did it lead to a select number of candidates? Did you talk to those candidates, and were those interviews? What can you say about those interviews?
Mr. Stevens, I can answer the question for you for on behalf of all three candidates when it comes to the process. When we are looking for a supervisor or an executive, it doesn't matter. This process always begins by drafting a profile.
What are we looking for? What type of executive or supervisor do we need? There is variation, obviously. If you look at the profiles at the three people who have been nominated, they are all different when it comes to their profile. This is how it happens. What happens is that you engage an agency. This agency, I think there's three or four of them, and we regularly use those services. They will provide a long list first of all. The long list is discussed. This happens in the Nominations Committee. The Nominations Committee is in the lead usually. They look at it. That long list is reduced to a manageable number that you talk to. Could be three candidates, four, and in the end, you have a preferred candidate or the candidate that you prefer most. The process continues.
As a chair, usually I first talk to a candidate, then members of the Nominations Committee will talk to the candidate, then the other members of the Supervisory Board, and then in the end, this will result in an appointment. This is how these processes go, to the extent that, you know, wherever we as Supervisory Board are in the lead. When it comes to executives that are nominated by the Central Works Council, for example, that is relatively similar, but then obviously the Supervisory Board is not in the lead, but the Central Works Council is in the lead, and we are in touch, obviously. All these processes are very similar and identical to... obviously, the outcome is based on the profile that we look for. Does that answer your question? Yes. Thank you. Any other questions? Mr. Stevens?
Again, for all candidates, I know that Mr. Noteboom has said something already. We would love to know how careful the process was that the candidates went through and how the interviews were with the executive board and the supervisory board. Did you look at the future perspective, the expectations, the strategy, any upcoming regulations? How extensive were all these subjects addressed? Just like what Mr. Noteboom already referred to, what will they add? What kind of values will they add to KPN? Their motivation. I would like to know whether they've already talked to the auditor as well.
Maybe when the gentlemen introduce themselves, they can briefly zoom in on that. Your question also sees to really the contents of the matter. When you say I've already said that candidates talk to the CEO and the supervisory board.
Obviously, there is a strong component on the merits. You know, where is the company? What are the challenges? Obviously, all these matters are addressed. You know, what decisions are upcoming. Really talking about the strategy of the company plus all ongoing challenges that you have every year. These items are included. You know, please, candidates, when you introduce yourselves, they can briefly address this. You know, Maybe they can include it. They will also address the matter of why KPN. Ben, maybe you feel a need to add something to what you've already said. Well, I think I said it all, that I was very motivated, and I think you need motivated people in your company, right?
When I started out with Gerard, you know, I was like, you know, "How, how exciting is it?" Then it was very exciting. I talked to other supervisors, obviously, we talk about the challenges. You know, how is the company doing? Where you wanna go? All the obvious things that you'd expect. Does that answer your question, Mr. Stevens? It was all positive. Yes, it was all positive. Doesn't mean, however, that there are no aspects that can be challenging or maybe I have a different opinion of, but, you know, that's normal. Any further questions? If not, then I conclude that there are no further questions about this subject. Now you can cast your vote on this item. It concerns the proposal to appoint Mr. Noteboom as a member of the Supervisory Board.
The vote is open until any other business. We now proceed to item 13, which is the appointment of Mr. Heemskerk. I would like to briefly address the nomination. I'd like to refer to the further information in the agenda. The nomination for this position was also based on the recommendation of the Central Works Council, which recommended Mr. Heemskerk's nomination. The complete recommendation of the Central Works Council can be found on the KPN website. Mr. Heemskerk complies with the requirement and is very knowledgeable in the public industry and politics, and has a clear insight in the society, and also because he is a Secretary General of the European Round Table for Industry in Brussels, but also in previous roles that he was a Minister of Foreign Trade, he was Member of Parliament.
Heemskerk is considered independent within the meaning of the Dutch Corporate Governance Code. It is therefore proposed that, therefore Mr. Heemskerk is a great addition and has adopted that nomination and also the other board supports this. Supervisory Board proposes to appoint Mr. Heemskerk in accordance for a period of four years, ending at the closure of the annual general meeting of shareholders to be held in 2027. Mr. Heemskerk is present here, I would like to give the floor. Frank.
Good afternoon. You see my CV and picture on the screen already. I believe that COVID, everybody who was not convinced yet, it demonstrated how important digital services and digital infrastructure is for the Netherlands. KPN plays an enormous important role.
It's a huge honor for me for that reason that I have been nominated for the supervisory board, and an even bigger honor that this was done based on a right of the Central Works Council. I, of course, bring experience from economic affairs, but also my work at the World Bank. I am pretty sure that growth investments and having a healthy profitability is very, very important for any stakeholder, and I am very committed to work on that. I have a current position in Brussels, and I am able to see and witness how more and more regulation and directives come from Brussels, and that has an impact on KPN and Netherlands as a country. I would really like to contribute to that, making sure that KPN is ready.
I must say, all meetings were very pleasant, informal and formal. I have the impression that KPN is doing really well. They're growing, and you can always do better, right? If there are any further questions, I'm happy to answer.
Thank you, Frank. Any further questions for Mr. Heemskerk or this item? If not, then thank you. I conclude that there are no further questions. Also, then you can now cast your vote. The vote is about the appointment of Mr. Heemskerk as a member of the Supervisory Board, and the vote is open until any other business. Thank you. This means that we have now come to number 14, which is the appointment of Mr. Dijkhuizen on the Supervisory Board.
I would like to briefly inform you. I again refer you to the explanatory notes with the agenda. Mr. Dijkhuizen is a valuable contribution to the Supervisory Board and meets the requirements of the profile of the Supervisory Board. Mr. Dijkhuizen is a seasoned executive with a strong track record as finance and audit professional. Because Ms. Guillouard is stepping down, the Board wishes to use his audit and finance expertise. His track record is unprecedented. Therefore he meets all the requirements of the profile. He is a nice addition to the Supervisory Board. Mr. Dijkhuizen also qualifies as an Audit Committee financial expert. He is independent within the meaning of the Dutch Corporate Governance Code. The appointment is supported by the Management Board and the Works Council as well.
You can find the position of the Works Council also on the company's website. For that reason, Mr. Dijkhuizen is nominated by Supervisory Board for a period of four years, ending at the closure of the annual general meeting of shareholders to be held in 2027. Mr. Dijkhuizen is present here, and I would like to give the floor to him for a brief introduction.
Thank you, Chair. Looking at my, first of all, thank you for having me. It says a CFO NIBC. I am no longer that. I stepped down as per the first of April. Mr. Dijkhuizen, this is how we know each other, right? Mr. Stevens, I'm sorry.
There is a time when you no longer wish to be full-time executive, and you want to do something else in your life, and I decided that I wanted to do that. As per the first of June, officially, I will no longer have those ties. This is why it would start at the first of July for me and not at the end of this AGM. Why KPN? If you look at my CV, I have done many, many things and then said this already, but, you know, really, focusing on social issues, I obviously also consciously did a number of things. I did not do a number of things. For example, IT is fundamental.
How we interact, how we communicate, it will only become more important not only today but also in the future. I would really like to contribute to that. It is great that the chair says that I'm an expert in the field of finance. That's nice. I wanna grow in a number of other fields. If you say, as an executive, I'm going to stop, the worst thing to do is to completely retire. I wish to focus on a number of things. One of those things is, you know, the nice discussion that we had today about 5G. What happens? You know, what do you do? How can you work that best? It's a combination of giving and also receiving, making sure that in my other roles that I have, I can still continue to grow. That's one.
Next step, we have had regular talks. I had an informal talk with the auditor, and he confirmed to me that I was allowed to do this. This is why I'm free to say this today, Mr. Stevens. I think it's just great to be able to do it. These are my reasons.
Thank you, Herman. We will now proceed to questions on this item. Are there any questions, comments to Mr. Dijkhuizen? No further questions. I conclude that there are no questions. Now you can vote, and it concerns the proposal to appoint Mr. Dijkhuizen as a member of the supervisory board as per the 1st of July this year. The vote is open until the start of any other business. Thank you. This brings us to 15, 16, 17, and 18.
15 is the proposal to grant. So sorry. Concern the proposal to authorize the Board of Directors to acquire KPN's own shares, then the proposal for capital reduction by withdrawal of own shares. 17 concerns the proposal to appoint the Board of Directors as the competent body to issue ordinary shares. 18 concerns the proposal to appoint the Board of Directors as the competent body to limit or exclude the statutory right of preemption when issuing ordinary shares. These four items on the agenda are closely linked, I will explain them to you at once. However, you can vote on it separately. The proposals give the Executive Board, under the supervision of the Supervisory Board, some flexibility with regard to the issuance and repurchase of shares.
These schemes are on the agenda every year and are in line with what is customary in the Dutch market. We therefore ask you, like every year, to, one, authorize the board of directors to repurchase a maximum of 10% of its own shares and, second, withdraw own shares, thus repurchase and thus reduce the subscribed capital. Three, empower the board of directors or authorize the board of directors to issue up to 10% of ordinary shares. Fourthly, give the board of directors the power to exclude in such issuance or limit the right of preemption in that event. For the exact modalities of these items on the agenda, I refer you to the explanatory notes.
Finally, I would like to point out that these decisions, apply for a period of 18 months from today and will replace your decisions from last year. We will now proceed with questions. Does anybody have questions?
yeah. Danke well.
Yes. Thank you, Mr. Chair. My name is Bruning. This, power, is it about the EUR 300 million worth of repurchase of shares that was announced?
No, sir.
This is a separate proxy?
Yes, it's part of it. It fits in it.
What do you mean, sir? You mean... Yes, I'm now looking at the secretary. This is part of it.
Yes. The buyback or the purchase program of EUR 300 million is part of the mandate that you will give us.
Do you have any plans to purchase any more?
We will not tell you, as you'll understand, it's not currently something where that's our plan. If not, we will of course issue a press release. Do you have any more questions?
Do you have any plans perhaps to withdraw any shares or reissue new shares? I mean, are there any concrete plans? Because, yes, this is an annual, you know, mandate, but does it, anything ever happen?
Sir, if it ever happens, we will of course inform you about it as we should. Currently, those plans are nonexistent. Any other questions?
No further questions about this topic then. Now, about each of these agenda items, you can cast your vote. I would like to request you to do that, because afterwards we will end the voting. 15 concerns the proposal to authorize the executive board to acquire KPN's own shares according to the specs that you read in the agenda. 16 concerns the proposal for capital reduction by withdrawal of KPN's own shares. Agenda item 17, as said, concerns the proposal to appoint the board of directors, the executive board, sorry, as the competent body to issue ordinary shares. Agenda item 18 concerns the proposal to appoint the executive board as the competent body to limit or exclude the statutory right of preemption when issuing ordinary shares.
Please cast your vote, these will also be the final voting items. Within a few moments, we will close the voting on all items. Please therefore make sure that you cast your vote on every item insofar as you've not done that already. I will give you a few moments to cast your votes, or if you should want to change your vote, 'cause that's possible too. Let me look at the notary and also the secretary. The vote is hereby closed. That means that on no agenda item you can vote any longer, the results will be shown on the screen. For that, before that, we will now continue first with item 19, DNA of the business. Someone in the back. Please state your name.
Last year, I asked the very same question. The dismantling of the ordinary landlines, and the fact that we can only go and use internet basically in the future. A former general once said that we should not fully do away with the old phone line network, i.e. landlines. For now, it seems that the government doesn't seem to realize the importance, but, you know, I would like your reaction on it.
I will give the floor to Mr. Figee to answer this question.
I was just told that I should state my name. My apologies. Reinik is my name.
Thank you for your question, sir. Indeed, the year we started dismantling the old copper because we are now focusing on fiber optics.
We of course don't need to overlay one network over the other, right? We do have a very careful approach. Whenever we roll out fiber optics, we always announce that on average five years later only, we will start dismantling the copper network in that area, so people have some time. Basically the whole industry of, you know, the, let's say, the old-fashioned, you know, ISDN and whatever calling has already moved to IP calls. My dad, who's 93, also uses the same old, landline. The problem in the past was that the IP protocol didn't work on certain networks, right? For example, alarm systems, et cetera, but that hardly ever happens. Whenever we do dismantle networks, and sometimes we see exceptional cases, and then of course we take that into account.
The actual, you know, turning off of that system hasn't happened, but we have basically taken 2 million households off the system. I don't know which former general you are referring to. We have very good relations with the Department of Defense, obviously. They're a very important partner and client of ours, I've never heard from them that we should not move to the IP protocol 'cause that's the industry standard and has been for years. For those people who still struggle with it, we have great substitutes available in the market. We've had no one dissatisfied that we had to sort of leave behind. We've always been able to provide households with the best equipment, even if they only have equipment that uses ISDN.
For example, we made a very, very small device for it that provides, you know, the possibility to make a switch to the old system. Anyway, I remember your question from last year, and indeed, we have included it in the dismantling program, I'm sure things will be fine. I'll hope to be able to give you a new update next year.
Thank you. Mr. Stevens, you had
a question? Yes, Mr. Stevens, still from Kerkdriel. I read somewhere that the room for the issuance of new mobile phone numbers is limited, the space. How long do you think you can continue, and how much room is there to, you know, create new phone numbers? How is that going to be in the future?
Joost?
Yes. That is, indeed something that was in the media recently.
It's the ministry that issues or creates those numbers. It has happened that the mobile phone numbers threaten to be insufficient. That, of course, had not only to do with how the market growth but grows, but also the way you deal with the numbers, because many numbers come back, and you can reuse them. There's a world to be won there. The ministry is considering indeed to make a new 06 series available, so mobile series that used to be called, used to call, to a certain network that cannot be released. Anyway, I also think that mobile phone providers can use the numbers that come back more efficiently. They can reuse them, and we already are doing that very efficiently.
We see no shortage whatsoever. There's no shortage in the Netherlands anyway, with the new 06, 760, might become available for the market as well. In addition, if I may. In the past, I have received or I have experienced or a friend, a person I knew received a reused number, and there was some issues. That's exactly what I meant with doing that, you know, carefully 'cause you give a number to a person that is then used. If people, for whatever reason, you know, stop using that number or switch to a new number, then obviously the provider has to ensure that the number is disconnected for that client and can then be reused in the market after a cooling off period. This doesn't happen from one week to the next.
Normally, at least, it shouldn't. Whenever we come, receive a number back, then we don't re-issue it the next week. How long is that period? I'm not sure, sir, but I think it is one or two years at least. 'Cause obviously it's also about the number, making the number available to a new user who can then, in his or her way, start using it. There is a cooling off period. I think it's more than a year in any case.
Thank you. Any other questions? We have a question over there .
Thank you, Mr. Chair. My name is van Domberg, I'm from Delft. My question is partly as a consumer, partly as a shareholder. It's about the rollout of optic, fiber optics. Last summer, it was concluded up until the front door, right?
Of the building, afterwards, it's become, it's very difficult. Normally, as a consumer, I, you know, have the experience of getting answers quickly from KPN, now it is basically, you know, you have to wait 45 minutes, the chain partners, everyone says, "Yes, fiber optics has been delayed with a year." Another product that I'm not sure of that I tested, they said, "Do you want it? Well, if you want it, then you have to renew your contract, leave your data, we'll call you." They called me within eight weeks. That doesn't seem very efficient, does it? With respect to efficiency, I have competitors, you know, on my doorstep every two weeks. Basically, you know, I'm not really, you know, interested in them. Anyway.
Joost, look, we're working on a gigantic operation. The rollout of optic fiber is basically us selling connections for connection, for physical connections that still need to be built. It's a lot of work. Having said that, it goes pretty well. There is indeed a labor market shortage, as you may know. You know, the rollout in the streets goes faster than connecting the actual homes. Although, you know, 70% can be done by us, and competitors are not even close to that percentage. It's a process that we have to recalibrate every time. If you get lost within KPN when you call, of course, that's bad. That needs to be improved.
This is definitely one of the most important objectives for us also, to make it clearer and more unidirectional, right? It's correct that indeed the streets are connected sooner than the actual homes, and that is because of, you know, management of available capacity, but it's not correct if we're not clear about it, that should be improved. I agree with you. Where do you live? In Delft. Okay. That's exactly where we are indeed working, but indeed, that should definitely improve in the client communication. Thank you for pointing that out. The second point, I don't know what service you were referring to. Can I speak freely? I don't know. If that's legal, then I suppose, why not? Is it about KPN? It's about KPN. Yes.
Last year, we received an offer to test the new devices. It was said you are not allowed to communicate about it. Yes, I know. Yes. That indeed is also a very important project. By the way, we have already announced it, and it's in the market. We made a huge step by moving our TV product to a different platform, the Android platform, which is the industry standard in the world. We can very quickly and basically overnight present new content to our clients without needing, you know, six quarters for it. We still have to migrate many clients to it, though. We've only just started with a few tens of thousands of, you know, clients. You apparently were one of them.
Great. Good to hear. That is if you indeed participated. We have already started it's already gone live, and the first 10,000 clients are indeed already on Android. It's a bit worrisome, though, that you know, can register for it, but then within now and eight weeks, you'll hear from us? That's ridiculous. That is indeed something we will take along because yes, th
at could be better. Thank you for the advices. I indeed think that it is wise to have you to talk with each other afterwards over drinks to exchange details. I see there's business cards flying around already, good. Any other questions? No questions. Good.
In that case, we can move on to the final item, and that's the voting results, for which I would like to give the floor to the secretary
Yes, thank you. I will share the results with you, ladies and gentlemen, and they will also be, or they should be on the screen. Yes, so that I can see them as well. Agenda item three, the adoption of the annual accounts of the year 2022. The proposal was adopted by 99.99% of the votes in favor. The remuneration report adopted with 96.56% and 3.44% against. The dividend 100% and 0% against. Adopted. Agenda item seven, discharge of the executive board members, 98% in favor and 1.9% against, by the way.
The same for the Supervisory Board members, 98.1% and 1.9% against, also adopted. The same for the adoption of the proposal to appoint the external auditor, 99.86% in favor. Agenda item 11, the appointment of Ms. Sapp as a member of the Supervisory Board, the reappointment actually, 93.5% in favor. To appoint Mr. Noteboom as a member of the Supervisory Board, 97.2% in favor. Mr. Heemskerk as a member of the Supervisory Board also adopted 97.29%, and that means that proposal was adopted as well. The same applies to Mr. Dijkhuizen's appointment, 97.26%, also adopted. The mandate to acquire own shares, 99.63%, adopted.
Capital reduction by withdrawing own shares of the company, 99.9% in favor. All adopted. Also adopted the executive board as the competent body to issue ordinary shares, 98.62%, adopted. Also adopted the proposal to appoint the executive board as the competent body to limit or exclude the preemptive right, 75.4%. Also adopted.
Thank you, Jasper. I can hereby state that all agenda items or all proposals on the agenda item have been voted for in favor. That means I can also congratulate the new members, Noteboom, Heemskerk, and Dijkhuizen and Mrs. Sapp. I can congratulate her on her reappointment. Congratulations, and the supervisory board is looking forward to the future collaboration. I'd also like to congratulate Jolanda on her reappointment.
Congrats, and nice that you will remain part of the team. Finally, I would like to briefly mention or thank a few persons, for that the notary and the secretary, I would like to thank them for their work at the meeting, I would like to thank this executive board on behalf of the Supervisory Board for all their help and support and everything. I would also like to thank the auditor for his efforts and for taking the floor here today, for attending this meeting. Obviously, I would also like to thank the people who make all of this possible, so the team behind the screens. Gerald and all the others, I don't know where you are, but a big thank you. I see him in the back indeed.
Thank you very much for the organization. Everything went very smoothly as always. Thank you. In addition, I would like to say something about the resignation of Mr. Fouladi and Mr. van Overbeke from the executive board as of the first of May. I'll do this in English.
Jean-Pascal, it is impossible to do justice to your contribution over the past few years in just a few sentences. Since we are now gathered here today with our shareholders, I deem it appropriate to extend on behalf of the board of management and the supervisory board our sincere gratitude for your contribution to the company and its shareholders in your capacity as members of the board of management. We will all, and at different moments, say goodbye to you, but hopefully you will feel our appreciation and gratitude by expressing these words in the presence of our shareholders today. Babak and Jean-Pascal, thank you very much.
Finally, I'd like to thank all of you for your presence and your input in this meeting. This applies to everyone here, but of course also all of you joining us via the video link. The next annual meeting is expected to take place on April 10th next year. The final date will of course be announced as soon as it is known on the KPN website. In my introduction, I already referred to the extraordinary meeting which will be convened shortly and which will take place on the 31st of May because of the appointments, sorry, the proposals for appointments that have been recently announced by the company. I hereby thank you for your for being here. I hereby close the meeting. Thank you.