Proximus SA — Audit Report / Information 2012

Mar 15, 2013

Belgacom NV van publiek recht / SA de droit public

Report of the joint auditors to the shareholder's meeting on the financial statements for the year ended 31 December 2012

The original text of this report is in Dutch / French

Belgacom NV van publiek recht / SA de droit public

Report of the joint auditors to the shareholder's meeting on the financial statements for the year ended 31 December 2012

To the shareholders

As required by law and the company's articles of association, and more specifically by articles 143 and 144 of the Companies Code, applicable to Belgacom NV van publiek recht / SA de droit public under article 37 of the law of 21 March 1991 reforming certain economic public corporations, we are pleased to report to you on the statutory audit assignment which you have entrusted to us. This report includes our opinion on the financial statements together with our report on other legal and regulatory requirements.

Report on the financial statements - Unqualified opinion

We have audited the financial statements of Belgacom NV van publiek recht / SA de droit public for the year ended 31 December 2012, prepared in accordance with the accounting principles applicable in Belgium, which show total assets of 16.490.129 (000) EUR, and a profit for the year of 745.704 (000) EUR.

Responsibility of the board of directors for the preparation of the financial statements

The board of directors of the company is responsible for the preparation and fair presentation of these financial statements in accordance with the accounting principles applicable in Belgium, and for such internal control as the board of directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Joint auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with legal requirements and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the joint auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the joint auditors consider internal control relevant to the company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We have obtained from the company's officials and the board of directors the explanations and information necessary for performing our audit.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Unqualified opinion

In our opinion, the financial statements as of 31 December 2012 give a true and fair view of the company's assets, liabilities, financial position and the results in accordance with the accounting principles applicable in Belgium.

Report on other legal and regulatory requirements

The preparation and the assessment of the information that should be included in the directors' report and the company's compliance with the requirements of the Companies Code and its articles of association are the responsibility of the board of directors.

In the framework of our mandate, our responsibility is to verify, for all significant aspects, the respect of some legal and regulatory obligations. On this basis, we include in our report the following additional declarations, which do not change the scope of our audit opinion on the financial statements:

• The directors' report includes the information required by law, is, for all significant aspects, in agreement with the financial statements and is not in obvious contradiction with any information obtained in the context of our audit mandate.
• Without prejudice to certain formal aspects of minor importance, the accounting records are maintained in accordance with the legal and regulatory requirements applicable in Belgium.
• The appropriation of the results proposed to the general meeting is in accordance with the requirements of the law and the company's articles.
• No transactions have been undertaken or decisions taken in violation of the company's articles or the Companies Code such as we would be obliged to report to you.
• In accordance with article 523 of the Companies Code, we are required to report on the following operations which have taken place since 31 December 2011:
• During the meeting of the board of directors of 1 March 2012, the board of directors has decided upon the short and long term incentives of the President & CEO, triggering a conflict of interest for the President & CEO, in his capacity as director of the company. In respect of the offering to the President & CEO under the short term incentives, the board of directors estimates the financial consequences for the company at 513.452 EUR for the past year. In respect of the offering to the President & CEO under the long term incentives, the board of directors estimates the financial consequences for the company at 534.611 EUR for the past year. The President & CEO did not participate in the deliberation and decision on this item.
• During the meeting of the board of directors of 26 July 2012, the board of directors has decided upon the extension of the existing power supply contract with Electrabel Customer Solutions, triggering a conflict of interest for Mrs. L. Van Den Berghe, in her capacity as director of both the company and Electrabel Customer Solutions. Mrs. Van Den Berghe did not participate in the deliberation and decision on this item.
• During the meeting of the board of directors of 13 December 2012, the board of directors has decided upon the conclusion of a new frame agreement with Bpost for Fixed and Mobile billing, triggering a conflict of interest for Mrs. M. Durez, in her capacity as director of both the company and Bpost. Mrs. Durez did not participate in the deliberation and decision on this item.

In the directors' report, the board of directors has, in accordance with the requirements of article 523 of the Companies Code, reported on the above transactions, which triggered a conflict of interest for the aforementioned board members. We refer to chapter 9 of the attached directors' report for the respective extract from the minutes of the board of directors.

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During the period, the company paid an interim dividend on which the statutory auditors, member of the joint $\bullet$ auditors, have issued the report attached to the present report, as required by law.

Brussels, 1 March 2013 The joint auditors

DELOITTE Bedrijfsrevisoren/Reviseurs d'Entreprises BV o.v.v.e. CVBA / SCs.f.d. SCRL Represented by Geert Verstraeten

Luc CALLAERT BV 0.v.v.e. EBVBA / SC s.f.d. SPRLU Represented by Luc Callaert

Perd

The Belgian Court of Audit Represented by Pierre Rion Counselor

Romain Lesage Counselor

Belgacom NV van publiek recht /SA de droit public

Auditors' report on the statement of assets and liabilities as of 30 September 2012 with respect to the proposed distribution of an interim dividend

Free Translation

Table of content

Page

1.	Introduction	3
2.	Limited review procedures	4
3.	Comments on the statement of assets and liabilities	4
4.	Important post balance sheet date events	4
5.	Limitations on the profit appropriation
6.	Conclusion	6

$\overline{1}$ . Introduction

In accordance with article 45 of the company's bylaws, the board of directors proposes to distribute an interim dividend out of the profit of the year.

In accordance with article 618 of the Company Code we have performed a limited review of the attached interim statement of assets and liabilities for the period of 1 January 2012 till 30 September 2012, which shows a balance sheet total of 15.880.002 (000) EUR.

This attached interim statement of assets and liabilities has been established under the responsibility of the board of directors in order to allow the directors to verify whether the available profit of the period, determined in accordance with the below mentioned article 618, is sufficient in order to distribute an interim dividend up to approximately 262 million EUR.

The wording (translated from Dutch) of article 618 reads as follows:

"The articles of association empower the board of directors to distribute an interim dividend on the results of the financial year.

The distribution can only relate to the profit of the current financial year, and, in such case, decreased by losses carried forward or increased by profit carried forward excluding the reserves set aside based upon a legal or statutory requirement. In addition, the distribution can only be realized after the board of directors has verified that the profit, determined in accordance with the second paragraph, is adequate in order to distribute an interim dividend on the basis of the statement of assets and liabilities, which is reviewed by the statutory auditor.

The verification report of the statutory auditor is attached to his annual opinion.

The board of directors' decision to distribute an interim dividend should be taken no later than 2 months subsequent to the date on which the statement of assets and liabilities has been drafted.

The distribution can be decided upon as early as 6 months after the closing of the previous financial year and following the approval of the financial statements of that financial year.

Subsequent to a first interim dividend distribution, a new distribution can be decided upon as early as 3 months after the first interim dividend was decided upon.

If the interim dividends exceed the amount of the year-end annual dividend, which is decided upon by the General Assembly, the surplus is considered as an advance on the subsequent dividend."

$2.$ Limited review procedures

Our review was performed in accordance with the recommendations of the Belgian Institute of Chartered Auditors relating to limited review procedures. A limited review of a statement of assets and liabilities mainly comprises of an analytical review of the financial data and a discussion of this information with management. The scope of this limited review is not as extensive as a full review performed in accordance with generally accepted accounting standards. Therefore we cannot express an opinion on the attached statement.

We also ascertained that, based on the company's by-laws, the board of directors has the required legal power to distribute an interim dividend.

Comments on the statement of assets and liabilities $3.$

The interim statement of assets and liabilities as of 30 September 2012 has been established under the responsibility of the board of directors in accordance with the accounting law and regulations and the company's valuation rules and is derived from the company's accounting records. The valuation rules are consistent with those used in the previous accounting year.

The establishment of a statement of assets and liabilities for purposes of issuing an interim dividend does not require the inclusion of disclosures. Nevertheless, we would like to refer to the disclosures with respect to important claims and legal proceedings as included in the company's annual accounts as per 31 December 2011 and the consolidated halfyear results of the Belgacom Group per 30 June 2012, more specifically to the discussion of the alleged abuse of dominance on the Belgian mobile market. The board of directors of Belgacom SA de droit public/NV van publiek recht (hereafter "Belgacom") has to assess this situation in the context of the intended distribution of an interim dividend. For the purpose of the distribution of an interim dividend, the attached interim statement of assets and liabilities is reliable to the extent that the assessment previously made by the board of directors with respect to the risks resulting from the claims and legal proceedings remains unchanged. The management has confirmed to us that there are at present no new elements that would change the above mentioned risk assessment.

4. Important post balance sheet date events

On 23 October 2012, the board of directors of Tango SA, a wholly owned subsidiary, decided to distribute an interim dividend to its shareholder. Belgacom, for an amount that ranges between 400 and 725 million EUR, unless the conditions precedent relating to the planned contribution into the capital of Tango SA of Belgacom's stake in Belgacom Group International Services SA (hereafter "BGIS SA"), a 67,14% owned subsidiary, are fulfilled. In that case, such contribution would generate sufficient positive effects for Belgacom in the current accounting year, annulling the need for an interim dividend from Tango SA.

In case the conditions precedent are not timely fulfilled, the board of directors of Tango SA will determine the final amount of the interim dividend on 24 December 2012, which will then be recorded as financial income in the books of Belgacom. As of the date of this report and on the basis of our discussions with the company's management, there have been no other important post balance sheet events since 30 September 2012, date of the attached interim statement of assets and liabilities, that would have a material effect.

5. Limitations on the profit appropriation

In accordance with article 616 of the Company Code, an amount of at least one twentieth of the net profit is to be annually withheld for the creation of a legal reserve. The obligation to withhold ends when the reserve fund has reached one tenth of its nominal capital.

In accordance with article 617 of the Company Code, no distribution may occur if, as a result of that distribution, the net assets would fall below the paid-in capital, or when this is higher, of the called-upon capital, increased by the reserves, which according to the legal and statutory requirements cannot be distributed. The net assets concern the total amount of assets, as shown in the balance sheet, less provisions and debts. In the event of a distribution of dividends, the shareholders' equity may not include the amount of unamortized formation expenses, and, subject to motivation in exceptional instances, the amount of unamortized research and development costs.

In accordance with article 618, the distribution of an interim dividend can only be made on the profit of the current year and the profit carried forward, excluding the reserves set aside based upon a legal or statutory requirement.

In accordance with article 62 §2 of the Law of 21 March 1991, article 43 of the bylaws of Belgacom states that five percent of the annual profit before tax needs to be distributed towards the personnel of the company. This happens via the profit appropriation in the annual accounts. The attached interim statement of assets and liabilities per 30 September 2012 does not contain this appropriation. Although during the general shareholders' meeting of 18 April 2012 it was decided to no longer include this requirement in the bylaws, this amendment has not yet been ratified by Royal Decree at the date of this report, and hence this article is currently still applicable. In addition, the legal requirements of article 62 §2 of the Law of 21 March 1991 remain unaffected.

In case new elements in connection with the existing claims and legal proceedings would arise prior to the general assembly that will approve the annual accounts as per 31 December 2012, which would give rise to a possible negative assessment that could be made in a reasonable and reliable manner, the distribution of the result could be influenced or potentially affected accordingly.

6. Conclusion

After consideration of what is mentioned above, our review did not reveal any facts or circumstances which would lead to important modifications to the statement of assets and liabilities for the period from 1 January 2012 till 30 September 2012.

The profit of the current period (48 million EUR), as mentioned in the statement as per 30 September 2012, excluding the reserves based upon legal or statutory requirements, is lower than the amount of the proposed interim dividend (up to approximately 262 million EUR).

However, subsequent to 30 September 2012, the board of directors of Tango SA, a wholly owned subsidiary, decided to distribute an interim dividend of minimum 400 million EUR, unless the conditions precedent relating to the planned contribution into the capital of Tango SA of Belgacom's stake in BGIS SA, a 67,14% owned subsidiary, are fulfilled. In that case, such contribution would generate sufficient positive effects for Belgacom in the current accounting year, annulling the need for an interim dividend from Tango SA.

Also, in case new elements in connection with the claims and legal proceedings would arise prior to the general assembly that will approve the annual accounts as per 31 December 2012, which would give rise to a possible negative assessment that could be made in a reasonable and reliable manner, the distribution of the result could be influenced or potentially affected accordingly.

The present report is solely intended for the use of the board of directors and the company's shareholders within the framework of the planned distribution of an interim dividend as set out above and can therefore not be used for any other purpose. In accordance with article 618, it should be annexed to the statutory report on the financial statements for the year ended 31 December 2012.

Brussels, 24-October 2012

DELOITTE Bedriffsrevisoren BV 0.v.v.eCVBA Represented by Geert Verstraeten

Luc CALLAERT BV o.v.v.e. EBVBA Represented by Luc Callaert

Attachment: Statement of Assets and Liabilities per 30 September 2012 and valuation rules of the company

Belgacom Board October 25, 2012

Statement of assets and liabilities as per September 30, 2012 of Belgacom S.A. under public Law

$Nr$ .

$\mathcal{L}^{\text{max}}{\text{max}}$ and $\mathcal{L}^{\text{max}}{\text{max}}$

BALANCE SHEET

	Notes	Codes
ASSETS
FIXED ASSETS		20/28	14.385.982,708,38
Formation expenses		20
	5.1
Intangible fixed assets	5.2	21	4.442.152.143.89
Tangible fixed assets	5.3	22127	2.034.727.832.28
Land and buildings ,		22	210.343.943,37
Plant, machinery and equipment		23	1.736.766.757,25
Furniture and vehicles		24	41.460.811,88
Leasing and other similar rights		25
Other tangible fixed assets		26	46.156.319,78
Assets under construction and advance payments		27
	5.41
Financial fixed assets	5.5.1	28	7.909.102.732.21
Affiliated enterprises	5.14	280/1	7.896.024.658,27
Participating interests		280	7.896.024.658,27
Amounts receivable		231
Other enterprises linked by participating interests	5.14	282/3	8.565.422,01
Participating interests		282	8.565.422,01
Amounts receivable		283
Other financial assets		234/8	4.512.651,93
Shares		234	2.720.000,00
Amounts receivable and cash guarantees		265/8	1.792.651,93
CURRENT ASSETS		29/58	1.494.018.997,88
Amounts receivable after more than one year		29	1.784.340,87
Trade debtors		290
Other amounts receivable		291	1.784.340,87
Stocks and contracts in progress		3	113.208.217.34
Slocks		30/36	85.776.913,78
Raw materials and consumables		30/31	35.109.988,06
Work in progress		32
Finished goods		33
Goods purchased for resale		34	50.666.925.72
Immovable property intended for sale		35
Advance payments		36
Contracts in progress		37	27.431.303,56
Amounts receivable within one year	5.5.11 5.6	40/41	824.610.787.46
Trade debiors		40	809.039.300,04
Other amounts receivable		41	15.571.487,42
Current investments $\cdots$		50/53
Own shares minimum communication communications		50	493.783.921,86
Other investments and deposits		51/53	475.672.118,12
			18.111.805,74
Cash at bank and in hand		54/58	6.930.232,15
Deferred charges and accrued income	5.6	490/1	53.701.498.20
TOTAL ASSETS		20/58	15,880.001.706,26

Nr.
EQUITY AND LIABILITIES	Notes	Codes
EQUITY		10/15	1.938.520.203.10
Capital	5.7	10	1.000.000.000.00
Issued capital		100	1.000.000.000,00
Uncalled capital		101 11
Share premium account Revaluation surpluses		12
Reserves		13	888.110.446.07
Legal reserve		130	100.000,000,00
Reserves not available $\ldots$		131	500.989.321,22
In respect of own shares held		1310	500.989.321.22
Other		1311
Untaxed reserves		132	12 342 622,26
Available reserves		133 14	274.778.502,59 47.792.959.07
Accumulated profits (losses)		15	616.797.96
Investment grants
Advance to associates on the sharing out of the assets www.communication.com/		19
PROVISIONS AND DEFERRED TAXES		16	689.180,571.23
Provisions for liabilities and charges manufactured and re-		160/E	664.797.358,66
Pensions and similar obligations		160	74.808,45
Taxation		161
Major repairs and maintenance		162
Other liabilities and charges	5.8	163/5	684 722.550,21
Deferred taxes		168	4.383.212,57
AMOUNTS PAYABLE		17/49	13.254.300.931.93
Amounts payable after more than one year	5.9	17	10.186.490.455.77
Financial debts		170/4	10.128.491.390,98
Subordinated loans		170
Unsubordinated debentures		171	1,771.836.588,87
Leasing and other similar obligations		172
Credit institutions		173	8.356.654.802,11
Other loans		174
Trade debts		175	57.999.064,79
Suppliers		1750	57.999.064,79
Bills of exchange payable		1751
Advances received on contracts in progress mummum		176
Other amounts payable		178/9
Amounts payable within one year		42/48	2.649.443.737,96
Current portion of amounts payable after more than one
year falling due within one year	5.9	42	56.464.212,45
Financial debts		43	1.606.200.860,83
Credit institutions		430/8	1,550.648.360,83
Other loans		439	55.552.500,00
Trade debis		44	517.944.606,63
Suppliers		440/4	517.944.606,63
Bills of exchange payable		441
Advances received on contracts in progress		46	11.207.298,08
Taxes, remuneration and social security	5.9	45	448,589.582,60
Taxes		450/3	265.911.401,86
Remuneration and social security		454/9	182.678.180.74
Other amounts payable		47/48	9.037.177,37
Accrued charges and deferred income	5.9	492/3	418.366.738,20
TOTAL LIABILITIES		10/49	15.880.001.706,26

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VALUATION RULES

The valuation rules comply with the terms of Chapter II of the R.D. of Jan 30, 2001.

These rules were approved and adapted by the Board of Directors at their meetings on May 27, 1993, Dec 4, 1997, Oct 22, 1998, Oct 28, 1999, Oct 26, 2000, April 25, 2002, Oct 23, 2003, Dec 13, 2004, Dec 18, 2008, Feb 24, 2011 and March 1 2012.

BALANCE SHEET

FORMATION EXPENSES

The loan issue expenses are charged entirely to the year during which they are issued. Important formation expenses are capitalised and depreciated over a period of 5 years. The acquisitions of the year are depreciated pro rata temporis. Reorganisation costs are expensed.

INTANGIBLE ASSETS

The intangible assets are valued at the acquisition cost; this is the purchase price, production cost or the assigned value. General expenses are not incorporated.

For depreciations the straight line method is used. The acquisitions of the year are depreciated pro rata temporis.

Intangible assets with an unlimited useful life are not depreciated. These assets shall only be written down in case of a permanent impairment or diminution in value.

Intangible assets with a limited useful life are depreciated at a fixed rate using the following plan, established on the basis of economic criteria:

• Goodwill: 5 to 15 years
• Software: 5 years $\Delta$ .
• Network licenses: over the license period $\mathbf{a}^{\dagger}$
• Rights to use, football and broadcasting rights: over the contract period $\overline{a}$
• Customer bases and trademarks: 3 to 10 years

The good will generated by the merger of beginning of 2010 is depreciated over 15 years. This depreciation period is justified by the long life character of the profitability of all the merged companies.

TANGIBLE ASSETS

Tangible assets are valued at their acquisition cost; this is the purchase price, production cost or the assigned value. General expenses are not incorporated.

Tangible assets with an unlimited useful life are not depreciated. These assets shall only be written down in case of a permanent impairment or diminution in value.

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Tangible assets with a limited useful life are depreciated using the straight line method. They are depreciated at a fixed rate using the following plan, established on the basis of economic criteria:

	Useful life (years)
Land and buildings - Land - Buildings and building equipment - Facilities in buildings - Leasehold improvements	indefinite $22 - 33$ $3 - 10$ $3 - 10$
Technical and network equipment - Cables and ducts - Switches - Transmission equipment - Radio Access Network - Mobile sites and site facility equipment - Equipment installed at client premises - Data and other network equipment	$15 - 20$ $8 - 10$ $6 - 8$ $6 - 7$ $5 - 10$ $2 - 8$ $2 - 15$
Furniture and vehicles - Furniture and office equipment - Vehicles	$3 - 10$ $3 - 10$

Fixed assets held under leasing or other similar rights are depreciated according to the life period of the real property as mentioned in the contract.

Assets under construction and advance payments are depreciated over the life period of the assets to which they relate.

Fixed assets that are put out of order are valued at net book value or at their expected realisation value if lower. They are no longer depreciated.

The acquisitions of the year are depreciated pro rata temporis.

FINANCIAL ASSETS

Participating interests and shares are valued at their acquisition cost, which is the purchase price or the assigned value. Only the important ancillary costs are capitalised.

A write down is recorded if a durable permanent impairment or reduction in value of these assets is observed, based on the financial situation, the profitability or the prospects of the company in which the participating interests or shares are held, taking into account the CBN/CNC advice n° 126-8.

Receivables are booked at their nominal value. A write down is recorded when, at the due date, the payment is partially or entirely uncertain.

AMOUNTS RECEIVABLE AFTER MORE THAN ONE YEAR

Amounts receivables are booked at nominal value. Amounts receivable expressed in foreign currencies are converted to EUR at the rate in force on the date of booking of the outgoing invoice and are translated at the year-end rate.

A write down is recorded on the nominal value when at the due date, the payment is partially or entirely uncertain.

STOCKS AND CONTRACTS IN PROGRESS

Inventories of consumables and goods for resale are booked at their acquisition cost.

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At the time of the annual inventory, the Weighted Average Price method is used to assess the various subdivisions in this caption.

A write down is applied when the sales or market value is lower than the acquisition cost or to take into consideration the risks inherent to the nature of the products.

Contracts in progress and work in process are valued at production cost or at market price (if this is lower than the production cost).

The projects of the ICT activity (contracts in progress) are taken into result in function of their realisation percentage.

AMOUNTS RECEIVABLE WITHIN ONE YEAR

These amounts appear on the balance sheet at nominal value.

A write down is recorded on the nominal value when at the due date, the payment is partially or entirely uncertain.

Amounts receivable expressed in foreign currencies are converted into EUR at the rate in force on the date of entry of the outgoing invoice. At balance date they are translated at closing rate.

CURRENT INVESTMENTS

Current investments are valued at nominal value when they concern funds held in financial institutions and at acquisition cost, acquisition price without ancillary costs, in the other case.

A write-down is recorded on the nominal value or on the acquisition cost when the sales value on the closing date of the balance sheet is less than the previously booked value.

For the determination of the sales value of own shares the market value is taken into account on the one hand and the execution price of emitted share options for which these shares are held on the other hand.

Current investments in foreign currencies are translated into EUR at the rate in force on the closing date of the balance sheet.

CASH AT BANK AND IN HAND

Cash at bank and in hand is valued at nominal value. A write-down is recorded on the nominal value when the realisation value on the closing date of the balance sheet is less than the previously booked value. Cash at bank and in hand in foreign currencies is translated into EUR at the rate in force on the closing date of the balance sheet.

PROVISIONS AND DEFERRED TAXES

On the closing date of the balance sheet, an inventory is made of all foreseeable liabilities and contingent losses arising during the current year or during prior years. Provisions are established based on a reliable estimate of the risk on the moment of the establishment of the annual accounts.

In the framework of post employment benefits, a provision is made for as well the current as for the future beneficiaries of these benefits. For the current beneficiaries this provision is determined as the present value of the obligation for the accorded benefits. For future beneficiaries, this provision is constituted gradually in function of the number of years in service in order that, at the pension date, the provision reaches also the present value of the obligation for the accorded benefits.

Deferred taxes are booked in compliance with article 76 of the R.D. of January 30, 2001.

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AMOUNTS PAYABLE AFTER MORE AND WITHIN ONE YEAR

Amounts payables appear on the balance sheet at nominal value.

Amounts payable in foreign currencies are converted into EUR as follows:

• loans in foreign currencies at the rate in force at the time the loan is concluded;
• trade debts at the exchange rate on the date of entry of the incoming invoice.

Trade debts and financial debts, not covered against exchange risks, expressed in foreign currencies are translated at closing rate.

TRANSLATION DIFFERENCES

Exchange gains and losses resulting from the translation are taken in the income statement.

INCOME STATEMENT

The items in the income statement are valued at nominal value. Own construction is booked at production cost excluding indirect costs.

TURNOVER

Revenue is registered in the period to which they refer, regardless of their payment. The turnover takes commercial and volume discounts into account.

Specific revenue streams and related recognition criteria are as follows:

• revenue from fixed line, mobile and carrier traffic is recognized on usage.
• revenue from connection fees and installation fees is recognized in income at the time of connection or installation.
• revenue from sales of communication equipment is recognized upon delivery to the third party distributors or upon delivery by the own Belgacom shops to the end-customer.
• revenue relating to the monthly rent, the monthly subscription fee and access fees in the framework of fixed and mobile telephony, internet and digital television are recognized in the period in which the services are provided.
• prepaid revenue such as revenue from pre-paid fixed and mobile phone cards is deferred and recognized based on usage of the cards.
• maintenance fees are recognized as revenue over the maintenance period on a pro-rata basis.
• revenue from the ICT activity linked to projects is recognized in the result in function of the realization percentage.

RIGHT AND COMMITMENTS NOT ACCRUED IN THE BALANCE SHEET

The rights and commitments not accrued in the balance sheet are mentioned in the notes, per category, at the nominal value of the commitment in the contract, or failing that, at their estimated value.