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UNITED
  STATES SECURITIES AND
  EXCHANGE COMMISSION Washington, D.C.
  20549

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Form
  20-F

| | REGISTRATION
      STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES
      EXCHANGE ACT OF 1934
| | ------------------------------------------------------------------------------------------------------------
| | OR                                                                                                          
| | ANNUAL REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934            
| | For
        the fiscal year ended 31 December 2004                                                          
| | OR                                                                                                          
| | TRANSITION
      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934        

For
  the transition period from:to

Commission
  file number: 1-14824

TPG
  N.V.
  (Exact name of registrant
  as specified in its charter)

The
  Netherlands (Jurisdiction of incorporation
  or organisation)

Neptunusstraat
  41 - 63
  2132 JA Hoofddorp
  The Netherlands (Address of principal
  executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

|                                           | Name
        of each exchange  
|------------------------------------------ | -------------------------------
|Title
        of each class                | on
        which registered    
|American
        Depositary Shares, each   | New
        York Stock Exchange
|representing
        one Ordinary Share    |                                
|                                           |                                
|Ordinary
        Shares, par value € 0.48* |                                

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| | Annual
      Report 2004 and Form 20-F
| | --------------------------------------





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Table
  of contents

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|                        | 
|----------------------- | 
|Table
      of contents | 
|                        | 

Street scene,Shanghai

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|2 | TPG
      Annual Report 2004
|- | ----------------------------

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Chapter

|   |  | Introduction                                                                                                                                                                                                                                                                | 5                                                                      
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------
|1  |  | From
      the CEO                                                                                                                                                                                                                                                          | 6                                                                      
|2  |  | Information
      on the company                                                                                                                                                                                                                                            | 13                                                                     
|3  |  | The
      mail division                                                                                                                                                                                                                                                     | 24                                                                     
|4  |  | The
      express division                                                                                                                                                                                                                                                  | 34                                                                     
|5  |  | The
      logistics division                                                                                                                                                                                                                                                | 41                                                                     
|6  |  | Corporate
      governance                                                                                                                                                                                                                                                  | 50                                                                     
|7  |  | Report
      of the Supervisory Board                                                                                                                                                                                                                                       | 58                                                                     
|8  |  | Remuneration
      report                                                                                                                                                                                                                                                   | 62                                                                     
|9  |  | Code
      of Business Principles & Corporate Social Responsibility                                                                                                                                                                                                         | 69                                                                     
|10 |  | Risk
      factors                                                                                                                                                                                                                                                          | 73                                                                     
|11 |  | Other
      financial information on the company                                                                                                                                                                                                                            | 81                                                                     
|12 |  | Financial
      statements and other information                                                                                                                                                                                                                            | 97                                                                     
|   |  |                                                                                                                                                                                                                                                                            | Consolidated
      balance sheets                                      
|   |  |                                                                                                                                                                                                                                                                            | Consolidated
      statements of income                                
|   |  |                                                                                                                                                                                                                                                                            | Consolidated
      cash flow statements                                
|   |  |                                                                                                                                                                                                                                                                            | Consolidated
      statements of changes in shareholders equity       
|   |  |                                                                                                                                                                                                                                                                            | Notes
      to the consolidated financial statements                   
|   |  |                                                                                                                                                                                                                                                                            | Accounting
      principles for consolidation, valuation, determination
|   |  |                                                                                                                                                                                                                                                                             | of
      results and cash flows                                        
|   |  |                                                                                                                                                                                                                                                                            | Notes
      to the consolidated balance sheets                         
|   |  |                                                                                                                                                                                                                                                                            | Notes
      to the consolidated statements of income                   
|   |  |                                                                                                                                                                                                                                                                            | Notes
      to the consolidated cash flow statements                   
|   |  |                                                                                                                                                                                                                                                                            | Additional
      notes                                                 
|   |  |                                                                                                                                                                                                                                                                            | TPG
      N.V. corporate balance sheets                                
|   |  |                                                                                                                                                                                                                                                                            | TPG
      N.V. corporate statements of income                          
|   |  |                                                                                                                                                                                                                                                                            | Notes
      to the corporate balance sheets and statements of income   
|   |  |                                                                                                                                                                                                                                                                            | Other
      information                                                
|   |  |                                                                                                                                                                                                                                                                            | Auditors
      report                                                 
|13 |  | Regulatory
      environment                                                                                                                                                                                                                                                | 164                                                                    
|14 |  | Additional
      information                                                                                                                                                                                                                                                | 169                                                                    
|15 |  | Investor
      relations                                                                                                                                                                                                                                                    | 183                                                                    
|   |  |                                                                                                                                                                                                                                                                            | Historical
      table: TPG figures from 2000 through 2004             
|16 |  | Cross
      references to Form 20-F                                                                                                                                                                                                                                         | 192                                                                    
|   |  | Certifications                                                                                                                                                                                                                                                              |                                                                        
|   |  |                                                                                                                                                                                                                                                                             |                                                                        
|   |  | This
      annual report constitutes TPG N.V.s annual report for 2004 in accordance
      with Dutch regulations. It also forms the basis of our annual report on
      Form 20-F for the year ended 31 December 2004 for the US Securities and
      Exchange Commission. |                                                                        
|   |  |                                                                                                                                                                                                                                                                             |                                                                        
|   |  | This
      annual report has been sent in hard copy form to shareholders who have requested
      to receive a copy and can be viewed on our website, www.tpg.com. The information
      on our website, however, does not form part of this report.                        |                                                                        
|   |  |                                                                                                                                                                                                                                                                             |                                                                        
|   |  | TPG
      N.V. is a public limited liability company registered in the Netherlands
      with listings on the Amsterdam, New York, London and Frankfurt stock exchanges.                                                                                                    |                                                                        





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|TPG
        Annual Report 2004 | 3
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Introduction

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|01           |  | 
|------------ |  | 
|             | 
|Introduction | 
|             | 

Pedestrian
  bridge, Shanghai

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      Annual Report 2004
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TO
    GUIDE YOUR READING OF THIS DOCUMENT, PLEASE FIND BELOW A SUMMARY OF EACH CHAPTERS
    CONTENTS. CHAPTER
    1contains a letter from our CEO Peter Bakker to his fellow shareholders
    and all other readers discussing  among other things  why we at
    TPG take our work personally. CHAPTER
    2presents some high-level information on our company, including a group
    financial review and prospects. CHAPTERS
    3THROUGH 5deal with our mail, express and logistics
    divisions, respectively. Each chapter contains a business overview, the divisions
    strategy, an operational overview and a financial overview. Chapter 3 on mail
    also gives a summary of the regulatory environment in which our mail business
    operates. (More comprehensive information on the regulatory environment can
    be found in Chapter 13.) CHAPTER
    6discusses corporate governance, an area where we have been very active
    in 2004. This chapter gives an overview of our procedures and the checks and
    balances that govern the way we manage our company. CHAPTER
    7contains the report of our Supervisory Board. CHAPTER
    8sets out our remuneration report. It comprises our remuneration policy
    and the detailed compensation plan for our Board of Management and Supervisory
    Board. CHAPTER
    9deals with corporate social responsibility. Here our code of business
    principles, as well as our sustainability policy and humanitarian efforts,
    are outlined. CHAPTER
    10cautions against forward-looking statements and presents an overview
    of risk factors concerning our business. CHAPTER
    11gives some other financial information on the company, in particular
    with regard to cash flow, liquidity, capital resources and critical accounting
    policies. CHAPTER
    12holds our financial statements and other information as required by
    article 392, part 9, book 2 of the Dutch Civil Code. CHAPTER
    13deals with our regulatory environment. CHAPTER
    14contains various pieces of additional information, including our relationship
    with the State of the Netherlands and a description of the rights attached
    to our shares. CHAPTER
    15provides information of interest to our shareholders, including with
    respect to the performance of our shares. FINALLY,
    CHAPTER 16contains a cross-reference table specifying where the various
    items required by Form 20-F can be found in this document.




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        Annual Report 2004 | 5
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|Chapter
      01 | From the CEO
|---------------- | ------------

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|01                 |  | 
|------------------ |  | 
|                   | 
|From
      the CEO | 
|                   | 



TPG
  Board of Management

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      Annual Report 2004
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Our
    business is all about delivering. A letter to a friend across town. Business
    parcels to the other side of the world. Component parts to an assembly line.
    Container shipments across the sea. Whatever the cargo, we ensure that goods
    and documents reach their destinations reliably and efficiently. Delivering
    is our core competence. But we take it a step further. In
    everything we do, we aim not only to deliver, but to deliver more. More service
    for our customers. More opportunities for our employees. More value for our
    shareholders. And more benefits for our world. And we can deliver more because
    we have great people. It is through their work and dedication that our company
    exists. OUR
    GROUP STRATEGY FOR LEADERSHIPIn
    the beginning of 2004 we introduced a strategy for our group, setting out
    a clear direction and ambitions. Our mission statement identified our key
    stakeholders and became the basis for a push to further enhance what we believe
    is our leading position. One element of our strategy is a move to one brand
     TNT  for all our businesses. This move is a clear signal of our
    commitment to being one company with a comprehensive strategy and shared objectives. Together,
    the TNT strategy and all its elements add up to what I have come to call the
    TNT house. This house represents all that TNT stands for and all that we aspire
    to achieve. Our
    house is underpinned by a solid foundation  our three divisions, Mail,
    Express and Logistics. The next layer of building blocks is formed by the
    five areas of our TNT-1 programme (announced last year as  TPG-1
    ): human resources, shared services, key account management, information and
    communication services and procurement. Next come our three growth initiatives:
    postal consolidation, China and freight management. In
    between the building blocks is the mortar that binds our house and makes it
    strong: our mission, standards, corporate governance, social responsibility
    endeavours and our brand. Covering the house are our four critical success
    factors: satisfied customers, engaged employees, shareholder value and work
    for the world. BUILT
    ON A FIRM FOUNDATIONSo
    what is the state of the TNT house? Ill start with the foundation. Overall,
    our three divisions produced strong results in 2004. They weathered the mixed
    economy and delivered margin improvements across the board, resulting in an
    operational cash flow of €1 billion. This healthy development enabled
    us to buy back around 4% of our stock when the State of the Netherlands decided
    to reduce its holding in our company to around 19%. The
    cost flexibility programme we launched in our mail division in 2001 helped
    employees there to do exceptional job countering 1.5% decline in addressed
    mail volumes in the Netherlands in 2004. In fact, the volume decline was actually
    higher than 1.5%;




in 2004, a few additional working days due to holidays falling on weekends,
    for instance, masked a higher rate of decline. Nonetheless, our mail operating
    margin reached an outstanding 22.2%. After
    years of discussions, the Dutch parliament approved the Postal Vision in 2004,
    setting forth a clear path towards liberalisation of the Dutch mail market.
    The plan calls for the Dutch mail market to continue to welcome competition,
    with full liberalisation from 2007, assuming that the mail markets in the
    United Kingdom and Germany are also liberalised by that date. Looking
    to 2005, although there is no guarantee, I expect organic growth in European
    Mail Networks to increase further, compensating for the continuing volume
    decline in the Netherlands. This development should lead to our overall mail
    revenues remaining stable, though we do not expect our mail margin to remain
    at the high level of 2004. Express
    continued its impressive record of positive quarterly yields, reaching an
    operating margin of 7.9%. Operationally, the division has delivered great
    results, with all business units across all geographies contributing. In the
    coming year, I hope to see further improvement of the operating margin as
    we move towards our target of a 10% operating margin by 2007. We
    are pushing forward with our strategic aim to build the number-one express
    company in Europe. Further investments in the TNT Express European air hub
    in Liège, Belgium, as well as in our European road network will expand
    our capabilities. We will continue to strengthen our domestic positions in
    a number of countries through acquisitions. By
    restoring its margin to 3.7%  excluding the contribution of the Wilson
    Logistics Group, which we acquired in August 2004  Logistics also contributed
    to our good results in 2004. The successful implementation of the Transformation
    through Standardisation programme helped our logistics employees overcome
    the difficulties of 2003. Weve made good progress in turning around
    logistics operational performance, bringing three of the four loss-making
    business units back into the black. The one unit where the turnaround has
    not yet taken hold is France. In
    2005 I foresee continued operating improvements and we need to find a solution
    for France, as well as an ongoing push for standardisation across the entire
    logistics division. We must get better still at turning our now-significant
    scale into a positive trend. We are hopeful that revenue growth will be high,
    mainly driven by the Wilson acquisition. TNT-1Three
    of the five TNT-1 projects entered implementation phases in 2004, and these
    will create the first concrete results this year. We are targeting extra revenues
    through key account management. The procurement team is set to book its first
    wave of savings through streamlined purchasing initiatives, and we have begun
    standardising our human resources management across our global business.


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        Annual Report 2004 | 7
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|Chapter
      01 | From the CEO
|---------------- | ------------

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But,
    to me, TNT-1 is more than a programme intended to achieve extra revenues and
    cost savings through closer cross-divisional cooperation. It is evidence of
    the fact that our company is one, with a shared vision and mission, and shared
    standards. We are one company, 162,000 people strong, striving for leadership
    in our industry. And
    how better to express our aim to be one company than by moving all parts of
    the group to one brand. We compete on a global level, and operating under
    one brand will let us make the most efficient use of our marketing budget,
    as well as to show one face to our customers, who increasingly look to us
    for multi-country, 
full-service contracts. The
    re-branding will have the biggest impact in the Netherlands, where our company
    has been part of everyday life for more than two centuries. Exchanging TPG
    Post red for TNT orange will take some getting used to by both our customers
    and our employees. The changeover will be gradual, from 2006, to limit costs
    and to allow time for all our stakeholders to become comfortable with the
    change. And one thing I can promise: The re-branding will not change the heart
    of our company. We will continue to be what we are  a great mail, express
    and logistics company, delivering more through great people. OUR
    THREE GROWTH INITIATIVESThe
    top floor of our TNT house is dedicated to growth. Growth brings energy and
    excitement and new opportunities for our talented and ambitious employees
    and our shareholders alike. We believe we made great progress in all three
    strategic growth areas in 2004  postal consolidation, China and freight
    management. 2004
    saw the overture of postal consolidation in Europe when the Danish government
    offered for sale up to 25% of Danish Post. We have entered a non-binding bid
    and are currently awaiting the next steps in the process. We intend to grow
    our mail activities organically in all European countries. Alliances are also
    possible ways to accelerate this growth, but the risk and controls in any
    deal must be secured in an attractive way. China
    is at the top of my agenda. I made six working visits there in 2004, meeting
    with customers and government officials. In September, the entire Board of
    Management spent a week in Shanghai, where we opened our new China head office.
    The country is an economic powerhouse with enormous potential, but to realise
    its potential and remain competitive, it needs logistical skills to feed and
    sustain its incredible growth. We feel honoured to help meet these needs,
    both through our activities and through the TNT China University, which opened
    in November 2004. In the coming years we hope to help train thousands of students
    to begin meeting that countrys exploding need for skilled logistics
    professionals. China
    is also the arena in which the TNT-1 approach comes into its own. TNT China
    is taking the lead for the whole company, addressing the market with a unified
    TNT product offering in mail, express and logistics  and reaping the
    fruits of this approach. In
    2004 we took an important first step in freight management with our acquisition
    of Sweden-based Wilson Logistics Group. I extend a hearty welcome to the 2,300
    employees of Wilson,




our
    new colleagues. I trust you will feel at home in our TNT family. Our
    customers, particularly those in Asia, are increasingly demanding integrated
    logistics solutions, which include freight management. Wilson gives us global
    capabilities in this area, and we will continue looking to strengthen our
    freight management presence in the United States and in China. MAKING
    OUR HOUSE A POWERHOUSE FOR SOCIETYThe
    TNT strategy goes beyond our goal to achieve industry leadership. We also
    aim to achieve social leadership. And just like the TNT house, this goal is
    built on the solid foundation of our three divisions and the strength of our
    global TNT brand. Next to those elements come two pillars: transparency &
    integrity and corporate sustainability. When
    assembled together, all these elements fuel our good reputation and that,
    in turn, fuels our company pride. While it may seem like a rather intangible
    factor, I happen to believe that pride is perhaps the highest ideal a company
    can strive for. When we achieve the capacity to instil pride in our employees
    and inspire our customers and shareholders, then, I believe, we will contribute
    to a better world and gain social leadership. MAKING
    OUR HOUSE SUSTAINABLEIn
    the area of corporate sustainability 2004 marked a year of progress for us.
    We are publishing our first corporate sustainability report over 2004. You
    can find it on our website at tpg.com (although our website does not form
    a part of this annual report), and we will continue to report on our progress
    in certification. Our aim is to be as open and transparent as possible about
    our sustainability efforts. Part
    of our sustainability effort is our partnership with the United Nations World
    Food Programme (WFP). We use our core competencies and business skills to
    support WFP in five areas: joint logistics supply chain, private sector fundraising,
    emergency response, transparency and accountability, and school feeding support.
    In addition to these projects, more than 40,000 people participated in our
    first global Walk the World fundraising event in 2004. And at the end of the
    year, we were able to help WFP in its work to help those affected by the disastrous
    tsunami in Asia. Our
    work with the World Food Programme has benefited us as well, not least because
    it has made our employees more proud of our company. For us in the service
    industry, customer satisfaction depends on the dedication and quality of our
    people and their willingness to go the extra mile. Employee engagement is
    therefore a key performance indicator for us, and our surveys show that our
    partnership with WFP plays a vital role in strengthening this important measure. MAKING
    OUR HOUSE TRANSPARENTIn
    addition to the operational challenges in our divisions that I have already
    mentioned, our group as a whole faces challenges: 2005 will be the year we
    strive to become fully compliant with the Sarbanes-Oxley Act. This is a big
    undertaking that will affect our entire company, and we aim to get this right. In
    response to our review of tax issues in the group, we will continue to formalise,
    strengthen and adapt, our internal lines of


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      Annual Report 2004
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communication and the functioning and monitoring of the tax, legal and financial
    reporting functions around the group. Another
    important development will be the switch to the new International Financial
    Reporting Standards, which on 1 January 2005 became applicable to all listed
    companies in the European Union. We expect to inform all stakeholders about
    the changes in our financial statements as a result of the new IFRS in an
    official announcement on 27 April 2005. As always, we maintain our commitment
    to the transparency of our financial statements and risk factors, and we aim
    to continue improving their quality. TNT
    HOUSE WILL BRING NEW ENERGY IN 2005 As
    we work together to grasp all of the opportunities and meet all these and
    other challenges that lay ahead, I am certain we will be inspired with new
    energy to keep building and improving our TNT house. I thank all my TPG and
    TNT colleagues for the magnificent job they did in 2004. With your help and
    support, I am confident that 2005 will also be successful.  Peter
    Bakker 
    CEO






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        Annual Report 2004 | 9
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|Chapter
      01 | 
|---------------- | 

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Presentation
    of Information and Exchange Rates Unless
    otherwise specified or the context requires otherwise, us, we,
    our and the company refer to TPG N.V. and all its
    group companies as defined in Article 2:24b of the Dutch Civil Code. References
    to dollars, US dollars and $ are to United
    States dollars, references to euro and  are
    to the currency introduced at the start of the second stage of the Economic
    and Monetary Union pursuant to the Treaty establishing the European Economic
    Community as amended by the Treaty on the European Union. Our financial statements
    are reported in euro. Prior to 1 January 2001 our financial statements were
    denominated in Dutch guilders. In this annual report we have translated these
    financial statements into euro using the irrevocably fixed conversion rate
    applicable since 1 January 1999 (1 = NLG 2.20371). Comparative
    financial statements reported in euro depict the same trend as would have
    been presented if TPG N.V. had continued to present financial statements in
    Dutch guilders. The amounts relating to periods prior to the introduction
    of the euro will not be comparable to the amounts reported by other companies
    that were restated from currencies other than the Dutch guilder. Our
    financial statements are prepared in accordance with accounting principles
    generally accepted in the Netherlands (Dutch GAAP), which differ in certain
    respects from accounting principles generally accepted in the United States
    (US GAAP). For a description of the differences between Dutch GAAP and US
    GAAP that affect the reconciliation of our Dutch GAAP net income and shareholders
    equity to those under US GAAP, see note 29 to our consolidated financial statements. US
    dollar amounts presented are unaudited and have been translated solely for
    your convenience from euro into US dollars at an exchange rate of $1.3538
    per 1.00, the noon buying rate in The City of New York on 31 December
    2004 for cable transfers as certified by the Federal Reserve Bank of New York.
    We do not represent that the US dollar amounts presented in the US dollar
    convenience translations or any amounts translated from euro into any other
    currency could have been converted from euro at the rates indicated.






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      Annual Report 2004
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SELECTED
    FINANCIAL DATAThe
    selected consolidated financial income statement data for each of the years
    in the three-year period ended 31 December 2004 and the selected consolidated
    financial balance sheet data for each of the years in the two-year period
    ended 31 December 2004 have been derived from our audited financial statements
    and the related notes included in chapter 12 of this report. The selected
    consolidated financial data for earlier years have been derived from our audited
    financial statements not included in this report. We
    have acquired a number of companies and businesses during the years to which
    the following financial data relates, which limits the comparability of our
    year-on-year figures.






Income
  statement data

|                                                                          |                                
|------------------------------------------------------------------------- | -------------------------------
|                                                                          | Year
      ended at 31 December
|                                                                          |                                
|                                                                          | 2004                           
|                                                                          |                                
|                                                                          | US$                            
|                                                                          |                                
|Amounts
      in accordance with Dutch GAAP:                              |                                
|Net
      sales                                                           | 17,038                         
|Total
      operating revenues                                            | 17,105                         
|Total
      operating expenses                                            | (15,516                        
|Total
      operating income                                              | 1,589                          
|As
      % of total operating revenues                                    | 9.3                            
|                                                                          |                                
|Income
      before income taxes                                          | 1,485                          
|Net
      income                                                          | 903                            
|Net
      income per ordinary share (in cents) 2                          | 190.8                          
|Net
      income per diluted ordinary share (in  cents) 3                | 190.5                          
|Dividend
      per share paid in the year (in cents)                      | 67.7                           
|Dividend
      per share declared in the financial year
     (in cents) 4 | 77.2                           
|Issued
      share capital                                                | 311                            
|                                                                          |                                
|Amounts
      in accordance with US GAAP:                                 |                                
|Net
      sales                                                           | 17,039                         
|Total
      operating income                                              | 1,611                          
|Income
      before income taxes                                          | 1,497                          
|Net
      income                                                          | 967                            
|Net
      income per ordinary share (in cents) 2,5                        | 205.6                          
|Net
      income per diluted ordinary share (in cents) 3,5                | 205.4                          
|                                                                          |                                
|                                                                         

|(in
      millions, except percentages and per share data)
|----------------------------------------------------------
|1                                                         
|2                                                         
|3                                                         
|4                                                         
|5                                                         



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        Annual Report 2004 | 11
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Chapter
        01


Selected
  financial data

| |                                                         |  |        |      |                                                |       |      
| | ------------------------------------------------------- |  | ------ | ---- | ---------------------------------------------- | ----- | -----
| |                                                         |  |        |      | Year
        ended and position at 31 December |       |      
| |                                                         |  | 2004   | 2003 |                                                | 20021 |      
| |                                                         |  |        |      |                                                |       |      
| |                                                         |  | US$    |      |                                               |       |     
| |                                                         |  |        |      |                                                |       |      
| | Amounts
      in accordance with Dutch GAAP:            |  |        |      |                                                |       |      
| | Total
      assets                                      |  | 11,212 |      | 8,282                                          |       | 7,915
| | Group
      equity 3                                    |  | 3,769  |      | 2,784                                          |       | 2,986
| | As
      % of total liabilities and group equity        |  | 33.6   |      | 33.6                                           |       | 37.7 
| | Provisions                                              |  | 1,675  |      | 1,237                                          |       | 817  
| | Long-term
      liabilities                             |  | 2,228  |      | 1,646                                          |       | 1,661
| | Short-term
      liabilities                            |  | 3,540  |      | 2,615                                          |       | 2,451
| |                                                         |  |        |      |                                                |       |      
| | Mail
      financial data                               |  |        |      |                                                |       |      
| | Total
      operating revenues                          |  | 5,280  |      | 3,900                                          |       | 3,915
| | Depreciation
      and impairments of PP&E 4            |  | 152    |      | 112                                            |       | 104  
| | Amortisation
      and impairments of other intangibles |  | 24     |      | 18                                             |       | 16   
| | Earnings
      from operations 5                        |  | 1,171  |      | 865                                            |       | 820  
| | Amortisation
      and impairments of goodwill          |  | 43     |      | 32                                             |       | 54   
| | Total
      operating income                            |  | 1,128  |      | 833                                            |       | 766  
| | As
      % of total mail operating revenues             |  | 21.4   |      | 21.4                                           |       | 19.6 
| | Total
      assets 6                                    |  | 3,172  |      | 2,343                                          |       | 2,078
| |                                                         |  |        |      |                                                |       |      
| | Express
      financial data                            |  |        |      |                                                |       |      
| | Total
      operating revenues                          |  | 6,357  |      | 4,696                                          |       | 4,251
| | Depreciation
      and impairments of PP&E 4            |  | 179    |      | 132                                            |       | 123  
| | Amortisation
      and impairments of other intangibles |  | 35     |      | 26                                             |       | 23   
| | Earnings
      from operations 5                        |  | 505    |      | 373                                            |       | 276  
| | Amortisation
      and impairments of goodwill          |  | 69     |      | 51                                             |       | 53   
| | Total
      operating income                            |  | 436    |      | 322                                            |       | 223  
| | As
      % of total express operating revenues          |  | 6.9    |      | 6.9                                            |       | 5.2  
| | Total
      assets 6                                    |  | 4,304  |      | 3,179                                          |       | 3,192
| |                                                         |  |        |      |                                                |       |      
| | Logistics
      financial data                          |  |        |      |                                                |       |      
| | Total
      operating revenues                          |  | 5,525  |      | 4,081                                          |       | 3,735
| | Depreciation
      and impairments of PP&E 4            |  | 119    |      | 88                                             |       | 104  
| | Amortisation
      and impairments of other intangibles |  | 11     |      | 8                                              |       | 5    
| | Earnings
      from operations 5                        |  | 207    |      | 153                                            |       | 24   
| | Amortisation
      and impairments of goodwill          |  | 85     |      | 63                                             |       | 227  
| | Total
      operating income                            |  | 122    |      | 90                                             |       | (203 
| | As
      % of total logistics operating revenues        |  | 2.2    |      | 2.2                                            |       | (5.4 
| | Total
      assets 6                                    |  | 3,736  |      | 2,760                                          |       | 2,645
| |                                                         |  |        |      |                                                |       |      
| | Amounts
      in accordance with US GAAP:               |  |        |      |                                                |       |      
| | Total
      assets                                      |  | 11,312 |      | 8,356                                          |       | 8,119
| | Group
      equity 3                                    |  | 3,575  |      | 2,641                                          |       | 3,163
| | As
      % of total liabilities and group equity        |  | 31.6   |      | 31.6                                           |       | 39.0 
| | Provisions                                              |  | 1,676  |      | 1,238                                          |       | 804  
| | Long-term
      liabilities                             |  | 2,170  |      | 1,603                                          |       | 1,678
| | Short-term
      liabilities                            |  | 3,891  |      | 2,874                                          |       | 2,474
| |                                                         |  |        |      |                                                |       |      

|(in
      millions, except percentages)
|---------------------------------------
|1                                      
|2                                      
|3                                      
|                                       
|4                                      
|5                                      
|6                                      



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|02                               |  | 
|-------------------------------- |  | 
|                                 | 
|Information
      on the company | 
|                                 | 





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|Chapter
        02 | Information on the company
|------------------ | --------------------------

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Group
    business description TPG
    N.V. is a company with limited liability and was incorporated under the laws
    of the Netherlands on 29 December 1997. We changed our name from TNT Post
    Group N.V. in August 2001. Our registered address is Neptunusstraat 41-63,
    2132 JA Hoofddorp, the Netherlands. Our telephone number is +31 20 500 6000.We
    were formed in connection with the consummation of a demerger transaction
    pursuant to which our former parent company, Koninklijke PTT Nederland NV
    (KPN), demerged its mail, express and logistics divisions. Although the demerger
    became effective on 28 June 1998, its arrangements were effectively retroactive
    to 1 January 1998. Our
    group is composed of three segments: our mail division, our express division
    and our logistics division. TPG N.V. is a holding company and sets the agenda
    for the group and these three divisions. We provide a wide range of mail,
    express and logistics services worldwide. These services involve the collection,
    storage, sorting, transport and distribution of a wide variety of items for
    our customers within specific time-frames, and related data and documentation
    management services. Although
    TPG N.V. has existed as an independent company only since 1998, our history
    in the mail, express and logistics businesses goes back over a much longer
    period of time. The roots of our mail division stretch back more than 200
    years and are firmly embedded within the operations of Royal TPG Post B.V.
    Our express business has been meeting the need for time-sensitive door-to-door
    delivery services for half a century, and the logistics division was a pioneer
    in the emerging logistics market during the mid 1980s. We
    have evolved from being the public postal company in the Netherlands into
    an international group providing mail, express and logistics services. As
    a result, we have broadened the range of our activities from mainly postal
    operations in the Netherlands to include world-wide express and logistics
    services. Our express and logistics divisions are not subject to regulations
    (such as price cap mechanisms) imposed on the mail division by the Dutch Postal
    Act and the postal regulations of other national jurisdictions. Other than
    for reserved postal services, which our mail division has the exclusive right
    to provide under the Dutch Postal Act, our mail division, as well as, our
    express and logistics divisions are subject to competition. The
    State of the Netherlands is our largest shareholder. The State holds a special
    share that gives it the right to approve certain fundamental decisions with
    respect to us. The State also owns approximately 18.6% of our outstanding
    ordinary shares as of the date of this annual report. The State has indicated
    its intention to further reduce its shareholding to approximately 10% of our
    ordinary shares. See chapter 12, note 26. MISSION
    & STRATEGYMissionOur mission is to exceed customers expectations in the
    transfer of their goods and documents around the world. Our
    mission is to deliver value to our customers by providing the most reliable
    and efficient solutions in distribution and logistics.




Our
    mission is to lead the industry by: 
      instilling
        pride among our people,
      creating
        value for our shareholders, and
      sharing
        responsibility for the world in which we live. Objectives
    and StrategyOur
    strategy is based on the following five elements: 
      Our
        business is to deliver the products of our customers, and our portfolio
        of businesses is derived from that.
      Our
        individual businesses have strong strategies underpinned by value-based
        management.
      We
        exploit the strength of our portfolio of businesses through co-operation
        between the businesses in approaching customers and sharing resources.
        We believe the combination of our businesses will accelerate our growth
        through new customers, geographies, new alliances and possibly new (combinations
        of) services.
      We
        intend to develop new home markets and other growth opportunities to solidify
        our position and to offer exciting career opportunities to many of our
        talented employees. These opportunities include China and other emerging
        markets, freight management and postal consolidation.
      Our
        brand reputation and employee pride and satisfaction are the two most
        important assets we manage. In
    January 2004, we discussed our company-wide values during our annual senior
    management meeting. The discussion resulted in the adoption of these standards
    that represent our commitments: 
      aim
        to always satisfy our customers,
      challenge
        and improve all we do,
      be
        passionate about our people,
      act
        as a team,
      be
        honest, always,
      measure
        success through sustainable profit, and
      work
        for the world. At
    the start of 2004, we have announced the implementation of a new group strategy
    and mission statement intended to result in a different approach in the way
    we conduct our business, the TNT-1 programme. Our
    TNT-1 programme aims at maximising the groups revenue and cost synergies
    and commenced in 2004 with the mobilisation of five cross-divisional implementation
    teams for human resources, shared services, key account management, services
    and procurement. Important achievements include key account management pilot
    studies and a first phase of reviews of procurements of purchasing reviews. In
    addition, during 2004 three specific areas of expected growth have been confirmed:
    China, postal consolidation and freight management. ACCELERATE
    GROWTH IN CHINAChinas economy has grown into the sixth largest in the
    world today (source: Global Insight WMM 2Q 2004). Its logistics market is
    already the worlds third largest, and its express market is estimated
    to be become the sixth largest by 2010 (source: McKinsey). With Chinas
    direct mail items per capita measuring




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only
    a tenth of Europes top-tier markets, we estimate that the opportunities
    in the Chinese direct mail market are significant. We
    have taken concerted actions to move our business in China forward. We have
    started to establish an integrated management team with the goal of setting
    up a single mail, express and logistics company in China. We have incorporated
    a wholly owned international holding company, TNT (China) Holding co. Ltd.,
    to give us better access to the market. Through this integrated company, we
    aim to realise cost efficiencies and align our strategies for China across
    divisions. We
    have expanded our express network in China of TNT-owned branches from 12 to
    25 in the first half of this year. Our automotive logistics joint venture,
    Anji-TNT, renewed its automotive logistics contract with Shanghai Volkswagen
    for inbound, finished vehicle distribution and aftermarket services. We believe
    that we are the only third party logistics company in China to cover the complete
    automotive supply chain as a result of the renewal of this contract with Shanghai
    Volkswagen. In terms of local partnerships, we have expanded our cooperation
    with China Post to the mail business where our mail team has been working
    as their network efficiency consultants. For
    our business to continue expanding in China, we recognise the critical importance
    of building local talent. Working in partnership with the prestigious Shanghai
    Jiaotong University, we opened the TNT China University in November 2004 with
    the goal of training and imparting professional and business skills to our
    employees. BUILD
    ON THE LEADERSHIP POSITION OF TPG POST IN THE POSTAL INDUSTRYWe have continued to pursue a leading position in the European
    mail market. We strive to be the leading pan-European postal company as national
    markets open up for competition. As a result of further liberalisation we
    also explore value-creating opportunities when stakes in postal operators
    that are currently in the hands of national governments are divested. Our
    current involvement in the sale process of a 25% stake in Denmark Post since
    December 2004, is an example of this. EXPAND
    BUSINESS PORTFOLIO TO INCLUDE FREIGHT MANAGEMENTWe have reiterated our stated ambition in growing into freight
    management which, in 2004, resulted in the acquisition of the Swedish freight
    management company Wilson Logistics Holding AB. See page 42. The need for
    freight management capabilities is driven by customer demand and the desire
    to achieve a better balance in our portfolio of businesses. REBRANDINGTo highlight the increasing internationalisation of our company,
    we have decided to submit a proposal to the annual general meeting that is
    expected to take place on 7 April 2005 to change the statutory name of our
    company to TNT N.V., see chapter 14. After the name change, we will operate
    globally under the brand TNT for all our activities from 2006. Operating under
    one brand will increase the recognition of our group worldwide and allow for
    more efficient communication on the services we provide. It will also symbolise
    the cohesion between the three divisions within our company: mail, express
    and logistics.




In
    the Netherlands, we currently offer our postal services mainly under the brand
    TPG Post. We have been granted the right to affix the designation Royal
    to our subsidiary TNT Post B.V. after the name change. We presently offer
    postal services in eight European countries, partly under the name TNT. The
    name change in the company will be accompanied by a change of colour to orange
    for the entire group. SeasonalityOur domestic mail business is seasonal in that it is affected
    by public and local holiday patterns and especially by the distribution of
    Christmas greeting cards and presents during December. The
    express business is seasonal in that it is affected by public and local holiday
    patterns and adverse weather conditions. Our
    logistics business is seasonal in that it is affected by the seasonal slowdown
    of the target sector we focus on, the automotive sector. Typically the second
    quarter of the year (April through June) is the best quarter of the year. Our
    newly acquired freight management business shows a pattern that the second
    half of the financial year is consistently better than the first half and
    in particular the last quarter (October through December) is the best quarter
    of the year. The reasons are mainly that: 
      the
        average number of working days in the first half of the year is lower
        in the second half year, and
      one
        of our targeted industries is textile (from Asia into Europe) and in winter
        the clothes are heavier than in summer, which increases the average weight
        we forward. MARKET
    TRENDSWe believe that globalisation is a trend driving the world
    economy. We believe that globalisation will continue but it will affect our
    divisions in different ways. In the mail industry, operators are still organised
    on largely national lines. However, with our European Mail Networks and other
    international ambitions, we seek to establish a leading international position
    in mail. In
    the express industry, we see that the majority of flows of documents and parcels
    remain within national or continental boundaries. Thus, our strategy is to
    build operational excellence within regions, particularly Europe and Asia. In
    logistics, our customers are increasingly global, with either global supply
    chains or global operating standards, so we seek to match these trends with
    our own capabilities and geographic coverage. Freight management is already
    a global business, for example in the conveyance of goods manufactured in
    China, and other parts of the Far East, to the major consumer markets of Europe
    and North America.




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|Chapter
      02 | Information on the company
|---------------- | --------------------------

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OUR
    COMMITMENT TO COMMUNITYWe strive to improve the social and environmental impact of
    our business on communities around the world. We aspire to help people realise
    their potential and to meet the needs of the current generation, without producing
    a poorer world for future generations. To meet these aspirations, we subscribe
    to the United Nations Global Compact, which embraces, supports and enacts
    a range of values in the areas of human rights, labour standards and the environment
    that we can influence. See chapter 9. Since
    2003, we have been actively involved in the World Economic Forums logistics
    and transport sector corporate citizenship initiative. Corporate
    PhilanthropyWe have established a strategic partnership with the United
    Nations World Food Program (WFP), in which we share logistical resources and
    know-how in the fight against hunger. This partnership is more fully described
    in chapter 9. In
    June, thousands of TNT and WFP personnel, with their friends and families,
    participated in Walk the World, a sponsored walk encompassing
    over 70 countries.




EnvironmentWe are committed to protecting the environment. This includes
    promoting the reduction of emissions through efficient route planning, the
    use of cleaner alternative fuels, and replacement road vehicles and aircraft
    by cleaner versions. In 2004, we increased the coverage of ISO 14001 certified
    environmental management systems in the group and introduced the Dow Jones
    corporate sustainability assessment. We report our progress in our annual
    corporate sustainability report. GovernanceWe are committed to good corporate governance, including early
    compliance with almost all aspects of the Dutch Corporate Governance Code.
    We have fully embraced the spirit of corporate governance reform, rather than
    merely meeting minimum compliance standards. We have introduced procedures
    and policies covering whistle-blowing, auditor independence and
    Sarbanes-Oxley compliance, under the supervision of our audit committee. ReputationAt all times, we seek to maintain transparency. This was recognised
    in 2004 by TPG winning the prestigious Henri Sijthoff prize for the best annual
    report in the Netherlands and for the best corporate website, issued by the
    Netherlands leading financial newspaper.


Group
  financial review

|                                                           |                                                  
|---------------------------------------------------------- | -------------------------------------------------
|                                                           | As
      of and for the year ended at 31 December
|                                                           |                                                  
|                                                           | 2004                                             
|                                                           |                                                  
|                                                           | US$                                              
|                                                           |                                                  
|Divisional
      operating revenues 2                      |                                                  
|Mail                                                       | 5,280                                            
|Express                                                    | 6,357                                            
|Logistics                                                  | 5,525                                            
|                                                           |                                                  
|Total                                                      | 17,162                                           
|Non-allocated                                              | 32                                               
|Intercompany
      eliminations                            | (89                                              
|                                                           |                                                  
|Total
      operating revenues 3                           | 17,105                                           
|                                                           |                                                  
|Depreciation,
      amortisation and impairments           | 722                                              
|Total
      operating income                               | 1,589                                            
|As
      % of total operating revenues                     | 9.3                                              
|Net
      income                                           | 903                                              
|                                                           |                                                  
|Capital
      expenditure on property, plant and equipment | 393                                              
|Average
      total capital 4                              | 10,964                                           
|Return
      on average total capital (%) 5                | 14.5                                             
|                                                           |                                                  

|(in
      millions, except percentages)
|---------------------------------------
|1.                                     
|2.                                     
|3.                                     
|4.                                     
|5.                                     



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In
    2004, we had total operating revenues of 12,635 million. Our mail division
    accounted for 30.9% our operating revenues, 71.0% of our operating income
    and 62.2% of our earnings from operations (operating income excluding goodwill
    amortisation and impairment and non-allocated operating income/expense 
    see Earnings from operations on this page). Our express division
    accounted for 37.2% of our operating revenues, 27.4% of our operating income
    and 26.8% of our earnings from operations. Our logistics division accounted
    for 32.3% of our operating revenues, 7.7% of our operating income and 11.0%
    of our earnings from operations. The
    information in the chapters Information on the company, The
    mail division, The express division, The logistics
    division and Other financial information on the company
    should be read together with our consolidated financial statements. Key
    factors that affect our results of operations include: 
      the volumes of mail we deliver,
      the
        number of shipments transported through our networks,
      the
        mix of services we provide to our customers,
      the
        prices we obtain for our services,
      the
        average number of working days in a year,
      our
        ability to manage our capital expenditures and operating expenses,and
      our
        ability to match our operating expenses to shifting volume levels.  Our
    mail and express divisions provide services to customers and account for revenue
    for those services on a daily basis; results of operations are therefore influenced
    by the average number of working days in a year. We
    use total operating revenues, i.e. net sales plus other operating revenues,
    to assess the performance of our divisions. We believe that other operating
    revenues are a recurring element and allocate them to divisions when we review
    their performance. See note 16 to our consolidated financial statements for
    a description of other operating revenues. We
    attribute revenues and expenses to our divisions based on the underlying nature
    of the transaction that gave rise to the revenue or expense and the division
    involved. We call revenues and expenses that we do not allocate to divisions
    non-allocated. These revenues or expenses occur at the group level
    or we do not consider them part of the divisions operations. This method
    of allocating revenues and expenses is consistent with how we internally manage
    our businesses. The
    results for 2002 of our express and logistics divisions have been retroactively
    adjusted for consistency to reflect the transfer of our Innight business from
    express to logistics in January 2003. Operating revenues of our mail lines
    of business have been retroactively adjusted to reflect a more accurate elimination
    of intra-division transactions. EARNINGS
    FROM OPERATIONSThis annual report contains a non-GAAP financial measure, within
    the meaning of applicable Securities and Exchange Commission rules, that we
    believe is useful for investors. This




financial
    measure is earnings from operations, which is used by our management as a
    supplemental measure to evaluate the performance of our businesses. We believe
    that when viewed with our GAAP results and the accompanying reconciliations,
    it provides
    a more complete understanding of factors and trends affecting our businesses
    than the GAAP results alone.We understand that investors and analysts regularly
    rely on non-GAAP financial measures such as earnings from operations to provide
    a financial measure by which to compare a companys assessment of its
    operating performance against that of other companies in the same industry.This
    non-GAAP financial measure is not prepared in accordance with generally accepted
    accounting principles and may be different from non-GAAP financial measures
    used by other companies. Non-GAAP financial measures should not be considered
    as a substitute for, or superior to, measures of financial performance prepared
    in accordance with GAAP. We
    define earnings from operations as operating income excluding the amortisation
    and impairment of goodwill.Thus, earnings from operations is most directly
    comparable to the GAAP measure operating income. Reconciliations of this non-GAAP
    financial measure to the GAAP financial measure of operating income are found
    in the Operating income tables throughout this annual report.


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|TPG
        Annual Report 2004 | 17
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|Chapter
      02 | Information on the company
|---------------- | --------------------------

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Consolidated
  group results

|                                                             |                                
|------------------------------------------------------------ | -------------------------------
|                                                             | Year
      ended at 31 December
|                                                             |                                
|                                                             | 2004                           
|                                                             |                                
|                                                             | US$                            
|                                                             |                                
|Total
      operating revenues                               | 17,105                         
|Total
      operating expenses                               | (15,516                        
|                                                             |                                
|Total
      operating income                                 | 1,589                          
|As
      % of total operating revenues                       | 9.3                            
|Net
      financial expense                                  | (104                           
|Income
      taxes                                           | (579                           
|Results
      from investments in affiliated companies       | (4                             
|Minority
      interests                                     | 1                              
|                                                             |                                
|Net
      income                                             | 903                            
|Net
      income per diluted ordinary share (in eurocents) 1 | 190.5                          
|                                                             |                                

|(in
      millions, except percentages and per share data)
|----------------------------------------------------------
|1.                                                        

Operating
  revenue by division

|                                |                                
|------------------------------- | -------------------------------
|                                | Year
      ended at 31 December
|                                |                                
|                                | 2004                           
|                                |                                
|                                | US$                            
|                                |                                
|Mail                            | 5,280                          
|Express                         | 6,357                          
|Logistics                       | 5,525                          
|Non-allocated                   | 32                             
|Intercompany
      eliminations | (89                            
|                                |                                
|Total
      operating revenues  | 17,105                         
|                                |                                

|(in
      millions, except percentages)
|---------------------------------------
|1.                                     



Operating
  income

|                                                 |                                
|------------------------------------------------ | -------------------------------
|                                                 | Year
      ended at 31 December
|                                                 |                                
|                                                 | 2004                           
|                                                 |                                
|                                                 | US$                            
|                                                 |                                
|Earnings
      from operations by division:      |                                
|Mail                                             | 1,171                          
|Express                                          | 505                            
|Logistics                                        | 207                            
|                                                 |                                
|Total
      earnings from operations             | 1,883                          
|Amortisation
      and impairment of goodwill    | (198                           
|Non-allocated
      operating income / (expense) | (96                            
|                                                 |                                
|Total
      operating income                     | 1,589                          
|                                                 |                                

|(in
      millions, except percentages)
|---------------------------------------
|1.                                     



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Total
  operating revenues increased by 6.5% in 2004 compared to 2003. Operating income
  increased by 53.1%, mainly due to: 
      productivity
        improvements and cost control in our mail division,
      growth
        in our express division,
      a
        successful recovery of the profitability of our logistics division,
      the
        2003 goodwill impairment of 183 million in our logistics and mail
        divisions,
      asset
        impairments of 10 million in 2003, and
      67
        million of costs associated with the Transformation through Standardisation
        programme in our logistics division in 2003. The
    mail divisions operating revenues declined by 0.4% in 2004 mainly due
    to a decrease in addressed Mail Netherlands volumes (-1.5%). On a comparable
    number of working days basis, this volume decline amounted to -3.2%. These
    volumes continued to decline as a result of growing competition, substitution
    and customers suspending their mailings. Our mail division focused on quality
    and margin to defend its market position. The mail divisions operating
    income increased by 8.7%, primarily due to cost control in Mail Netherlands,
    a favourable net result of 25 million after the unwinding of our contract
    with an insurance company for future wage guarantees and various social measures,
    which are discussed in detail in chapter 3  The mail division,
    and a goodwill impairment of 20 million in 2003. Earnings from operations
    increased by 5.5%. Our
    express division achieved 10.5% higher operating revenues compared to 2003
    due to a strong performance in their international businesses and an increased
    number of working days, despite mixed economic conditions especially in their
    key national markets. Through offering the right products, competitive pricing
    and having an efficient sales process our express division was able to show
    this performance. Express operating income increased by 44.4%, primarily due
    to continued focus on the divisions standard commercial policies and
    achieving further operating efficiencies. These further operating efficiencies
    were achieved by continuing to share best operating practices throughout their
    business and investing in operations and information systems aimed at further
    improving the service quality. Earnings from operations increased by 35.1%. During
    2004 our logistics division delivered a 346 million (9.3%) increase
    in operating revenues compared to 2003, of which 258 million arose as
    a result of the inclusion of the results of newly-acquired businesses (net
    of disposals), primarily the Wilson freight management business. The logistics
    division generated operating income of 90 million. This represents a
    293 million improvement over the prior year. After adjusting the 2003
    comparative figures to reflect the additional charges in 2003 of 163
    million of costs for goodwill impairments, 10 million of costs for asset
    impairments and 69 million of various costs associated with the Transformation
    through Standardisation programme, logistics operating income improved by
    51 million in 2004, with earnings from operations increasing 50
    million, including a net acquisition impact of 10 million.




Cash
    generation for the group remained strong with higher cash flow from operations
    partly offset by cash used for the acquisition of Wilson and the repurchase
    of our shares owned by the State. Group
  Operating Revenues  2004  Total
  operating revenues increased by 769 million (6.5%) to 12,635 million
  compared to 2003. This amount resulted mainly from an increase of 445
  million related to our express division and an increase of 346 million
  related to our logistics division, of which 258 million was attributable
  to newly-acquired businesses (primarily Wilson). Revenue development in our
  mail division remained flat. Included in the non-allocated operating revenue
  was 16 million of revenues from our subsidiary Global Collect B.V., a
  payment provider. Organic
    growth, defined as the growth calculated against last years foreign
    exchange rates and excluding the effect from the first-time consolidation
    of acquisitions and the deconsolidation of disposals, was responsible for
    5% of total operating revenue growth, and acquisitions accounted for 2.1%,
    but this growth was partly offset by a 0.6% decrease attributable to changes
    in foreign exchange rates. The effect of changes in foreign exchange rates
    was mainly due to the appreciation of the euro against the US dollar, the
    Australian dollar, the Canadian dollar and the UK pound. 2003Total operating revenues increased by 84 million (0.7%)
    to 11,866 million compared to 2002. This amount resulted from a decrease
    of 90 million related to our mail division, an increase of 76
    million related to our express division, an increase of 125 million
    related to our logistics division, and the remaining was attributable to a
    decrease in non-allocated items and inter company eliminations of 27
    million. Included in the non-allocated operating revenue was 13 million
    of revenues from Global Collect. Overall,
    the distribution of operating revenues remained in line with our strategy
    of spreading our operating revenues equally over our three divisions. Organic
    growth was responsible for 3.8% of total operating revenue growth, and acquisitions
    accounted for 0.7%, but this growth was partly offset by a 3.8% decrease attributable
    to changes in foreign exchange rates. The effect of changes in foreign exchange
    rates was mainly due to the appreciation of the euro against the US dollar,
    the Australian dollar, the Canadian dollar and the UK pound.




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|Chapter
      02 | Information on the company
|---------------- | --------------------------

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Group Operating Expenses

|                                                      |                                 |  
|----------------------------------------------------- | ------------------------------- | -
|                                                      | Year
      ended at 31 December |  
|                                                      |                                 |  
|                                                      | 2004                            | %
|                                                      |                                 |  
|                                                      | US$                             |  
|                                                      |                                 |  
|Cost
      of materials                               | 812                             |  
|Work
      contracted out and other external expenses | 7,124                           |  
|Salaries
      and social security contributions      | 5,828                           |  
|Depreciation,
      amortisation and impairments      | 722                             |  
|Other
      operating expenses                        | 1,030                           |  
|                                                      |                                 |  
|Total
      operating expenses                        | 15,516                          |  
|                                                      |                                 |  
|(in
      millions, except percentages)              



2004Total operating expenses increased by 362 million (3.3%)
    to 11,461 million compared to 2003. Overall, the organic growth in operating
    expenses was 1.6%, the increase due to acquisitions effective in 2003 (including
    DocVision B.V., Blitzpunkt GmbH, Werbeagentur Fischer GmbH, Full Service Srl.
    and Archive and Data Storage Ltd.) and in 2004 (including Wilson, Koc Group
    Turkey (remaining shares), Overtrans Srl. (remaining shares), Höfinger
    Haushaltswerbung GmbH (remaining shares), Prime Vision B.V., Seducom B.V.
    and our joint venture with Essent N.V., Cendris BSC Customer Contact) was
    2.2%, and changes in foreign exchange rates had a positive effect of 0.6%.
    Our gross margin, defined as the total operating income as a percentage of
    operating revenues, increased from 6.5% in 2003 to 9.3% in 2004. The 2003
    percentage was suppressed by the goodwill impairments and asset impairments
    in 2003. Total
    cost of materials increased by 54 million (9.9%) compared to 2003. Organically,
    cost of materials increased by 68 million (12.5%), mainly due to higher
    fuel costs incurred in our express division (23 million) and higher
    costs in our logistics division (42 million). The organic cost increase
    was partly offset by the effect of disposals in 2004 (primarily DFDS Transport
    Logistics joint venture and Denis Bodden N.V./SA) by 13 million (-2.4%). Work
    contracted out and other external expenses related to fees paid for sub-contractors,
    consultants, rent and leases. Total work contracted out and other external
    expenses increased by 342 million (7.0%) for 2004 compared to 2003.
    Acquisitions and disposals in 2003 and 2004 contributed 213 million
    (4.3%) to the increase. 169 million of the increase (3.5%) was primarily
    revenue related and reflected organic growth, especially in our express division.
    Changes in foreign exchange rates offset these cost increases by 40
    million (-0.8%). Salaries
    and social security contributions increased by 142 million (3.4%) compared
    to 2003. Acquisitions and disposals in 2003 and 2004 contributed 15
    million (0.4%) to the increase.Excluding
    the favourable net result of 25 million, regarding the settlement for
    future wage guarantees and various social measures (as described in chapter
    3  The mail division), salary costs increased organically
    by 164 million (3.9%), and reflected the 0.8% increase in our average
    number of full-time employee




equivalents,
    wage increases for employees and higher social security contributions. The
    trend of replacing more expensive labour with less expensive labour in order
    to reduce operating costs in our mail division continued in 2004. Changes
    in foreign exchange rates offset these cost increases by 12 million
    (-0.3%). Depreciation,
    amortisation and impairments decreased by 178 million (-25.0%) compared
    to 2003. If adjusted for the effect of goodwill and asset impairments of 193
    million made in 2003 and 11 million in 2004, there is an organic increase
    of 4 million. Acquisitions in 2003 and 2004 further increased the costs
    by 3 million (0.4%). Changes in foreign exchange rates decreased these
    costs by 3 million (-0.4%). Other
    operating expenses included items such as marketing expenses, restructuring
    costs, bad debt expenses, insurance costs, and various other operating costs.
    Other operating expenses increased by 2 million (0.3%) compared to 2003.
    Acquisitions in 2003 and 2004 contributed 28 million (3.7%) to the increase.
    Organically, other operating expenses decreased 19 million (-2.5%) mainly
    due to the cost programmes in our mail and logistics divisions. Changes in
    foreign exchange rates further offset the cost increases by 7 million
    (-0.9%). 2003Total
    operating expenses increased by 375 million (3.5%) to 11,099 million
    compared to 2002. Overall, the organic growth in operating expenses was 6.5%,
    the increase due to acquisitions effective in 2002 (including Cerilly Invest
    SA, Bleckmann Group B.V., Société des Transports Nicolas Frères
    SA and our 50% joint venture with DSV A/S, TNT DFDS Transport Logistics) and
    in 2003 (including DocVision, Blitzpunkt GmbH, Fischer, Full Service and Archive
    and Data Storage) was 0.9%, and changes in foreign exchange rates had a negative
    effect of 3.9%. Our gross margin, defined as the total operating income as
    a percentage of operating revenues, declined from 9.0% in 2002 to 6.5% in
    2003, primarily due to the goodwill impairments and asset impairments mentioned
    below. Total
    cost of materials decreased by 8 million (-1.4%) compared to 2002. Acquisitions
    effective in 2002 and in 2003 increased total cost of materials by 24
    million (4.3%). Organically, cost of materials decreased by 16 million
    (-2.8%) primarily as a result




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from
    the focus on cost control in our mail division. Changes in foreign exchange
    rates further decreased these costs by 16 million (-2.9%). Total
    work contracted out and other external expenses increased by 110 million
    (2.3%) for 2003 compared to 2002. Acquisitions in 2002 and 2003 contributed
    38 million (0.8%) to the increase. 287 million of the increase
    (6%) was primarily revenue related and reflected organic growth, especially
    in our express and logistics divisions. Changes in foreign exchange rates
    offset these cost increases by 215 million (-4.5%). Salaries
    and social security contributions increased by 136 million (3.4%) compared
    to 2002. Acquisitions in 2002 and 2003 contributed 23 million (0.6%)
    to the increase. An increase of 258 million (6.4%) was primarily revenue
    related and reflected the 6.9% organic increase in our average number of full-time
    employee equivalents and wage increases for employees, furthermore 37
    million higher pension costs attributed to the increase. In our mail division,
    we experienced trend of replacing more expensive labour with less expensive
    labour in order to reduce operating costs. Changes in foreign exchange rates
    offset these cost increases by 145 million (-3.6%). Depreciation,
    amortisation and impairments increased by 221 million (45.1%) compared
    to 2002. This increase was primarily due to the 183 million of goodwill
    impairments and 10 million of asset impairments made in the third quarter
    of 2003. The goodwill impairments were made in respect of our France (76
    million), Italy non-automotive (48 million), Germany (24




million) and Nordics (15 million) businesses in our logistics division
    and our UK data and document management business (20 million) in our
    mail division. An additional increase of 28 million was due to an increase
    in depreciation charges as a result of additional investments in property,
    plant and equipment and other intangibles. Changes in foreign exchange rates
    offset these cost increases by 22 million
    (-4.5%). Other
    operating expenses included items such as marketing expenses, restructuring
    costs, bad debt expenses, insurance costs, and various other operating costs.
    Other operating expenses decreased by 84 million (-10.0%) compared to
    2002. This decrease was due primarily to the 69 million (-8.2%) reduction
    in organic costs that resulted from continued focus on cost reductions during
    the current economic downturn. Other operating expenses attributable to acquisitions
    in 2002 and 2003 were 6 million (0.7%). Changes in foreign exchange
    rates contributed 21 million (-2.5%) to the other operating expense
    reduction. Included
    in various components of the above-mentioned cost analysis was a total of
    69 million in costs incurred related to the standardisation of our logistics
    divisions procurement, transportation and warehouse processes as part
    of its Transformation through Standardisation programme described in further
    detail in the logistics division discussion in chapter 5  The
    logistics division. Of this amount 9 million was included in expenses
    for work contracted out, 20 million in salaries and 40 million
    in other expenses.




Group
  Operating Income

|                                              |                                
|--------------------------------------------- | -------------------------------
|                                              | Year
      ended at 31 December
|                                              |                                
|                                              | 2004                           
|                                              |                                
|                                              | US$                            
|                                              |                                
|Mail                                          | 1,127                          
|Express                                       | 436                            
|Logistics                                     | 122                            
|Non-allocated
      operating income / (loss) | (96                            
|                                              |                                
|Total
      operating income                  | 1,589                          
|                                              |                                

|(in
      millions, except percentages)
|---------------------------------------
|1.                                     



2004Total operating income for the group was €1,174 million,
    an increase of 53.1%. The operating income of all three divisions grew in
    comparison to the previous year. The mail operating income amounted to €833
    million and is further described in chapter 3  The mail division.
    Express contributed €322 million to the group operating income and is
    further described in chapter 4  The express division. Logistics
    turned its 2003 negative contribution to the group operating income into a
    positive €90 million contribution. The logistics operating income is
    further described in chapter 5  The logistics division.




In 2004, non-allocated operating income amounted to a loss of €71 million.
    Included in this was €38 million for business initiatives, €20 million
    of which was used to build a corporate structure in China to support the business
    development in this region. During 2004 we opened a new head office in Shanghai,
    incorporated TNT (China) Holdings Co. Ltd., set up a new data centre and launched
    TNT China University. The average number of full time equivalents employed
    for this initiative was 139 at year-end 2004. The remaining €18 million
    for business initiatives was used for several other strategic projects, including
    the TNT-1 initiative (see also chapter 2), the aim of building alliances with
    other organisations and postal operators and a cost efficiency




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|Chapter
      02 | Information on the company
|---------------- | --------------------------

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project
    for lean warehousing. Costs made to support the World Food Programme (see
    also chapter 9 - Code of Business Principles & corporate social responsibility)
    were €9 million, including our contribution to relieve the victims of
    the tsunami disaster in Asia. The other costs were €24 million, which
    is an increase of €15 million or €6 million if corrected for the
    €9 million release of an insurance provision in 2003. This increase was
    mainly due to strengthening the group head office functions as a result of
    remedial actions, and higher costs for advisors following our audit committee
    investigations. Acquisitions
    effective in 2003 and 2004 had a positive €8 million effect on our operating
    income. Foreign currency movements during the year had a €2 million negative
    impact on our operating income.




2003In 2003, non-allocated operating income amounted to a loss of €19
    million. This included costs for business initiatives of €5 million,
    our costs of €5 million related to our charity initiative in connection
    with the United Nation's World Food Programme and other cost of €9
    million. Included in other cost was a release of an insurance provision of
    €9 million. Acquisitions effective in 2002 and 2003 had a negative effect on our operating
    income in the amount of €14 million. Foreign currency movements during
    2003 had a negative €29 million effect on our operating income.


Group
  Financial Income and Expenses

|                                        |                                
|--------------------------------------- | -------------------------------
|                                        | Year
      ended at 31 December
|                                        |                                
|                                        | 2004                           
|                                        |                                
|                                        | US$                            
|                                        |                                
|Interest
      and similar income       | 50                             
|Interest
      and similar expenses     | (154                           
|                                        |                                
|Net
      financial expense             | (104                           
|                                        |                                
|(in
      millions, except percentages)



2004Net financial expense was 77 million in 2004, an improvement
    of 15 million (16.3%) compared to 92 million in 2003. Interest
    and similar income in 2004 increased by 19 million (105.6%) compared
    to 2003, primarily due to a favourable 11 million result on realisation
    of mark-to-market positions following the unwinding of interest rate hedges
    and higher average cash balances. Interest
    and similar expenses in 2004 were 4 million (3.6%) higher than in 2003.
    Interest and similar expenses were favourably impacted through a reduction
    in average gross debt which was offset by one-off interest charges incurred
    on taxes (6 million). The interest and similar expense was adversely
    affected by interest rate movements (3 million), particularly as UK
    interest rates increased, and higher expenses as a result of foreign exchange
    losses (3 million). The interest charge benefited from the strengthening
    euro exchange rate in relation to the US dollar (2 million).




2003Net
    financial expense was 92 million in 2003, an improvement of 16
    million (14.8%) compared to 108 million in 2002. Interest
    and similar income in 2003 decreased by 2 million (-10.0%) compared
    to 2002, primarily due to lower rates earned on cash balances. Interest
    and similar expense in 2003 improved by 18 million (14.1%) compared
    to 2002. This improvement was primarily a result of a lower average net debt,
    which, at 1,202 million was 330 million lower than 2002. While
    the expense was adversely affected by interest rate movements, particularly
    as Canadian rates increased and euro rates fell, the interest charge benefited
    from the strengthening euro, particularly in relation to US dollar, Canadian
    dollar and UK pound denominated borrowings. Net financial expense in 2003
    also benefited from two US$100 million interest rate swaps with banks, one
    entered into on 7 January 2003 and the other on 23 January 2003. Under the
    terms of these arrangements, we will receive fixed interest rates and pay
    variable interest rates until 5 December 2008.




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Group
  Income Taxes

|                                        |                                
|--------------------------------------- | -------------------------------
|                                        | Year
      ended at 31 December
|                                        |                                
|                                        | 2004                           
|                                        |                                
|                                        | US$                            
|                                        |                                
|Current
      tax expense               | 470                            
|Changes
      in deferred taxes         | 110                            
|                                        |                                
|Total
      income taxes                | 580                            
|                                        |                                
|(in
      millions, except percentages)



2004Group income taxes amounted to 428 million, an increase
    of 16.3% compared to 2003. Our effective tax rate for 2004 was 39.0% compared
    to 54.5% for 2003. This decline in effective tax rate was predominantly the
    result of the impact of the non-tax deductible goodwill impairments in the
    third quarter of 2003 (9.9%) and the effect in 2003 of the 59 million
    charge taken in connection with liabilities to the UK Inland Revenue, as described
    below. The
    total accumulated losses that were available for carry forward at 31 December
    2004 amounted to 793 million. With these losses carried forward, future
    tax benefits of 260 million could be recognised. Tax deductible losses
    give rise to deferred tax assets at the statutory rate in the relevant country.
    Deferred tax assets are recognised if it is more likely than not that they
    can be offset against taxes payable in future years. As a result we recorded
    deferred tax assets of 98 million at the end of 2004. We established
    valuation allowances and have therefore effectively not recognised 162
    million of the potential future tax benefits. This is mainly due to the uncertainty
    regarding the realisation of such benefits, for example as a result of the
    expiry of tax losses carried forward and legislative changes. 2003Group income taxes amounted to 368 million, an increase
    of 7.9% compared to 2002. Our effective tax rate for 2003 was 54.5% compared
    to 35.9% for 2002, primarily due to the impact of non-tax-deductible goodwill
    impairments made in the third quarter of 2003 for our mail and logistics divisions
    and the effect of a 59 million charge taken in connection with liabilities
    to the UK Inland Revenue, following investigations conducted by our audit
    committee. The investigations conducted by our audit committee related to
    representations made to the UK Inland Revenue and to our auditors PricewaterhouseCoopers,
    with respect to certain UK tax matters originally arising in the late 1990s
    relating to one of our UK subsidiaries. In addition to this investigation,
    our audit committee, with the assistance of independent tax advisors, conducted
    a review of other UK tax matters that arose from the same period. This was
    partly offset by a favourable European ruling on the tax deductibility of
    interest expense in respect of our foreign subsidiaries. The
    total accumulated losses that were available for carry forward at 31 December
    2003 amounted to 750 million. With these losses carried forward, future
    tax benefits of 248 million could be recognised. Tax deductible losses
    give rise to deferred tax assets at the statutory rate in the relevant country.
    Deferred tax assets are recognised if it is more likely than not that they




can
    be offset against taxes payable in future years. As a result we recorded deferred
    tax assets of 110 million at the end of 2003. We established valuation
    allowances and therefore effectively did not recognise 138 million of
    the potential future tax benefits. This was mainly due to the uncertainty
    regarding the realisation of such benefits, for example as a result of the
    expiry of tax losses carried forward and legislative changes. Group
    Net Income2004In 2004 net income was 667 million, an increase of 367
    million (122%) compared to 2003. This increase was mainly the result of an
    increase in operating income of 407 million (53%), driven by the operational
    performance of the divisions combined with the negative impact in 2003 of
    goodwill and asset impairments, and the costs associated with our Transformation
    through Standardisation restructuring programme, as described in chapter 5
     The logistics division. A reduction of net financial expenses
    of 15 million,predominantly
    reflecting a favourable result of unwinding of interest hedges,
    also contributed to the growth in net income. Income taxes increased by 60
    million compared to 2003, which was the combined effect of the higher profit
    before tax and a decreased effective tax rate. The effective tax rate in 2003
    was impacted by the 59 million charge taken in connection with liabilities
    to the UK Inland Revenue in 2003 and non-deductible goodwill impairments.
    The loss from investments in affiliated companies reduced with 3 million
    compared to last year, and net income attributable to minority shareholdings
    contributed 1 million. 2003Net income decreased by 299 million (-49.9%) to 300
    million compared to 2002. This decrease was primarily the result of the decrease
    in operating income of 291 million (-27.5%), due to 233 million
    of after-tax goodwill and asset impairments, and the costs associated with
    our Transformation through Standardisation programme, an increase in group
    income taxes (27 million) and a decrease in net financial expense (16
    million). The lower net financial expense was mainly due to lower average
    debt and a higher proportion of variable interest rate debt compared to 2002.
    Income attributable to our minority shareholders decreased by 4 million.




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|Chapter
      03 | The mail division
|---------------- | -----------------

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|03                      |  | 
|----------------------- |  | 
|                        | 
|The
      mail division | 
|                        | 



Shanghai
  residents

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Mail
    business description Our
    mail division provides services for collecting, sorting, transporting and
    distributing domestic and international mail including letters, printed matter
    and parcels, as well as for distributing addressed direct mail and unaddressed
    mail. We also provide a range of data and document management services, including
    direct marketing and interactive services, and services for managing physical
    and electronic information flows. Our
    substantial and long experience in the mail industry has helped us become
    one of the worlds leading postal operators. It also helps us anticipate
    and respond to our changing market. In addition to providing world class mail
    service, we continue to combine our expertise with technology to develop new
    mail related data and document management services that meet specific consumer
    and business needs. We
    have long viewed our core competence not as merely moving physical mail from
    one location to another, but as intelligently managing both physical and electronic
    flows of information. This skill is central to our objective, which is to
    maintain our margins through the implementation of cost flexibility measures
    and to maintain market share in the Netherlands, and to achieve growth through
    the provision of mail related data and document management services and international
    expansion. Our
    mail business is highly regulated. See chapter 13. The Dutch Postal Act requires
    us to provide mandatory postal services and grants us the exclusive right
    to provide certain mandatory postal services referred to as reserved postal
    services. Mandatory postal services are subject to price regulation. In the
    Netherlands traditional mail services are declining due to the size of the
    Dutch domestic mail market, growing competition and the substitution of methods
    of delivering information for mail. In other countries we may be able to grow
    our mail services, although substitution is a relevant factor that negatively
    influences the total size of all domestic mail markets. At the moment the
    potential growth in other countries is also negatively affected by regulatory
    barriers to entry. Key
    elements of our mail strategy, particularly in the Netherlands, are to increase
    cost flexibility and to achieve growth through developing mail related data
    and document management services and international expansion. Due to our strong
    position in the Dutch market, mail activities have provided us with a relatively
    stable source of revenue and income. Dutch and EU regulations prohibit us
    from using the revenues from reserved postal services to cross subsidise other
    activities. Our
    mail division is organised in four business lines  Mail Netherlands,
    cross-border mail, European Mail Networks and data and document management
    - the latter of which operates under the brand name Cendris.




MAIL
    STRATEGYOur ambition is to become the leading provider of business
    and consumer services for communication, transactions and delivery. We want
    our mail operations to be recognised as the industry benchmark for quality,
    efficiency and customer service, for producing the best returns in the industry
    and for making optimal use of new technologies and European postal market
    liberalisation. Our
    mail strategy is based on three key elements: 
      In
        Mail Netherlands, our focus is on the retention of our current margins
        by implementing cost flexibility measures. In addition, we continue to
        offer new services to customers that bring cost savings to their production
        chains.
      Internationally,
        we continue to expand along three tracks: -
      Through our European Mail Networks business line we offer
        addressed, unaddressed (i.e. the item of correspondence
        does not carry an individual address) and segmented distribution
        solutions for direct mail, brochures, leaflets and samples
        with an excellent price/quality ratio.-
      We
        continue to strengthen our European position through alliances
        with other organisations and postal operators.-
      Our
        51%-owned subsidiary Spring, with Royal Mail Group plc and Singapore Post
        Pte Ltd., offers cross border mail services on a global scale. 
      In
        addition to physical mail delivery, we continue to offer mail related
        data and document management services, such as direct and interactive
        marketing services and services for managing physical and electronic information
        flows. In
    2004, our mail division earned revenues of 3,900 million, a 0.4% decrease
    compared to the previous year. Mail accounted for 30.9% of our operating revenue,
    71.0% of our operating income and 62.2% of our earnings from operations. The
    following table sets forth operating revenues for each of the four business
    lines of our mail division for each of the years in the three-year period
    ended 31 December 2004:


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|Chapter
      03 | The mail division
|---------------- | -----------------

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|                                   |                                
|---------------------------------- | -------------------------------
|                                   | Year
      ended at 31 December
|                                   |                                
|                                   | 2004                           
|                                   |                                
|                                   | US$                            
|                                   |                                
|Mail
      Netherlands             | 3,601                          
|Cross-border
      mail            | 746                            
|European
      Mail Networks       | 643                            
|Data
      and document management | 290                            
|                                   |                                
|Total
      operating revenues     | 5,280                          
|                                   |                                

|(in
      millions)
|-------------------
|1.                 

In
    November 2004, we made a conditional offer for a 25% stake in the incumbent
    national postal operator of Denmark. We understand from informal reports that
    we may learn further about the status of our offer in the near future. This
    would be a substantial acquisition for us. As
    part of our cooperation with the China Post we are currently advising on the
    optimisation of the China Post transport, sorting and delivery operational
    structure. We are also investigating how we can capitalise on what we expect
    will be the strong development of the Chinese direct mail market. MAIL
    DIVISION OVERVIEW BY BUSINESS LINEMail
    NetherlandsOur Mail Netherlands business line collects, sorts, transports
    and delivers postal items, including letters, direct mail, printed matter
    and parcels within the Netherlands. Mandatory
    postal services provided in the Netherlands are included within Mail Netherlands.
    Our subsidiary Royal TPG Post B.V. performs these mandatory postal services. We
    are required to provide mandatory postal services. The domestic mandatory
    postal services mainly consist of the conveyance against payment of standard
    single rates of items of correspondence, including registered mail, and printed
    matter with a maximum weight of two kilogrammes and postal parcels with a
    maximum individual weight of 10 kilogrammes. The
    provision of certain mandatory postal services is reserved exclusively to
    us. These domestic reserved postal services include the conveyance of letters
    weighing up to 100 grammes within the Netherlands, the placing of letter boxes
    alongside or on public roads and the issuance of postal stamps bearing the
    effigy of the monarch and/or the word Nederland. The exclusive
    right does not extend to the conveyance of letters by a business to its own
    customers. Although not presently a widespread practice, large businesses
    may establish their own alternative distribution systems; this could adversely
    affect our mail divisions revenue. Certain
    services are not included in the mandatory services and we are not required
    to provide these, including the delivery of bulk printed matter such as advertising,
    magazines and newspapers, the delivery of bulk letters of correspondence with
    a weight above 100 grammes and unaddressed mail items. See chapter 13  Regulatory
    environment.




Tariffs
    for mandatory postal services must be transparent, non-discriminatory and
    uniform. However, we may grant volume discounts and negotiate specific prices
    and conditions with high volume users. In
    2004, approximately 28.3% of our mail operating revenue and approximately
    8.7% of the Groups operating revenues (2003: 28.8% and 9.5%) were derived
    from reserved postal services in which we generally are not subject to competition.
    Notwithstanding that other companies are generally precluded by the postal
    concession granted to us by the Dutch State from providing conveyance of letter
    mail items that fall under reserved postal services, a small number of these
    letter mail items are carried by other providers.We are mindful of this practice
    but the effect on volumes is immaterial. In
    2004, through our Mail Netherlands business line, we delivered on average
    approximately 17 million addressed postal items per day, six days a week,
    to approximately 7.5 million households and businesses, and collected, sorted
    and delivered approximately 5.3 billion addressed items of mail (excluding
    inbound international items).The average number of working days in a year
    is an important driving factor of our mail volumes in that year. The
    underlying decline of volumes adjusted for a comparable average number of
    working days per year was 3.2% in 2004.This implies an average annual decline
    of 1.6% since 2000.The decline was due in part to substitution by electronic
    media (see chapter 10  Risk factors), accelerated by competition
    and reduced demand for direct mail as a result of the slow economy.We expect
    demand for these services to pick up when the economy recovers, although we
    expect a further decline in addressed mail over the next few years due to
    the increasing use of electronic mail, electronic bill presentment, reduced
    frequency of bank statements, competition and other factors.We estimate that
    the total Dutch addressed mail market volumes shrunk by around 2% in 2004. Except
    for those services falling within reserved postal services, we face competition
    in the market in all areas of our mail division. Depending on the type of
    service, this competition arises from three primary sources: 
      dedicated
        companies specialising in a particular type of postal service,




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
      specialised
        distribution units of large Dutch companies, and
      local
        or regional companies providing a range of postal services in a given
        geographic area. In
    international postal services, other than reserved postal services, we face
    competition from other public postal operators and from a wide variety of
    private, internationally operating companies. Competition for these services
    is based primarily on price and quality of service. For some business lines,
    such as direct mail, the ability to offer data and documentation management
    services is also a competitive factor. In
    the Netherlands the two main competitors, Sandd B.V. and Selekt Mail Nederland
    (the latter is owned by Deutsche Post World Net), in the addressed mail market
    have both built their own nationwide delivery capability based on a delivery
    frequency of twice a week. These two main competitors have delivered in 2004
    around 200 million addressed postal items, which was around 4% of the total
    volume of the addressed mail market. We expect that these competitors will
    continue to grow. We will continue to pursue a margin policy and will continue
    to recommend to our customers our wide range of innovative services that are
    executed with excellent quality and reliability. We
    anticipate that numerous business opportunities within the European Union
    will exist as a result of the further liberalisation of the postal sector.
    We believe we will be in a position to take advantage of these opportunities
    as a result of our efficiency, quality of service and experience. Due to the
    efficiency of our operations and customer orientation, we do not believe liberalisation
    in the Netherlands will significantly undermine our position in our traditional
    home market. Our
    domestic mail system is presently organised around 11 main sorting centers.
    Six of these sorting centers are automated centers developed in recent years
    and are dedicated to letters and printed matter, three are dedicated to parcels,
    one to registered mail and one to international mail. The
    domestic mail process begins with the deposit of mail by customers at post
    boxes, post offices and other designated deposit points and the pick-up of
    mail from customers. Through a fleet of 4,170 vehicles either owned or leased
    by us, mail is delivered to one of the main sorting centers. After sorting,
    mail is delivered to the main sorting center in the region of its ultimate
    destination, where the mail is sorted to the level of an individual round
    of a mailman, whereafter it is delivered to one of our 535 mail distribution
    depots. At the depot, the mail is manually arranged according to street and
    house number and door-to-door delivery is then effected by one of our 42,150
    deliverers. In the coming years the process of manually arranging the mail
    according to street and house number will be taken over by sorting machines
    for small letter mail items, due to the actions formulated in our cost flexibility
    programme. The
    domestic mail service we provide in our home market in the Netherlands consistently
    ranks among the most efficient and most competitively priced in Europe. Our
    customers enjoy more than the legally required 95% next-day delivery of items
    of correspondence at an overall price thatwhen corrected for inflationhas
    actually decreased by 17% since the privatisation of our business in 1989.




Our
    direct mail business comprises all activities involving distribution within
    domestic borders of addressed advertising mail and magazines (referred to
    in the industry as direct mail). The vast majority of the delivery
    of direct mail is not a reserved postal service and is therefore subject to
    competition. Initially, direct mail was predominantly used by mail-order companies,
    banks and insurance companies, but recently it is increasingly being used
    by all companies, regardless of size. Over the past years, up until 2002,
    we achieved growth in direct mail volumes due to economic growth in general,
    our innovative marketing approach and developments in the communications market.
    Beginning in 2002 and continuing in 2003 and 2004, a decline in direct marketing
    expenditures, due to slow economic growth and competition with other communications
    media in the advertising market, negatively affected our direct mail volumes.
    We believe that better targeted direct mailings, which have a more limited
    circulation, may impede future growth in direct mail volumes. We
    have maintained our profitability because of a set of cost restructuring measures
    that are being implemented with great rigour. In 2001 we formulated our cost
    flexibility programme with works council discussions and initial pilots aiming
    at 320 million of savings on an annualised basis by 2012, compared to
    our cost levels in 2001. In 2004, we updated this cost flexibility programme
    with an overhead masterplan, and we now expect to achieve annualised cost
    savings by 2012 of approximately 370 million. At the end of 2004, an
    estimated aggregate cost saving of 145 million had been realised since
    2002. The cost saving programme includes a restructuring of the marketing
    and sales channels and organisation, a restructuring of our operations and
    a restructuring of our overhead. The restructuring of the marketing and sales
    channels includes the optimisation of call centres, the retail network (post
    offices and service points) and the marketing and sales organisation. The
    restructuring of operations includes: 
      the
        introduction of automated sequence sorting of small mail letter items,
      the
        implementation of a differentiated collective labour agreement for mail
        deliverers and other postal employees,
      the
        realisation of further optimised sorting processes,
      a
        restructuring of the mail depot structure,
      the
        separation of parcels from other mail delivery activities, and
      a
        restructuring of operational management structure, back office and support
        functions. The
    restructuring of our overhead includes the optimisation of staff and support
    functions. This
    redesign of our mail production chain has a particular emphasis on refining
    our distribution activities and distribution points throughout the Netherlands.
    In 2003, we started the installation of the first of several new sequence
    sorting machines and began using new software to improve automatic reading
    rates. By the end of 2004, 151 of these machines have been installed and installation
    of all the sorting machines is expected to be completed by the end of 2005. In
    2003, we also introduced the position of mail deliverer: part-time mail deliverer
    positions that provide the same high quality for customers at lower cost and
    with greater flexibility for the




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      03 | The mail division
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individual
    and the company. The new mail deliverer positions are particularly attractive
    to individuals who want to work limited hours but still have the security
    of a permanent position and pension. In total approximately 5,300 new employees
    joined TPG Post as part-time deliverers in 2003 and 2004, and the number continues
    to grow. Through natural attrition, up to 9,000 full-time equivalent mailman
    positions will be replaced by 20,000 part-time mail deliverer positions by
    the year 2012. An additional 5,000 mailman positions will be eliminated. We
    believe that the cost flexibility programme will help us maintain the high
    quality our customers have come to expect, while also maintaining our margins.
    In 2004 a plan (as part of the existing masterplans) was announced to redesign
    the management structure of the operational activities of our collection,
    sorting, transport and distribution. Included
    in Mail Netherlands are the results of our 50% interest in Postkantoren B.V.,
    a joint venture with Postbank N.V., a subsidiary of ING Group N.V. Postkantoren
    operates a network of post offices that act as outlets for the services of
    both partners. This network of outlets, including franchises in the Netherlands,
    helps to fulfil our mandatory service obligation to provide a minimum number
    and regional density of postal service points, as well as certain other services.
    Due to the growing use of cash dispensers and the Internet for banking and
    postal services, we are restructuring our outlets to include fewer post offices
    but more sales outlets in shops. In 2005, through this joint venture, we intend
    to operate 800 post offices. Further, we expect we will operate 1,300 TPG
    Post Service Points, which will offer most postal products. In addition, we
    intend to operate 1,000 sales outlets in shops, which means that we will offer
    the market a total of 3,100 outlets in 2005. Postkantorens core business
    is the distribution of financial and communication services and products (including
    postal services) to consumers and small businesses throughout the Netherlands.
    We use the post offices as an outlet for the collection of letters and parcels,
    the sale of stamps, the delivery of letters and parcels in the event that
    home delivery is not successful and express post. In addition, a network of
    more than 250 TPG Post Business Points will provide service to small and medium
    enterprises. On behalf of Postbank, Postkantorens post offices offer
    counter banking, insurance and mortgage services. Mail
    Netherlands also engages in activities related to philately and produces,
    issues and distributes Dutch stamps. Cross-Border
    MailOur cross-border mail business line offers a range of services
    to individual and business customers. These services include handling exported
    postal items in the Dutch market and all postal items imported to or passing
    through the Netherlands from foreign public and private postal operators. We
    provide two distinct cross-border mail services. The first of these is a mandatory
    postal service. For international inbound and outbound mail, based on the
    Dutch Postal Act and in accordance with the rules of the Universal Postal
    Union, mandatory postal services comprise conveyance against payment of both
    postal items at standard single rates and of bulk mail items at separately
    agreed rates with a maximum individual weight of two kilogrammes. International
    inbound and outbound postal parcels with a maximum individual weight of 20




kilogrammes
    are also included. We offer this service through a combination of our Mail
    Netherlands Network and foreign public and private postal operators. For the
    international transport of mail, we make use of a wide variety of air carriers
    and, within Europe, a subcontracted truck network. The provision of certain
    mandatory cross-border postal services is reserved exclusively to us. These
    cross-border inbound reserved postal services involve the conveyance of letters
    weighing up to 100 grammes within the Netherlands. Cross-border
    mail services also include handling bulk mailings for a range of international
    customers, including publishers, mail-order companies, and financial service
    and direct mail companies. We conduct these activities through our 51%-owned
    subsidiary, Spring, of which Royal Mail Group and Singapore Post own the minority.
    In addition to using its three shareholders delivery networks, systems,
    expertise and products, Spring uses delivery agreements with national and
    private postal operators. The
    cross-border mail services market is highly competitive. Deregulation has
    prompted national and private postal operators to lower prices for business
    mail in order to compete and to enter foreign markets to position themselves
    for growth. Consolidation is resulting in fewer providers in the market. In
    most countries, the primary competitor is the traditional incumbent postal
    operator, but increasingly we see international postal operators such as Deutsche
    Post, Swiss Post International, Danish Post and La Poste extending their operations.
    Spring is the only true global alternative to these postal operators and competes
    in the market through a consultative and solutions-based approach to mail. Springs
    name and credibility in the marketplace is achieved by delivering excellent
    service to publishers, corporate mailers and direct marketers. In addition
    to its cross-border business mail services, Spring draws on the resources
    of its shareholders to deliver tailor-made solutions. Spring
    aims to continue to grow its global customer base through sales teams managed
    from regional headquarters in Amsterdam, NewYork and Singapore. The
    23rd UPU congress held in Bucharest in September 2004 introduced a resolution
    governing the use of Extraterritorial Offices of Exchange (ETOE). The resolution
    has been accepted by a majority of the UPU countries. Countries applying the
    resolution do not allow ETOE on their territories and may use commercial prices
    (i.e. not based on terminal dues) for inbound mail volumes from ETOE. This
    means that routing options available to Spring and other operators (not being
    incumbents) are reduced. European
    Mail NetworksThrough our European Mail Networks business line, we are building
    a position to offer our customers a full service concept for mail, based upon
    high quality and a wide coverage in addressed and unaddressed delivery as
    well as a broad portfolio of services to reinforce our distribution activities.
    We have a presence now in Austria, Belgium, the Netherlands, the Czech Republic,
    Germany, Italy, Slovakia and the United Kingdom. Our services combine our
    expertise in data collection and direct marketing to offer customers an intelligent
    unaddressed service




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      Annual Report 2004
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that
    approaches addressed mail in its ability to target consumers. Unaddressed
    mail is delivered in preselected areas, but does not carry an individual address. We
    strengthened our position in 2004 in all markets mainly through organic growth.
    In Italy we were successful in growing the mail related business and were
    awarded a seven-year contract in mailroom management. In the UK we managed
    to outperform the market growth of unaddressed mail, despite losing our Safeway
    contract. We
    have made some small acquisitions. In Germany, we acquired the remaining 50%
    of the shares of Höfinger and the business activities of Schneider, both
    unaddressed mail companies and integrated their activities into our unaddressed
    mail subsidiary Olaf Jepsen GmbH. This strengthened our position in the German
    unaddressed mail market. In
    the German addressed market the revenue of our majority owned (71%) subsidiary
    EP Europost AG & Co doubled in 2004 as compared to 2003. We were successful
    in extending the number of licenses granted by the German regulator. Through
    these licenses EP Europost was able to sign the first contract for the delivery
    of small letter mail. In
    2002, the UK postal regulator announced it would extend the percentage of
    its bulk mail market open to competition from 10% to 40% effective 1 January
    2003. TPG Post UK Limiteds long-term license to provide bulk mail and
    certain other business mail services in the United Kingdom came into effect
    on 1 January 2003. In 2004 we began offering addressed distribution services
    in the United Kingdom using the TNT brand through our arrangement with Royal
    Mail Group giving us access to Royal Mail Groups local sorting and delivery
    network. Separately we gained access to Express Dairies milkman delivery
    network. We are in contact with large companies, publishers, mailing houses
    and direct marketers who send mailings of more than 4,000 items and who need
    reliable, competitively priced services. In this way we believe we are able
    to strengthen our position in Europes second-largest mail market and
    our existing unaddressed mail and data and document management services.




Data
    and Document ManagementThe
    services provided by our data and document management business line cover
    two main areas: direct marketing and document handling. In direct marketing,
    we offer direct and interactive marketing solutions such as data capture,
    database management, data mining and target systems for distribution. Our
    document handling services include distributed printing, mailroom management
    and workflow efficiency services. After
    branding our data and document management business line in 2003 as Cendris,
    we started in 2004 to restructure the different parts of Cendris into one
    company. The execution of these plans will be finalised at the end of 2005.
    The goal of this restructuring is to enable Cendris to improve its market
    proposition in the data and document market and to optimise the internal processes. In
    2004, Cendris had no revenue growth due to the slow recovery of the economy
    both in the Netherlands and the rest of Europe. The focus of our existing
    client base is still on cost efficiency. We have found it difficult to attract
    new clients for this business. In
    2004, we acquired the remaining 40% of the shares in DIMAR. DIMAR is one of
    the leading providers of full-service direct marketing activities in the Czech
    Republic and Slovakia. We have owned the other 60% of DIMAR shares since 2002. In
    2004, we also acquired 75% of the shares of Seducom. The other 25% is owned
    by Mailprofs Employment BV, a 50% subsidiary of TPG Post BV. Seducom is a
    consultancy company in the Netherlands on dating and document management.
    Seducom supports companies and organisations in structuring and setting up
    their physical and virtual document flows. Our
    call center formed a joint venture with BSC, the call centre of Essent, an
    energy company in the Netherlands. We own 51% of the shares of the joint venture,
    although the actual control of the joint venture is evenly divided between
    the partners. Therefore, 51% of the joint ventures revenue and result
    is consolidated in our figures. This joint venture created a substantial market
    position (2nd largest call centre company in the Dutch market) that allows
    us to bid on larger service requests.


Mail
  Financial Review

Mail
  operating revenues

|                                   |                                 |  |       |  |          |   |       |  |          |   |       | 
|---------------------------------- | ------------------------------- |  | ----- |  | -------- | - | ----- |  | -------- | - | ----- | 
|                                   | Year
      ended at 31 December | 
|                                   |                                
|                                   | 2004                            |  | %     |  | 2003     |   | %     |  | 20021    |  
|                                   |                                 |  |       |  |          |   |       |  |          |  
|                                   | US$                             |  |      |  | VARIANCE |   |      |  | VARIANCE |   |      | 
|                                   |                                 |  |       |  |          |   |       |  |          |   |       | 
|Mail
      Netherlands             | 3,601                           |  | 2,660 |  | (1.4     | ) | 2,698 |  | (3.5     | ) | 2,795 | 
|Cross-border
      mail            | 746                             |  | 551   |  | (8.5     | ) | 602   |  | (7.4     | ) | 650   | 
|European
      Mail Networks       | 643                             |  | 475   |  | 16.1     |   | 409   |  | 14.2     |   | 358   | 
|Data
      and document management | 290                             |  | 214   |  | 3.9      |   | 206   |  | 2.0      |   | 202   | 
|                                   |                                 |  |       |  |          |   |       |  |          |   |       | 
|Total
      operating revenues     | 5,280                           |  | 3,900 |  | (0.4     | ) | 3,915 |  | (2.2     | ) | 4,005 | 
|                                   |                                 |  |       |  |          |   |       |  |          |   |       | 

|(in
      millions, except percentages)
|---------------------------------------
|1.                                     



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        Annual Report 2004 | 29
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|Chapter
      03 | The mail division
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Mail
  operating expenses

|                                                      |                                
|----------------------------------------------------- | -------------------------------
|                                                      | Year
      ended at 31 December
|                                                      |                                
|                                                      | 2004                           
|                                                      |                                
|                                                      | US$                            
|                                                      |                                
|Cost
      of materials                               | 249                            
|Work
      contracted out and other external expenses | 1,277                          
|Salaries
      and social security contributions      | 2,054                          
|Depreciation,
      amortisation and impairments      | 219                            
|Other
      operating expenses                        | 354                            
|                                                      |                                
|Total
      operating expenses                        | 4,153                          
|                                                      |                                
|(in
      millions, except percentages)              



|                                              |                                
|--------------------------------------------- | -------------------------------
|                                              | Year
      ended at 31 December
|                                              |                                
|                                              | 2004                           
|                                              |                                
|                                              | US$                            
|                                              |                                
|Earnings
      from operations                | 1,170                          
|%
      of mail operating revenues            | 22.2%                          
|Amortisation
      and impairment of goodwill | (43                            
|                                              |                                
|Total
      operating income                  | 1,127                          
|                                              |                                
|(in
      millions, except percentages)      



---

|                                                                       |                                 |  |       |  |       | 
|---------------------------------------------------------------------- | ------------------------------- |  | ----- |  | ----- | 
|                                                                       |                                
|                                                                       | Year
      ended at 31 December | 
|                                                                       |                                
|                                                                       | 2004                            |  | 2003  |  | 2002  | 
|                                                                       |                                
|Addressed
      postal items delivered by Mail Netherlands 1(millions) | 5,302                           |  | 5,384 |  | 5,521 | 
|per
      Netherlands delivery address (items)                         | 707                             |  | 724   |  | 747   | 
|per
      Mail Netherlands FTE2 (thousands of items)                   | 161                             |  | 156   |  | 151   | 
|per
      Netherlands inhabitant (items)                               | 325                             |  | 331   |  | 341   | 
|per
      delivery day (millions)                                      | 17                              |  | 18    |  | 18    | 
|Total
      operating revenues per FTE2 (thousands of )               | 95                              |  | 89    |  | 92    | 
|Average
      percentage of national mail sorted automatically (%)     | 82                              |  | 82    |  | 80    | 
|                                                                       |                                 |  |       |  |       | 

|1. | Excluding
      international mail items per delivery day (millions).                           
|-- | ------------------------------------------------------------------------------------------------
|2. | This
      FTE (full-time employee equivalent) definition is based on a 37-hour work
      week.



|                                                                 |                                  
|---------------------------------------------------------------- | ---------------------------------
|                                                                 | Year
        ended at 31 December
|                                                                 |                                  
|                                                                 | 2004                             
|                                                                 |                                  
|Total
      cross-border mail volumes (thousands of kilogrammes) | 90,239                           
|                                                                 |                                  
|                                                                

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      Annual Report 2004
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The
    operating revenues of our mail division declined by 0.4% in 2004. In Mail
    Netherlands addressed mail volumes decreased 1.5%, and revenues declined 1.4%.
    On a comparable number of working days basis, the addressed Mail Netherlands
    volumes decline amounted to -3.2%. Revenues in our cross-border line of business
    declined 8.5%. Revenues in European Mail Networks showed 16.1% growth. Data
    and Document Management revenues increased 3.9%. 2004
    showed no major improvements in the economic environment in the Netherlands
    or Europe in general. Customers continued their search for cost savings in
    the distribution area. Addressed Mail Netherlands volumes continued to decline
    as a result of growing competition, substitution and customers suspending
    their mailings. The mail division focussed on quality and margin to defend
    our market position. At the European level we expanded in the addressed mail
    segment through our startups in the United Kingdom and Germany. Our
    mail divisions operating income increased by 8.7% in 2004, due primarily
    to Mail Netherlands and European Mail Networks. Our 2003 results were reduced
    by a 20 million goodwill impairment for our UK data and document management
    business. In 2004, earnings from operations increased by 5.5%. This increase
    was achieved primarily through continued progress in improving productivity
    and cost control while expanding our European Mail Networks and through small
    acquisitions. The improvement in earnings from operations was achieved despite
    the decline in addressed postal items delivered in the Netherlands. Mail
    Operating Revenues2004In 2004, operating revenues from our mail division decreased
    by 15 million (-0.4%) compared to 2003. Organic operating revenues decreased
    by 5 million (-0.1%). Compared to last year, 2004 showed a 7 million
    (-0.2%) negative acquisition effect, due to a number of acquisitions effective
    in 2003 (including DocVision, Blitzpunkt GmbH, Fischer and Full Service) and
    the disposal of our 50% share in Geldnet B.V., an armoured cash transit business.
    Acquisitions effective in 2004 (including Höfinger, Prime Vision, Seducom
    and our joint venture with Essent, Cendris BSC Customer Contact) and the disposal
    of Denis Bodden, partly offset the negative acquisition effect. Foreign exchange
    effects accounted for a decline of 3 million (-0.1%). Mail
    Netherlands operating revenues in 2004 decreased by 38 million (-1.4%)
    compared to 2003, of which 17 million can be attributed to a positive
    disposal effect of Geldnet in 2003. The organic volume decline in addressed
    mail items was offset by a higher average number of working days in 2004,
    a positive price-mix effect and a small increase in the volume of unaddressed
    mail items. The
    continued underlying decline in addressed postal item volumes in 2004 (-3.2%)
    was due primarily to competition in the non-mandatory area, accompanied by
    reduced demand for direct mail as a result of cost-saving programmes initiated
    by some of our key customers due to the slow economy and the continued substitution
    of electronic media. We expect these trends to continue. This volume decline
    was partly offset by the higher




average number of working days in 2004, which had a 1.7% upward volume effect. During
    2004 competition remained fierce with the key international postal operators
    continuing to compete on price. Increasingly it seems that the big three remain
    the main competitive global threat, Deutsche Post, Swiss Post and La Poste.
    However, increasingly we are seeing quality of service and reliability becoming
    more and more important to our customers. Cross border mail operating revenues
    in 2004 decreased organically by 44 million (-7.4%) compared to 2003.
    The main driving factors for this decline were fierce international competition,
    our policy to reduce and terminate unprofitable contracts of volume in our
    Spring business and the renewed sales agency agreement with Royal Mail Group,
    which resulted in a lower fee. Foreign exchange effects caused a 1% decrease,
    primarily related to the appreciation of the euro against the US dollar and
    the Singapore dollar. European
    Mail Networks operating revenues increased by 16.1% in 2004. All countries
    except Belgium, where our business is still negatively affected by local environmental
    taxes and competition, contributed to this growth; the UK and Italy showed
    double digit growth. In 2004 revenues of our start up in Germany more than
    doubled, while the first year of our start up in the United Kingdom showed
    significant growth. In Italy mail-related activities grew rapidly; addressed
    and unaddressed mail showed substantial growth as well. Despite
    the continuing weak economic climate in the Netherlands, data and document
    management operating revenues increased by 8 million (3.9%). This increase
    was mainly attributable to the full year contribution of the 2003 acquisition
    DocVision of 7 million (3.4%) and the newly started joint venture with
    Essent, Cendris BSC Customer Contact, in the customer contact/call centre
    business. 2003In 2003, operating revenues from our mail division decreased
    by 90 million (-2.2%) compared to the full year 2002. Organic operating
    revenues decreased by 81 million (-2.0%), while acquisitions effective
    in 2002 (including Cerilly and DIMAR) and in 2003 (including DocVision, Blitzpunkt
    GmbH, Fischer and Full Service) contributed positively. Including the effect
    of the disposal of our 50% share in Geldnet, the overall acquisition effect
    in 2003 amounted to 24 million (0.6%). Foreign exchange effects, driven
    by the decline of the US dollar, accounted for a decline of 33 million
    (-0.8%). Mail
    Netherlands operating revenues in 2003 decreased by 97 million (-3.5%)
    compared to 2002. This organic decrease amounted to 86 million (-3.1%)
    and was primarily a result of the 2.5% decline in volume of addressed postal
    items delivered in the Netherlands in 2003. The remainder of the decrease,
    11 million (-0.4%), was the result of the disposal of Geldnet. The continued
    and accelerating decline in addressed postal item volumes was due primarily
    to the continued substitution by electronic media, the continued growth of
    electronic banking resulting in a reduction in the frequency of bank statement
    mailings and reduced demand for direct mail as a result of cost-saving programmes
    initiated by some of our key customers due to the slow economy. As a result
    of these factors, the effect




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|Chapter
      03 | The mail division
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of competition in the non-mandatory area started to show in the addressed
    mail volume development. In addition, the Mail Netherlands operating revenue
    in 2002 included 18 million in non-recurring revenue from the distribution
    of euro coins during the first half of that year. Cross
    border mail operating revenues in 2003 decreased by 48 million (-7.4%)
    compared to 2002. This decrease was due primarily to negative foreign exchange
    effects of 22 million (-3.4%), primarily related to the US dollar, the
    UK pound, and the Singapore dollar, as well as by a mix of volume and price
    effects at Spring (our 51% owned subsidiary with Royal Mail Group plc and
    Singapore Post Pte Ltd.) and TPG branded businesses, leading to an organic
    revenue decline of 26 million (-4.0%). The main driving factors for
    this decline were the effects from the SARS virus during 2003, the global
    economic slowdown, fierce international competition and our policy to reduce
    and terminate unprofitable contracts. European
    Mail Networks operating revenues increased by 51 million (14.2%). The
    organic operating revenues increased by 37 million (10.3%) and all countries
    except Belgium, where our business was negatively affected by local environmental
    taxes, contributed to this growth. The acquisitions of Full Service in Italy
    during the third quarter of 2003 and unaddressed mail companies Blitzpunkt
    GmbH and Fischer in Germany in the first half of the year accounted for an
    increase of 21 million (5.9%) in operating revenue. Foreign exchange
    rate effects, primarily for our UK business, partly offset this growth by
    7 million 
    (-2.0%). Data
    and document management operating revenues in 2003 increased by 4 million
    (2.0%) compared to 2002. Organic operating revenues decreased by 6 million
    (-2.9%), as they were affected by a weak economic climate that has caused
    many of our customers to focus on reducing costs and that has also resulted
    in longer lead times for attracting new customers. The customer contact/call
    centre business in the Netherlands and Germany, however, contributed positively
    to organic growth. The acquisition of DocVision in the Netherlands early in
    2003 contributed a 14 million (6.9%) increase in operating revenues.
    Foreign exchange rate effects, primarily related to the UK pound, partly offset
    this growth by 4 million (-2.0%). Mail
    Operating Income2004The mail divisions operating income in 2004 increased
    by 67 million (8.7%) compared to 2003. Amortisation and impairment of
    goodwill in 2004 decreased by 22 million (-40.7%) compared to 2003,
    due primarily to the lack of a 2004 equivalent to the third quarter 20
    million goodwill impairment we recognised in 2003. Excluding amortisation
    and impairment of goodwill, the mail divisions earnings from operations
    increased by 45 million (5.5%), mainly achieved in Mail Netherlands
    and European Mail Networks. The 45 million improvement, however, included
    a net positive one-off effect of 25 million, as described below. Adjusted
    for this one-off effect, operating income increased 20 million organically. The
    improvement in organic earnings from operations in 2004 was primarily achieved
    through continued progress in improving productivity and cost control, mainly
    driven by our cost flexibility programme, which delivered savings of approximately
    45 million




in 2004, adding up to 145 million in estimated accumulated savings from
    the start of the programme in 2002. As was the case in 2003, sick leave for
    the year was reduced by management actions and an incentive programme in accordance
    with the collective labour agreement (CLA). Our
    operating expenses decreased by 82 million (-2.6%). The 2003 operating
    expenses included a 20 million one-off goodwill impairment. Excluding
    this effect, operating expenses decreased 62 million in 2004. Volume
    decreases in the business lines Mail Netherlands and Cross Border caused a
    decrease in work contracted out, partly offset by growth in European Mail.
    Adjusted for the 20 million impairment in 2003, depreciation and amortisation
    increased due to investments in property, plant and equipment. Costs of salaries
    including social and pension contributions showed a decrease due to savings
    in connection with our cost flexibility programme, lower pension costs and
    a net positive one-off effect from the settlement for future wage guarantees
    and various social measures, partly offset by a CLA-effect in Mail Netherlands. The
    results from acquisitions and disposals made in 2003 and 2004 were neutral
    to the overall growth in earnings from operations. In
    2004 the Dutch Government announced an array of measures that, as a result
    of the uncertainty around the ultimate consequences of such measures if adopted
    by parliament, negatively affected natural employee attrition within the Mail
    division. To support this natural attrition we launched a number of measures
    in September 2004 to stimulate various categories of employees to leave the
    company voluntarily. One
    such measure, called Personal Seniors Arrangement, targeted employees
    within certain functions that either will be made redundant or will be restructured
    as part of our cost flexibility programme. At the end of 2004, 1,067 employees
    of the targeted population of approximately 1,450 employees have accepted
    an offer to leave the Company one, two or three years before the original
    early retirement entitlement date. We have irrevocably transferred our obligation
    for future benefit payments to these employees to an insurance company in
    exchange for a settlement payment of 142 million. Net termination costs
    in connection with the Personal Seniors Arrangement amounted to 57 million
    in 2004, taking into account 103 million of releases from the existing
    provision for pension liabilities in our balance sheet. The realisation of
    a pro rata part of the unrecognised losses resulted in a loss of 30
    million. The employees acceptance of the offer will contribute approximately
    19 million to the realisation of the cost flexibility programme. The
    realisation of this amount is determined by the actual date of lease of employees
    and will not be fully realised in 2005. Various
    other cost-reduction measures in 2004 included bonus payments for employees
    that elected to leave the company and compensation for training and education
    as a stimulus for such a decision. The related costs totalled 12 million,
    and other restructuring costs were 10 million. Effective
    1 January 2001 we transferred a liability for future wage guarantees to an
    insurance company, after approval of our labour unions and works council.
    This transfer settled our obligation


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for future wage guarantees that had resulted from prior years restructuring
    measures as a result of which the job grading for various functions had declined.
    Following the outcome of an unfavourable court decision in October 2004 with
    regard to the timing of the deductibility of the settlement amount paid for
    tax purposes, we have decided to unwind the contract with the insurance company
    in accordance with its terms. Of the original amount settled of 181
    million we are entitled to a 134 million refund, which we have accounted
    for as a reduction in our salary costs in 2004 and the proceeds of which are
    used in 2004 to offset our liability as a result of the Personal Seniors Arrangement
    discussed above. As a result of the unwinding of the contract we estimate
    that from 2004 onwards our total salary cost will be negatively affected by
    an amount of 18 million. This amount over time will gradually decrease
    as the population entitled for such compensation will leave the Company or
    be promoted to other functions. In
    2004, overall mail earnings from operations as a percentage of mail operating
    revenues increased to 22.2%, compared to 20.9% in the prior year. 2003The mail divisions operating income in 2003 decreased
    by 8 million (-1.0%) compared to 2002. Amortisation and impairment of
    goodwill in 2003 increased by 24 million (86.4%) compared to 2002, due
    primarily to the third quarter 20 million goodwill impairment related
    to our UK data and document management business. The under-performance and
    change of management at Lason UK Ltd., a provider of integrated outsourcing
    services for data and document management, triggered a goodwill impairment
    test. Due to the collapse of the microfiche business an impairment of 20
    million was booked. Excluding amortisation and impairment of goodwill, the
    mail divisions earnings from operations in 2003 increased by 16
    million (2.0%). The organic earnings from operations improved by 9 million
    (1.1%), while foreign exchange effects offset this growth by 1 million
    (-0.1%). The improvement in organic earnings from operations in 2003 was primarily
    achieved through continued progress in improving productivity and cost control,
    mainly driven by our cost flexibility programme, which delivered savings of
    approximately 74 million in 2003. Sick leave was reduced by management
    actions and an incentivised programme in accordance with the collective labour
    agreement. Numerous cost control initiatives, none of which was individually
    significant, collectively contributed to the enhanced performance. This improvement
    was offset by an additional 29 million in pension costs that were recognised
    in 2003, compared to the prior year. The results from acquisitions and disposals
    made in 2002 and 2003 contributed 8 million (1.0%) to the overall growth
    in earnings from operations. In
    2003, overall earnings from operations as a percentage of mail operating revenues
    increased to 20.9% compared to 20.1% in the prior year.








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Chapter
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|The express division | 



Sydney Opera
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Express
    business description Our express division provides on-demand door-to-door express delivery services for customers sending documents, parcels and freight. We offer regional, national and world-wide
express delivery services, primarily for business-to-business customers. The express services we provide and the prices we charge to customers are in the main classified by transit times, distances to be covered and sizes and weights of
consignments. EXPRESS
    STRATEGY In previous years we mainly focused on smaller and medium-sized customers. In 2004, we further refined our strategy to ensure a balance of customers of different sizes. We also
increased our focus on controlling costs in all areas of our operations. Our ambition is to be the leader in day- and time-certain, door-to-door transport for our business-to-business clients with the widest geographical coverage. We are a global express player. Our strategic intent is to: 
      be
        number one in Europe in national and intra-Europeanexpress
        flows,
      build
        uplift capacity from China to fuel our European networkand
        establish a domestic network in China,
      be
        number one in the Rest of the World emerging markets,and
      be
        number one in special services.




To achieve
    this, our objectives are to: 
      achieve
        profitable revenue growth through volumeacquisitions
        at optimised pricing,
      maintain
        a balanced customer portfolio (global accounts,national
        major, large, medium, small and adhoc customers),
      focus
        on product performance,
      improve
        cost effectiveness,
      ensure
        quality in all key areas,
      provide
        high-quality and cost-effective intra-European servicesthrough
        connecting strong domestic businesses,
      secure
        outstanding levels of customer satisfaction,
      develop
        leading-edge support technologies that provideadded-value
        for customers,
      strengthen
        the TNT brand and increase top-of-mindawareness
        of the comprehensive range of reliable on-demandexpress
        delivery services provided by the company, and
      recruit,
        develop and manage our employees towards thehighest
        standard of customer care. In 2004, our express division earned revenues of €4,696 million. Express accounted for 37.2% of our operating revenue, 27.4% of our operating income and 26.8% of our earnings
from operations. The following table sets forth operating revenues for the Europe and Rest of the World lines of business in our express division for each of the years in the three-year period
ended 31 December 2004.




|                                                                                                                                             
|---------------------------------------------------------------------------------------------------------------------------------------------
|Express
      operating revenues                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|Express
      Europe                                                                                                                         
|Express
      Rest of the World                                                                                                              
|                                                                                                                                             
|Total
      operating revenues                                                                                                               
|                                                                                                                                             
|(in
      millions) 1. Figures
      for 2002 have been restated to reflect the transfer of Innight services
      from express to logistics.



EXPRESS DIVISION OVERVIEW
In 2004, despite a mixed world-wide economy, our express business produced a strong performance driven by our international businesses, offering the right products, disciplined
pricing management and an efficient sales process. The primary
    factors behind our profit improvements in 2004 were strong international volumes,
    which were supported by a more balanced customer portfolio, continued positive
    revenue quality yield and careful cost management. Revenue quality yield is
    one of our key measures and it is calculated as the average of the percentage
    change in revenue per consignment compared to the previous year, and the percentage
    change in revenue per kilogramme compared to the previous year. Our employees
    furthered our mission through strict adherence to our commercial policy, a
    focus on serving business-to-business customers, and consistent company-wide
    deployment of our uniform best practice processes.




Technology continues to be an essential element to achieve our business strategy. We continue to standardise our processes throughout our global organisation and this is being
supported by the development and implementation of common processes on a standard IT platform. We plan for our common sales and customer service systems to support a single face to the customer through harmonisation of our international
and domestic processes. We continue to develop the common back office system using the integrated solutions from SAP. In 2004 we continued to exploit the comprehensive range of cross-functional data available in our datawarehouse to provide consistent and timely management reporting and analysis of
our key performance indicators. This has enabled in-depth measurement and analysis of our operational service performance and sales activities, which facilitates continuous improvement and adoption of best practice in our business.


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A focus in 2004
  was to maintain high quality technology for use by our
    customers. Our most recent regular customer survey demonstrated a high degree
    of satisfaction with the technology and functionality of the solutions provided.
    Key reasons for using the customer systems were stated as ease of use, speed
    of use and simplification of business activity. We also gained consistently
    high scores for customer technology in our regular customer loyalty surveys. In 2004 we undertook a number of benchmarks of our technology effectiveness and efficiency. In all cases these showed excellent results, indicating that we remained effective in all
aspects of information and communication systems. We are actively looking into business opportunities and potential acquisitions to expand our express operations. Express
    Europe The Express Europe line of our express division provides regional, national and pan-European express services as well as time-sensitive door-to-door products that deliver
consignments between Europe and the rest of the world. Our extensive integrated road and air networks have given us a strong position in the European market and are an important strategic asset with dense coverage in 33 European countries. We
expanded our European network in 2004 and continued to introduce uniform best practice approaches throughout the organisation. In Europe, we provide on-demand expedited door-to-door delivery services that involve carrying documents, parcels and freight for our European customers. The shipments are collected
by a fleet of vehicles that make either scheduled stops or on-demand collections upon receipt of customer telephone or Internet requests. Shipment and consignment details are sent to the nearest depot in our network. Details of each shipment are
entered into our track-and-trace systems either through scanning, data entry or electronic data interchange methods. The customer can then access the information through the Internet or proprietary customer interface technology. Each shipment is
then sorted by destination and consolidated with other customers consignments. Depending on its destination, each shipment is then line-hauled to a domestic road hub, an international road hub or one of our airports, generally within two hours
of arrival at the depot. We transport intra European shipments from the collecting depot by road or on one of the aircraft owned or leased by us from an origin airport to our main air express sorting hub in
Liège, Belgium. Where transit times allow, shipments that do not travel by air are carried by truck to one of our 10 main European road hubs. We then unload and sort the shipments and consolidate them with other consignments for each
destination and then put them on outbound line-hauls for movement to the delivery depot. We move domestic consignments within major European countries from the collection to the delivery depot, either directly or via a domestic hub. At the delivery depot we sort the shipments and then load them on the appropriate delivery vehicle. Proof of delivery is entered into the Global Link or other appropriate computer
system that is updated at every point in the process. This enables us to notify the customer when the consignee has received the shipment. Through these integrated road and air networks we are able to




offer a range of fast and reliable express
delivery services in most European countries. Our track-and-trace systems, including the Global Link system, enable us to offer an automated proof-of-delivery service, and customers can access the information
through the Internet or proprietary customer interface technology. In the pan-European segment of the market, our competition comes from global providers with international networks. Parcel alliances and public postal operators are trying to
penetrate the pan-European market by buying into parcel and express companies to create international air and road express networks. Trends in the industry indicate that express companies are seeking to extend their services further into the
conventional freight markets in an effort to exploit the capacity of their networks. For these reasons, it is likely that the major express operators will increasingly look for opportunities in liberalised post markets and in the wider freight
markets. Growth rates in the express market in Europe have been higher than those in the United States, indicating ongoing market penetration of dedicated parcel and time-sensitive delivery services. We expect that the overall international market, particularly the Pacific routes, should grow at faster rates than European domestic markets. The market in Europe has undergone a
period of intense consolidation in recent years and now has four other major players: Deutsche Post (DHL), FedEx Corp., Geopost-Groupe (La Poste) and United Parcel Service Inc. (UPS). However, the market is still much more fragmented than that of the
United States and there are still several large regional operators. Growth for the private courier companies in Europe has been consistently higher than for their more mature United States counterparts. We already have a more extensive express delivery road network in Europe than any of its competitors. Based on this robust infrastructure and on the disappearance of customs border
controls resulting from the enlargement of the European Union, we launched 16 new road linehaul connections between eight new acceding European Union member states on 17 May 2004. With 1,800 staff, 900 vehicles and 67 depots in these eight accession
countries, we have well-established profitable operations in this high-growth region, and a relatively modest expenditure was sufficient to provide customers with new and better services in the enlarged European Union. With the
    removal of the time consuming customs clearances resulting from the enlarged
    European Union, we now offer much improved international road transit times.
    The new road linehauls in response to the enlargement of the European Union
    were launched on 17 May 2004 and have resulted in an improvement in road transit
    times, by between one and five working days. We have seen a substantial improvement
    in our ability to deliver consignments originating from the European Union.Examples
    include: 
      from
        Ostrava, Czech Republic to Vilnius, Lithuania, journey times were cut
        from six days to two days,
   from Tallinn, Estonia to Warsaw, Poland, journey times were cut from six days to two days, and
   from Budapest, Hungary to Prague, Czech Republic, journey times were cut from four days to one day.


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In addition to offering customers shorter overall transit times between European Union countries, we have capitalised on reduced
    delays at country borders to provide customers in the accession countries
    with later collections for exports and earlier deliveries of imports. We have
    added additional sorting capabilities at 10 of our existing sites to process
    the increased flow of consignments travelling through our network. We continue to enhance our European air and road networks to be able to offer the most reliable service to our customers. With respect to our European network, we added a road
service to Bosnia in 2004, making it the 33rd country in our express road network. We introduced Turku in Finland as a new airport connection in March 2004 and in October 2004 further expanded our already dense network coverage by introducing Malta
and Cluj in Romania. We intend to make further investments to improve the sorting facilities at our hub at Arnhem. On 8 January 2004, we announced plans to introduce a further five Boeing 737-300 aircraft to our European air network. The five aircraft, leased for five years from GE Capital
Aviation Services, will replace chartered aircraft currently operating in our express air network. The new B-737s will be phased in over the next four years. Two aircraft joined the fleet in 2004, with further aircraft to be added in 2005, 2006 and
2007. Liège
    Investment On 25 May
    2004, we announced a €36 million investment plan for our Liège
    air hub, to be completed by the end of 2005. This investment confirms our
    growth prospects and our strong commitment to the region. Our investment is
    intended to improve transit times for our customer base and increase the percentage
    of consignments delivered on time and in perfect condition. The planned investment is intended to: -
      accommodate
        growth in number of airport destinations and sorting splits,-
      remove
        time consuming, non-ergonomic manual processes,-
   provide extra capacity,-reduce damaged shipments,-
   allow later departures and earlier arrivals, and-
   increase staff productivity. A number
    of initiatives were taken and launched aiming at reducing noise, either on
    the ground or in-flight, of our fleet. These include the implementation of
    new aircraft procedures to reduce lateral tolerance and optimise the climb
    profile during take-off, introduction of Boeing 737 aircraft, ground power
    units replacing noisier auxiliary power units and commencing to recertify
    the A300 aircraft at a lower maximum take off weight. See chapter 12, note
    14.




Express
    Rest of the World The Express
    Rest of the World business line provides door-to-door express delivery of
    documents, parcels and freight worldwide in all areas outside Europe and from
    these areas to Europe. Our worldwide coverage extends to more than 200 countries.
    In many of these countries our global express services are augmented by domestic
    and regional express delivery services. We also are building our position
    in Asia and have further improved service levels between Europe and Asia.
    Our business in Asia has expanded through a mix of organic growth, acquisitions
    and co-operative ventures such as our alliance with China Post. In China, we have 25 company-owned locations supported by an extensive agency and associate network that allows us to serve some 500 cities. We aim to have 35 of our own locations by
the end of 2005. Express Rest of the World operates in a similar way to that of our Express Europe business line, but relies primarily on airlift by commercial passenger airlines for linehaul
transportation links. In Australia our business was brought back to profitability in 2003, and further earnings improvements were achieved in 2004, through: 
      yield
        improvements through appropriate pricing actions,
   increased customer loyalty through improved delivery ofcustomer services, and
   strong cost management. In North America, we carry international express shipments primarily to and from the Northeast and West Coast regions. Building on our own delivery network in the Northeast business
corridor, we have introduced improved next-day delivery services to nine major business centres, including New York, Washington D.C., Chicago and Toronto. Express Rest of the World primarily competes with the three major carriers, which are UPS, FedEx and Deutsche Post (DHL). See chapter 10  Risk factors. All of these
carriers are pursuing aggressive expansion strategies in China and other emerging markets.


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Chapter
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Express
  financial review

|Express
      operating revenues |                                   |  |       |  |          |  |       |  |          |  |       | 
|-------------------------------- | --------------------------------- |  | ----- |  | -------- |  | ----- |  | -------- |  | ----- | 
|                                 |                                  
|                                 | Year
        ended at 31 December | 
|                                 |                                  
|                                 | 2004                              |  | %     |  | 2003     |  | %     |  | 20021    | 
|                                 |                                   |  |       |  |          |  |       |  |          | 
|                                 | US$                               |  | €     |  | VARIANCE |  | €     |  | VARIANCE |  | €     | 
|                                 |                                   |  |       |  |          |  |       |  |          |  |       | 
|Express
      Europe             | 5,163                             |  | 3,814 |  | 10.4     |  | 3,455 |  | 1.6      |  | 3,402 | 
|Express
      Rest of the World  | 1,194                             |  | 882   |  | 10.8     |  | 796   |  | 3.0      |  | 773   | 
|                                 |                                   |  |       |  |          |  |       |  |          |  |       | 
|Total
      operating revenues   | 6,357                             |  | 4,696 |  | 10.5     |  | 4,251 |  | 1.8      |  | 4,175 | 
|                                 |                                   |  |       |  |          |  |       |  |          |  |       | 
|                                

(in millions,
  except percentages) 1. Figures
  for 2002 have been restated to reflect the transfer of Innight services from
  express to logistics.

Express operating expenses

|                                                      |                                  
|----------------------------------------------------- | ---------------------------------
|                                                      | Year
        ended at 31 December
|                                                      |                                  
|                                                      | 2004                             
|                                                      |                                  
|                                                      | US$                              
|                                                      |                                  
|Cost
      of materials                               | 202                              
|Work
      contracted out and other external expenses | 3,047                            
|Salaries
      and social security contributions      | 2,070                            
|Depreciation,
      amortisation and impairments      | 283                              
|Other
      operating expenses                        | 319                              
|                                                      |                                  
|Total
      operating expenses                        | 5,921                            
|                                                      |                                  
|                                                     

(in millions, except percentages)

1. Figures for 2002 have been restated to reflect the transfer of Innight services from express to
logistics.

Express operating income

|                                              |                                  
|--------------------------------------------- | ---------------------------------
|                                              | Year
        ended at 31 December
|                                              |                                  
|                                              | 2004                             
|                                              |                                  
|                                              | US$                              
|                                              |                                  
|Earnings
      from operations                | 505                              
|%
      of express operating revenues         | 7.9%                             
|Amortisation
      and impairment of goodwill | (69                              
|                                              |                                  
|Total
      operating income                  | 436                              
|                                              |                                  
|                                             

(in millions,
  except percentages) 1. Figures
  for 2002 have been restated to reflect the transfer of Innight services from
  express to logistics.

Express operating statistics

|                                                 |                                
|------------------------------------------------ | -------------------------------
|                                                 | Year
      ended at 31 December
|                                                 |                                
|                                                 | 2004                           
|                                                 |                                
|Number
      of consignments(in
      thousands) | 176,429                        
|Total
      number of tons carried               | 3,378,863                      
|Average
      of number of working days          | 260                            
|Number
      of depots / hubs                    | 857                            
|Number
      of vehicles2                        | 19,023                         
|Number
      of aircraft2                        | 42                             
|                                                 |                                
|                                                

|1. | Figures for 2002 have been restated to reflect the transfer of Innight services from express to logistics.
|-- | ----------------------------------------------------------------------------------------------------------
|2. | A substantial number of vehicles and aircraft are not owned by us but are leased or subcontracted.        



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During
    2004, our express division realised higher operating revenues and improved
    earnings as a percentage of operating revenues due to a strong performance
    in our international business (attributable to offering the right products,
    disciplined pricing management and an efficient sales process) and a higher
    average number of working days. We continued to grow our profit margin, which was achieved through the implementation of standard commercial policies, cost control whilst maintaining service levels and the ongoing
review of our revenue quality yield against cost inflation. Some of the other key performance indicators used to monitor our express business include on-time delivery, customer satisfaction and employee satisfaction. Express
    Operating Revenues 2004
    Operating
    revenues of our express division for 2004 increased by €445 million (10.5%)
    compared to the prior year. The organic growth in operating revenues of our
    business was €454 million (10.7%). The 2003 acquisition of Archive and
    Data Storage had a positive effect on operating revenue of €1 million
    but negative foreign exchange effects had a negative effect of €10 million
    (-0.2%), mainly due to the weakening of the US dollar and various Asian currencies
    against the euro. The increase in operating revenues was due primarily to strong volume growth and an increased number of working days, with European air volumes increasing over last year by 4.9% and
road volumes by 9.7%, as well as a positive European revenue quality yield of 3.9%. Express
    Europe operating revenues for 2004 increased by €359 million (10.4%)
    compared to the prior year. The organic growth in operating revenues was €347
    million (10.1%). Most business units contributed to the increase in operating
    revenue despite the mixed economic conditions. In particular, the UK, Benelux,
    Italy, Spain and the Eastern European countries contributed to the majority
    of the growth in operating revenue. The 2003 acquisition of Archive and Data
    Storage had a positive effect on operating revenue of €1 million and
    foreign exchange had a positive effect of €11 million (0.3%). Express Rest of the World operating revenues for 2004 increased by €86 million (10.8%) compared to the prior year. This was achieved through the €107 million (13.4%)
organic growth in operating revenues from operations primarily in China, Taiwan and the Middle East. This was partly offset by negative foreign exchange effects of €21 million (-2.6%) mainly due to the weakening of the US dollar and various
Asian currencies against the euro. 2003
    Operating revenues of our express division for 2003 increased by €76 million (1.8%) compared to 2002. The organic growth in operating revenues of our business was €265
million (6.3%). The combination of the 2002 disposal of our Mistral Air Srl. business and the 2003 acquisition of Archive and Data Storage, had a net negative effect on operating revenue of €5 million (-0.1%) and negative foreign exchange effects accounted for a €184 million




(-4.4%) decline mainly due to the weakening of
the UK pound, the US dollar and various Asian currencies against the euro. The increase in operating revenues was due primarily to improvements in the revenue quality yield and modest volume improvements that resulted from the continued focus on the
divisions standard commercial policies that concentrate on providing simplified, no-discount tariffs to all new small and medium-sized business-to-business customers. Express Europe operating revenues for 2003 increased by €53 million (1.6%) compared to the prior year. The organic growth in operating revenues was €168 million (4.9%).
Most business units contributed to the increase in operating revenue despite the difficult economic conditions. In particular, Germany, France, Austria, Spain and the Eastern European countries contributed to the majority of the growth in operating
revenue. The negative effect on operating revenue in 2003 from acquisitions of €5 million (-0.1%) mainly related to a €6 million decrease in revenues through the sale of our Mistral Air business in 2002, offset by €1 million in
additional revenues from Archive and Data Storage. The negative foreign exchange effects of €110 million (-3.2%) related mainly to the weakening of the UK pound against the euro. Express Rest of the World operating revenues for 2003 increased by €23 million (3.0%) compared to the prior year. This was achieved through the €97 million (12.6%) organic
growth in operating revenues from operations primarily in Australia, Asia and the Middle East. This was partly offset by foreign exchange effects of €74 million (-9.6%) mainly due to the weakening of various Asian currencies against the
euro. Express
    Operating Income2004
    The express divisions operating income for 2004 increased by €99 million (44.4%) compared to 2003. Amortisation of goodwill during 2004 decreased by €2 million to
€51 million compared to 2003 and the express divisions earnings from operations for 2004 increased by €97 million (35.1%) compared to 2003. Operating expenses of our express division for 2004 increased by €346 million (8.6%) compared to the prior year. This was driven mainly by the strong international volume
growth, additional full time equivalent employees required to process these volumes, the expansion of our business in China and Eastern Europe and the high costs of fuel for our aircraft, linehaul and pick up and delivery vehicles. Cost of materials
increased by €23 million (18.3%) due to the higher fuel costs incurred in all business units. Work contracted out and other external expenses increased by €194 million (9.4%). This included the cost of linehaul and pick up and delivery,
which have increased to service the higher volumes and to improve the service quality. This also included the higher fuel costs from commercial linehaul and subcontractors as well as the increased number of depots in China. Salaries and social
security contributions increased by €111 million (7.8%) due to the additional number of full time equivalents, salary increases for existing employees, severance and redundancy payments and the higher number of working days in 2004.
Depreciation, amortisation and impairments increased by €11
    million (5.6%) due to the costs of asset impairments




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on buildings in Australia
    and Germany. In Australia we had an impaired depot due to construction faults.
    The impairment amount was offset against a compensation received from the
    company that constructed the depot. Other operating expenses increased by
    €7 million (3.1%) due to increased advertising and consultants costs. The improvement
    in operating income was due primarily to continued focus on the divisions
    standard commercial policies and achieving further operating efficiencies
    by continuing to share best operating practices throughout our business and
    investing in operations and information systems aimed at further improving
    our service quality. Almost all our express business units achieved improvements
    in their earnings from operations. Improvements were most significant in the
    Benelux countries, the UK, Ireland, Germany, Eastern Europe, Spain, Austria
    and Scandinavia. The organic growth in earnings from operations for 2004 increased
    by €96 million (34.8%) compared to 2003. The positive foreign exchange
    fluctuations amounted to €1 million (0.3%). Overall earnings from operations as a percentage of express operating revenues increased to 7.9% for 2004 compared to 6.5% in the prior year. 2003
    The express divisions operating income for 2003 increased by €31 million (16.1%) compared to 2002. Amortisation of goodwill during 2003 decreased by €1 million to
€53 million compared to 2002 and the express divisions earnings from operations for 2003 increased by €30 million (12.2%) compared to 2002. The improvement was due primarily to continued focus on the divisions standard
commercial policies that concentrate on providing simplified, no-discount tariffs to all new small- and medium-sized business-to-business customers and achieving further operating efficiencies by continuing to share best operating practices
throughout our business and investing in operation and information systems aimed at further improving our service quality. The organic growth in earnings from operations for 2003 increased by €57 million (23.1%) compared to 2002. This was
partly offset by acquisitions that resulted in a €5 million (-2.0%) decrease in earnings from operations and foreign exchange fluctuations that amounted to €22 million (-8.9%) mainly due to the weakening of the UK pound, the US dollar and
various Asian currencies against the euro. Overall earnings from operations as a percentage of express operating revenues increased to 6.5% for 2003 compared to 5.9% in the prior year.






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|05                     |  | 
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|The logistics division | 



Angel of the North, Gateshead

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Chapter
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Logistics
    business description With operations
    in 39 countries, our logistics division provides services focused on supply
    chain management. We work to ensure that  across the functions of procurement,
    manufacturing and distribution  the right goods, in the right quantities
    and condition are available at the right place and time. One key aspect of
    this is reducing the time it takes to bring goods from suppliers to their
    customer by using the latest technology to increase our customers visibility
    to their goods in the supply chain. Through a combination of targeted acquisitions and organic growth, we have built a truly global logistics business with significant operations in Europe, North and South America,
Asia and Australia. Our acquisition strategy has focused on achieving critical mass in selected geographies and six industry sectors: automotive inbound, automotive outbound (spare parts and finished vehicles), tyres, high-tech electronics,
publishing and media and fast-moving consumer goods. With a few exceptions in certain sectors, we believe we have achieved critical mass in terms of market presence and customer base in every market we serve. We are continuing to develop our sector
expertise in tandem with initiatives to manage key accounts. We are broadening our global service offering through the addition of freight management services, comprising primarily air and sea freight transportation. This expansion is to be
achieved through a series of strategic acquisitions, the first of which, the purchase of the Sweden-based Wilson, took place in 2004. In general, freight management operators do not own assets to provide these transportation services and must acquire cargo space from airline and shipping firms. Combining cargo
from a number of customers allows freight management operators to secure favourable rates from airlines and shipping companies, while at the same time matching the customer cargo with the shipping routes that yield the lowest price. In the past,
where we were asked to provide these services by our existing customers we subcontracted these services to external parties. We expect that the addition of our freight management capability and expertise will enable us to offer our knowledge, skills
and value added activities to a larger potential customer base while at the same time offering existing customers a fuller service offering. This is particularly relevant for the automotive and high-tech electronics sectors. We provide logistics services mainly under the TNT brand and, where appropriate, we still subcontract specific services, such as air, rail or basic truck transportation. Control
over and responsibility for the subcontracted services is ensured through our information technology  particularly through our MatrixTM technology discussed below - and management infrastructure.




Our service offering depends upon and is tailored to the customers needs. We have developed specialised knowledge and skills, and provide a range of value-added activities such
as: 
      specialised
        distribution services,
   value-added warehousing,
   air, sea and ground freight management,
   inventory control,
   order picking and information systems management to control production and parts supply,
   data and documentation management services,
   sub-assembly and installation upon delivery,
   repair servicing and returns,
   sequencing and kitting,
   systems integration,
   stock management,
   global materials management, and
   supply chain management consulting. LOGISTICS STRATEGY
Our ambition is to be the recognised world-wide leader in targeted industry sectors by designing, implementing and operating complex supply chain solutions and exploiting information
technology to achieve integration and visibility throughout the process. Our objectives are to achieve operational excellence, global coverage and leadership in the industry sectors we target. Throughout 2004 we made significant progress in addressing a number of the operational difficulties that negatively impacted our business performance in 2003, despite the continued
sluggish economic conditions in some of our industry sectors that impacted both 2003 and 2004. Our long-term logistics strategy encompasses the following: 
      Standardise
        key processes that are intended to bring immediate and significant improvements
        to the profitability of the division.
   Serve specific target industry chains, including inbound automotive and outbound spare parts, tyres, consumer electronics and high-tech, media and publishing and fast-moving consumer goods/retail.
   Achieve network innovator status, which means that we aim at being an industry innovator in selected sectors. We aim to do this through:-
      the
        creation of superior value for customers through new and additional services
        supported by our innovative MatrixTM technology,-
      further
        expanding our global presence, and-
   decreasing our costs by overseeing the total supply chain, capitalising on economies of scale and optimising the utilisation of assets and networks.
   Expand our areas of operation in response to what our key customers consider to be important to the growth of their business.
   The establishment of global freight management capability, providing both our existing and future customers with a more complete supply chain solution.


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In 2004,
    our logistics division earned revenues of €4,081 million. Logistics accounted
    for 32.3% of our operating revenue, 7.7 % of our operating income and 11.0%
    of our earnings from operations.




The following table sets forth total operating revenues for our logistics division for each of the years in the three-year period ended 31 December 2004.


Logistics operating revenues

|                               |                                
|------------------------------ | -------------------------------
|                               | Year
      ended at 31 December
|                               |                                
|                               | 2004                           
|                               |                                
|                               | US$                            
|                               |                                
|Total
      operating revenues | 5,525                          
|                              

(in millions)
  1. Figures
  for 2002 have been restated to reflect the transfer of Innight services from
  express to logistics.

LOGISTICS DIVISION OVERVIEW
In 2004,
  our logistics division made significant progress in addressing the operational
  difficulties that troubled the business in 2003, ultimately demonstrated by
  a much-improved operating income. In addition, a more stringent financial control
  environment was achieved through both structural change and a focus on key processes.
  Much of the credit for delivering this operational improvement goes to our Transformation
  through Standardisation (TtS) programme initiated in July 2003. The standard
  operating and business development practices that make up this programme delivered
  improvement in each of the following areas: 
      procurement,
   transportation and distribution,
   warehousing,
   information technology, and
   contract portfolio rationalisation. The principles of the TtS programme are now embedded in our everyday operations and we believe they provide a strong basis for profitable growth and increased financial control. Despite this substantial progress, revenue growth was partially stifled by a relatively stagnant economic environment and was negatively impacted in 2004 by the results of a
thorough review of our contract portfolio. Contracts that failed to meet our profitability guidelines under the TtS programme were faced with termination, expiration or renegotiations of the terms and conditions. Of the underperforming business
units identified in the previous year, only the performance of the French operations is still a cause of concern to us. In France, we are faced with a deteriorating trading environment due to our high cost base and particularly due to the increase
of low-cost competition in the transportation area. We consider the establishment of global freight management capabilities as a critical step in providing both our existing and future customers with a more complete supply chain
solution. The additional ocean and air freight capabilities offered by a freight management operation complement the transportation and warehousing services and solutions that are the core of our existing contract logistics business.




In August
    2004, the division took its first step in establishing freight management
    capabilities through the acquisition of Wilson, a global freight management
    business with a global reach and a significant presence in the Nordic region.
    This acquisition is expected to deliver benefits to our logistics and express
    divisions in the form of cross-selling opportunities and operational cost
    and overhead reductions. A dedicated integration team is in place to deliver
    the synergy potential, which we hope will generateadditional
    operational profit by 2008 in the following areas: 
      Accelerated
        revenue growth through cross selling of logistics, express and freight
        management products and services.
      Operational
        cost reductions through the combination of the air freight and land transport
        procurement functions of our express, logistics and freight management
        activities.
      Overhead
        and other cost reductions through combining facilities, buildings and
        associated costs and combining general procurement. Market
    Trends COMPETITION
    The logistics
    industry continues to be fragmented in a competitive market. Global industry
    leaders are competing not only with each other but also with small local specialists.
    Investment bank ING estimates the size of the global contract logistics market
    at €657 billion. The outsourced portion of this is estimated at around 22%
    or €145 billion. The logistics market is still very fragmented with the top
    7 contract logistics providers are estimated to control less than 11% market
    share in 2003 (source: ING, November 2004). There is anecdotal evidence that
    the large providers continue to win market share from the hundreds of smaller
    logistics companies that comprise the balance of the market. This trend is
    likely to continue as more shippers seek out the comprehensive logistics capabilities
    of the market leaders (source: Bear Stearns, September 2004).  As the logistics industry develops, we believe a two-tier provider trend is emerging. First-tier agents, known as lead logistics providers, are able to offer the broadest range of
services, including the traditionally outsourced, second-tier functions: warehousing, transportation and freight management.




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Delivering services either through their own capabilities or by subcontracting in part to second-tier providers focused on warehousing, transportation and freight management, lead
logistics providers serve as a single point of contact for the customer. Customers for whom we are a lead logistics provider include FIAT SpA and BMW North America. As the complexity and scope of logistics assignments grows, we believe securing this
role will be increasingly dependent on a providers information technology capabilities and geographic reach. The main technology that we use to provide lead logistics services is called MatrixTM. It offers an integrated technological solution
spanning the entire supply chain. During 2004, one of the key priorities within the logistics division was to further develop the functionality of MatrixTM and to implement it in operations around the world, including operations in Brazil, Thailand,
Italy, Belgium, the Netherlands, Luxembourg, the UK and Australia. CUSTOMER
    TRENDS Originally,
    the main reason customers outsourced their logistics operations was to control
    and reduce costs. Today the expectations are higher. A third party logistics
    provider must be able to offer more efficient solutions for an ever-larger
    portion of the supply chain. More than before, a logistics companys
    success depends on its capacity to deliver integrated, end-to-end solutions
    with significant financial and operational improvements and the ability to
    increase the final customers satisfaction levels. Information technology has become increasingly crucial for the logistics sector as it supports most of the supply chain processes. Technology such as radio frequency identification
(RFID) has the potential to significantly change the logistics processes. RFID technology is used to track assets throughout the supply chain. In this case, a transponder (also called a tag) containing a unique identifier and specific product
information is attached to a container or a pallet. This tag can be tracked at any point of the supply chain by communicating with readers. This technology is also being tested by market participants to track individual shipments. This technology
    is widely expected to improve efficiency across the entire supply chain and
    enhance visibility and tracking. This translates into better responsiveness
    in the supply chain. Our logistics division, together with the mail and express
    divisions, is currently testing the viability and benefits of RFID in a number
    of pilots that cover various activities and operations within the supply chain.
    For example, one such pilot involves a major United States-based auto manufacturer
    for whom we are responsible for ensuring that the parts needed to assemble
    cars arrive punctually at the assembly line. RFID tags are used to ensure
    that shipments




are not placed in the wrong trucks. These tags will automatically
    detect if a mistake is being made, in which case flashing red lights will
    stop the handlers and instruct them where the items should be loaded. As a
    next step, we expect this system to be implemented at the auto manufacturers
    suppliers to improve shipment accuracy and speed up delivery times. Logistics
  companies are driven by their clients in terms of service offering and geographic
  expansion. Given its rapid development, the Chinese market is a key focus area.
  The domestic
  Chinese transport and logistics market is estimated to grow at an annual rate
  of 25% between 2003 and 2007 (source: Transport Intelligence, China Logistics
  Report 2004). Logistics industry investment in China has continued to expand,
  helped by a positive change in the rules governing corporate activity in that
  market. The migration of manufacturing infrastructure to China, the expected
  gradual rise in consumption and the relative lack of outsourced logistics activities
  in China make the market particularly attractive. Additionally, logistics costs
  as a percentage of total costs are relatively high in China. Some estimates
  put logistics costs as a proportion of finished product value at about 20%,
  more than double that in more developed markets. This makes the need for high
  quality supply chain solutions that reduce costs only greater. Global
    logistics players have started reinforcing their presence in China. We believe
    we are well positioned to thrive in this growth market as we have built up
    a market-leading position in the automotive market through our joint venture
    with the logistics division of Chinas leading automotive company, Shanghai
    Automotive Industry Corporation. During 2004, our presence in China has been
    strengthened through significant management reinforcement as part of the TPG
    strategy to make China one of the key growth areas for the coming years. As logistics
    providers become more experienced, we believe more manufacturers will decide
    to outsource their logistics activities. According to an estimate by HSBC
    analysts 30% of logistics in Europe is outsourced (source: HSBC, 11 May 2004).
    In North America this percentage was only 15% and in Asia 10%. The percentage
    of outsourced logistics is expected rise over the coming years as more and
    more companies turn to logistics providers to perform part of their supply
    chain activities. Analysts at ING Bank estimate that on a global level,
    the percentage of outsourced logistics will rise from 23% to 27% in 2010.
    This trend, combined with the overall growth of logistics economies as the
    world economy expands leads to expected market growth rates of around 8% for
    the coming years (source: ING Bank, November 2004).


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Logistics financial
  review

Logistics operating revenues

|                               |                                  
|------------------------------ | ---------------------------------
|                               | Year
        ended at 31 December
|                               |                                  
|                               | 2004                             
|                               |                                  
|                               | US$                              
|                               |                                  
|Total
      operating revenues | 5,525                            
|                               |                                  

(in millions,
  except percentages) 1. Figures
  for 2002 have been restated to reflect the transfer of Innight services from
  express to logistics.

|Logistics
      operating expenses                    |                                   |  |       |  |          |   |       |  |          |   |       | 
|----------------------------------------------------- | --------------------------------- |  | ----- |  | -------- | - | ----- |  | -------- | - | ----- | 
|                                                      |                                  
|                                                      | Year
        ended at 31 December | 
|                                                      |                                  
|                                                      | 2004                              |  | %     |  | 2003     |   | %     |  | 20021    |  
|                                                      |                                   |  |       |  | VARIANCE |   |       |  | VARIANCE |   |       | 
|                                                      | US$                               |  | €     |  |          |   | €     |  |          |   | €     | 
|                                                      |                                   |  |       |  |          |   |       |  |          |   |       | 
|Cost
      of materials                               | 351                               |  | 259   |  | 13.1     |   | 229   |  | 5.5      |   | 217   | 
|Work
      contracted out and other external expenses | 2,885                             |  | 2,131 |  | 9.3      |   | 1,950 |  | 6.6      |   | 1,830 | 
|Salaries
      and social security contributions      | 1,630                             |  | 1,204 |  | 4.0      |   | 1,158 |  | 15.9     |   | 999   | 
|Depreciation,
      amortisation and impairments      | 214                               |  | 158   |  | (52.8    | ) | 335   |  | 110.7    |   | 159   | 
|Other
      operating expenses                        | 323                               |  | 239   |  | (10.2    | ) | 266   |  | (16.4    | ) | 318   | 
|                                                      |                                   |  |       |  |          |   |       |  |          |   |       | 
|Total
      operating expenses                        | 5,403                             |  | 3,991 |  | 1.3      |   | 3,938 |  | 11.8     |   | 3,523 | 
|                                                      |                                  

(in millions,
  except percentages) 1. Figures
  for 2002 have been restated to reflect the transfer of Innight services from
  express to logistics.

|Logistics
      operating income              |                                   |   |      |  |          |  |      |   |          |   |      |  
|--------------------------------------------- | --------------------------------- | - | ---- |  | -------- |  | ---- | - | -------- | - | ---- | -
|                                              |                                  
|                                              | Year
        ended at 31 December |  
|                                              |                                  
|                                              | 2004                              |   | %    |  | 2003     |  | %    |   | 20021    |  
|                                              |                                   |  
|                                              | US$                               |   | €    |  | VARIANCE |  | €    |   | VARIANCE |   | €    |  
|                                              |                                   |   |      |  |          |  |      |   |          |   |      |  
|Earnings
      from operations                | 207                               |   | 153  |  | 537.5    |  | 24   |   | (84.7    | ) | 157  |  
|%
      of logistics operating revenues       | 3.7%                              |   | 3.7% |  |          |  | 0.6% |   |          |   | 4.3% |  
|Amortisation
      and impairment of goodwill | (85                               | ) | (63) |  | 72.2     |  | (227 | ) | (224.3   | ) | (70  | )
|                                              |                                   |   |      |  |          |  |      |   |          |   |      |  
|Total
      operating income                  | 122                               |   | 90   |  | 144.3    |  | (203 | ) | (333.3   | ) | 87   |  
|                                              |                                  

(in millions,
  except percentages) 1. Figures
  for 2002 have been restated to reflect the transfer of Innight services from
  express to logistics.

Logistics
  operating revenues per industry

|                                  |                                  
|--------------------------------- | ---------------------------------
|                                  | Year
        ended at 31 December
|                                  |                                  
|                                  | 2004                             
|                                  |                                  
|                                  | €                                
|                                  |                                  
|Automotive                        | 1,455                            
|Fast
      moving consumer goods  | 642                              
|Hi-tech
      and electronics     | 503                              
|Publishing
      and media        | 250                              
|Tyres                             | 177                              
|Freight
      management (Wilson) | 279                              
|Other                             | 775                              
|                                  |                                  
|Total                             | 4,081                            
|                                  |                                  

(in millions,
  except percentages) 1. Figures
  for 2002 have been restated to reflect the transfer of Innight services from
  express to logistics.



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Logistics
  operating revenues per geographic region

|                                       |                                  
|-------------------------------------- | ---------------------------------
|                                       | Year
        ended at 31 December
|                                       |                                  
|                                       | 2004                             
|                                       |                                  
|                                       | €                                
|                                       |                                  
|Europe                                 | 2,994                            
|North
      America                    | 634                              
|Rest
      of the World                | 453                              
|                                       |                                  
|Total
      operating revenues         | 4,081                            
|Number
      of countries of operation | 39                               
|                                       |                                  
|                                      

(in millions,
  except percentages) 1. Figures
  for 2002 have been restated to reflect the transfer of Innight services from
  express to logistics.

|                                             |                                  
|-------------------------------------------- | ---------------------------------
|                                             | Year
        ended at 31 December
|                                             |                                  
|                                             | 2004                             
|                                             |                                  
|Number
      of warehouses                   | 655                              
|Number
      of square metres (in thousands) | 7,098                            
|Joint
      ventures                         |                                  
|Number
      of warehouses                   | 44                               
|Number
      of square metres (in thousands) | 1,359                            
|                                             |                                  

1. Figures
  for 2002 have been restated to reflect the transfer of Innight services from
  express to logistics.

During
  2004 our logistics division delivered a €346 million increase in operating
  revenues compared to 2003, of which €258 million arose as a result of the
  inclusion of the results of newly-acquired businesses, primarily Wilson. The
  logistics division generated operating income of €90 million. This represents
  a €293 million improvement over the prior year. After adjusting the 2003
  comparative figures to reflect the additional charges in 2003 of €163 million
  of costs for goodwill impairments, €10 million of costs for asset impairments
  and €69 million of various costs associated with the Transformation through
  Standardisation programme, operating income improved by €51 million with
  earnings from operations increasing €50 million, including a net acquisition
  impact of €10 million. The
  revenue growth in the logistics division has been somewhat limited by both internal
  and external factors. The contract rationalisation initiative within the Transformation
  through Standardisation programme has enforced a stricter view as to the acceptable
  earnings contribution of both prospective and existing contracts, leading to
  the termination of and addition of fewer lower margin contracts. The principal
  external factor restricting our logistics growth is the business and trading
  environment within the French logistics market. We are assessing a number of
  strategic and operational options in this connection. We
  believe that the Transformation through Standardisation programme, implemented
  in 2003, has delivered a significant contribution to the improvement in our
  operating income, through the development, sharing and application of best practice
  processes across our operational sites. Further evidence of




the positive impact
  of this programme can be seen from the improvement in the earnings from operations
  as a percentage of operating revenues. This measure improved from 0.6% (2.8%
  excluding asset impairment and Transformation though Standardisation costs)
  in 2003 to 3.7% in 2004 (3.8% when excluding the impact of the freight management
  business). Logistics
  Operating Revenues 2004 Our logistics operating revenues for 2004 increased by €346 million (9.3%)
  compared to 2003. Organic operating revenues increased by €136 million
  (3.7%) in 2004, compared to 2003. This increase was primarily due to the commencement
  of new contracts in Europe (mostly in Italy, Germany, and the United Kingdom),
  North America, and Rest of the World (mostly in Asia and South America) that
  generally offset the adverse impact of contract terminations in those countries.
  In total, the net effect of acquisitions and disposals of group companies and
  joint ventures accounted for €258 million (6.9%) of the logistics operating
  revenue growth during 2004. Foreign exchange effects decreased logistics operating
  revenues in 2004 by €48 million (-1.3%) compared to 2003, mainly due to
  the appreciation of the euro against other currencies, especially those in the
  United States, China and the rest of Asia. Operating
  revenues in Europe grew by €200 million (7.2%) in 2004, compared to 2003.
  This included a positive net acquisition effect of €120 million (4.3%),
  mostly explained by the acquisition of Wilson in the European region, with the
  remaining impact reflecting the net revenue impact of the acquisition of the


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remaining 50% of our Turkish joint venture and the revenues lost through the
  disposal of our TNT-DFDS Transport Logistics joint venture. Organic operating
  revenues in Europe in 2004 grew by €66 million (2.4%) compared to 2003.
  New European contract wins included Ford Motor Company and Volkswagen AG in
  Germany, Proctor and Gamble in Italy and B&Q Plc in the UK. In France, operating
  revenues continued to decline in 2004 due to a combination of contract terminations
  and the non-renewal of existing business due to the uncompetitive pricing structure
  of the market. The effect of changes in foreign exchange rates increased Europes
  operating revenues in 2004 by €14 million (0.5%) compared to 2003. Operating
  revenues in North America increased by €4 million (0.6%) in 2004, compared
  to 2003. Included in this amount was a net acquisition impact of €39 million
  (6.2%) relating to the Wilsons business in the North American region.
  Organic operating revenues in North America in 2004 grew by €13 million
  (2.0%) compared to 2003, due to increased volumes on existing contracts and
  new contract wins, including American Honda Motor Company Ltd., Norfolk Southern
  Rail and AAI Ford. The effect of changes in exchange rates decreased North Americas
  operating revenue in 2004 by €48 million (-7.6%) compared to 2003. Operating
    revenues in Rest of the World grew by €142 million (45.7%) in 2004, compared
    to 2003. Included in this amount was a net acquisition impact of €99
    million (31.8%) relating to the acquisition of Wilson in the Rest of the World
    region. Organic operating revenues in Rest of the World in 2004 grew by €57
    million (18.4%) compared to 2003. This increase was due to new contract wins
    in Asia, as well as further growth of our TNT Anji joint venture in China.
    The effect of changes in exchange rates decreased operating revenues in 2004
    by €14 million (-4.5%) compared to 2003, mainly as a result of the increase
    in the euro relative to various Asian currencies. In
    addition, we have remained focussed on our existing contract base and improved
    contract retention rates (the rate at which contracts due for renewal in any
    given period are successfully renewed, defined as annualised revenue of contracts
    renewed divided by the annualised revenue of contracts due for renewal) to
    approximately 75% in 2004. In this competitive environment, contracts have
    inevitably exited the portfolio as we seek to clean the portfolio and customers
    seek price reductions elsewhere. Examples of contract terminations include
    Tulip Computers Holding in the UK, Migros in Turkey and General Motors Corp.
    in North America. 2003
    Our logistics operating revenues for 2003 increased by €125 million (3.5%)
    compared to 2002. Organic operating revenues increased by €297 million
    (8.3%) in 2003, compared to 2002. This increase was primarily due to the commencement
    of new contracts in Europe (mostly in Italy, Germany, and the United Kingdom),
    North America, and Rest of the World (mostly in Asia and South America) that
    generally offset the adverse impact of contract terminations in those countries.
    In total, the net effect of acquisitions and disposals of group companies
    and joint ventures accounted for €59 million (1.6%) of the logistics
    operating revenue growth during 2003. Foreign exchange effects decreased logistics
    operating revenues in 2003 by €231 million




(-6.4%) compared to 2002,
    mainly due to the appreciation of the euro against other currencies, especially
    in the United States, South America, United Kingdom and Asia. Operating
    revenues in Europe grew by €150 million (5.7%) in 2003, compared to 2002.
    Organic operating revenues in Europe in 2003 grew by €148 million (5.6%)
    compared to 2002. New European contract wins included Pirelli & C SpA
    and Volkswagen in Germany, Telecom Italia SpA in Italy and KPN in the Netherlands.
    The commencement of a new FIAT contract in May also contributed to operating
    revenue growth in Europe. In France, operating revenues declined in 2003 due
    to contract terminations. The full year impact of prior year acquisitions
    of Transports Nicolas and our TNT-DFDS Transport Logistics joint venture provided
    a €74 million (2.8%) increase in operating revenues in 2003. The effect
    of changes in foreign exchange rates decreased Europes operating revenues
    in 2003 by €72 million (-2.7%) compared to 2002. Operating
    revenues in North America declined by €74 million (-10.5%) in 2003, compared
    to 2002. Organic operating revenues in North America in 2003 grew by €50
    million (7.1%) compared to 2002. New North American contract wins included
    NACCO Industries Inc., Mitsubishi North America and Interline Brands Inc..
    The prior years gain on the termination of an automotive contract and
    related joint venture resulted in a negative acquisition effect of €15
    million (-2.1%) on operating revenue in 2003. The effect of changes in exchange
    rates decreased North Americas operating revenue in 2003 by €109
    million (-15.5%) compared to 2002. Operating
    revenues in Rest of the World grew by €49 million (18.7%) in 2003, compared
    to 2002. Organic operating revenues in Rest of the World in 2003 grew by €99
    million (37.8%) compared to 2002. This increase was due to new contract wins
    in Asia, including contracts with Isuzu Motors America Inc. and Philips India,
    as well as further growth of our TNT Anji joint venture in China. The effect
    of changes in exchange rates decreased operating revenues in 2003 by €50
    million (-19.1%) compared to 2002, mainly as a result of the increase in the
    euro relative to various Asian currencies. By
    maintaining a focus on our strategic growth objectives, continually improving
    our business development processes and leveraging our knowledge globally,
    we improved our business development efficiency (the rate at which we convert
    new business opportunities to operational contracts, defined as the annualised
    revenue of new operational contracts divided by annualised revenue of potential
    contracts in a given period) from 20% to 22%. In
    addition, we remained focussed on our existing contract base and held contract
    retention rates at approximately 70% in 2003. In this competitive environment,
    contracts inevitably exited the portfolio as we sought to clean the portfolio
    and customers sought price reductions elsewhere. Examples of contract terminations
    included Ikea and Land Rover in the UK, Delphi in Spain and Goodyear Tire
    & Rubber Co. in North America.




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Chapter
  05    The logistics division

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Logistics
    operating income2004 
    The logistics division's operating income in 2004 increased by €293 million
    (144.3%) compared to 2003, resulting in an operating income of €90 million.
    Amortisation of goodwill in 2004 decreased by €164 million (72.2%) compared
    to 2003. This decrease in amortisation was primarily due to the €163
    million goodwill impairment charge recorded in the third quarter of 2003 and
    the resulting decrease in amortisation charge for the remainder of 2003 and
    2004. No such impairments were recorded in 2004. The
    logistics division's earnings from operations in 2004 increased by €129
    million (537.5%) compared to 2003. The increase in operating income consisted
    of an organic increase of €122 million (508.3%), a favourable net effect
    from acquisitions and disposals of group companies and joint ventures of €10
    million (41.7%) and an unfavourable impact of foreign exchange movements of
    €3 million (-12.5%). The
    organic earnings improvement of 537.5% reflected the negative impact on 2003
    earnings from operations of asset impairment charges and costs associated
    with the Transformation through Standardisation programme, totalling €79
    million. Excluding these costs, the organic improvement would have been 41.7%. The
    improvement in organic earnings from operations was most significant in our
    Benelux, Italy and Germany businesses. The improvement in the Benelux business
    was attributable to a strong sector focus on high volume businesses. Italy
    and Germany reversed their loss-making position reported in 2003 through contract
    rationalisation and improved cost control. In
    France, the combination of lack of profitable new business in a market with
    excess capacity and a high fixed cost base has led to a continuation of the
    disappointing earnings results reported in 2003. Management is assessing a
    number of options in relation to this business in light of the operational
    and financial performance levels we expect from all our business units. Operating
  expenses increased by €53 million, mainly driven by the acquisition impact
  of Wilson (€269 million), offset by the impairment expense taken in 2003
  in France, Germany, Nordics, Spain and Italy, totalling €173 million. Other
  significant impacts included the sale of DFDS (- €26 million) and the full
  integration of our joint venture in Turkey (€6 million) together with a
  negative foreign exchange effect of €47 million. The
    organic increase of the cost of materials €42 million (18.3%) was driven
    by business growth particularly in UK, Italy and South America. Higher
    expenses for work contracted out were related to the first-time inclusion
    of Wilson. In organic terms the decrease was €18 million (0.9%). This
    decrease was achieved by reduced use of agency labour and subcontractors primarily
    in France, South East Asia, Italy and the UK. Salaries
    including social and pension contributions grew organically by 3.5% (€40
    million) which was partially a result of business growth in Central and Eastern
    Europe and the UK,




partially offset by rationalisation measures in France
    due to a reduction of business activity there. Amortisation,
    depreciation and impairments significantly decreased in 2004 compared to 2003
    due to the aforementioned goodwill and asset impairments in 2003. Other
    operating expenses decreased organically by €36 million (13.5%) due to
    overhead and cost reductions, lower insurance premiums and the release of
    excess provisions. Foreign
    exchange rate effects decreased operating earnings by €3 million (-12.5%)
    and arose mainly from the appreciation of the euro against other currencies,
    especially in the United States, China and the rest of Asia. The net effect
    of acquisitions and disposals accounted for an increase of €10 million
    (41.7%) in earnings from operations in 2004, due primarily to the net effect
    of the acquisition of Wilson business, the acquisition of the additional 50%
    of TNT Lojistik ve Dagitim Hizmetleri A.S. in Turkey and the disposal of our
    TNT-DFDS Transport Logistics joint venture in 2004. Overall
    earnings from operations as a percentage of logistics operating revenues in
    2004 increased to 3.7% from 0.6% in 2003 and to 3.8% excluding the impact
    of the acquisition of Wilson. 2003 
    The logistics division's operating income in 2003 decreased by €290 million
    (-333.3%) compared to 2002, resulting in an operating loss of €203 million.
    Amortisation of goodwill in 2003 increased by €157 million (224.3%) compared
    to 2002. This increase was primarily due to the €163 million goodwill
    impairment charge recorded in the third quarter and was partly offset by the
    resulting decrease in amortisation charge for the remainder of 2003. The impairments
    were made in respect of our France, Italy, Germany and Nordics businesses. The
    logistics division's earnings from operations in 2003 decreased by €133
    million (-84.7%) compared to 2002. The decrease in operating income consisted
    of an organic decrease of € 101 million (-64.3%), unfavourable impact
    of foreign exchange movements of € 15 million (-9.6%) and an unfavourable
    net effect from acquisitions and disposals of group companies and joint ventures
    of € 17 million (-10.8%). The majority of the decrease in organic earnings
    from operations was attributable to: Asset
    impairments in France and Spain totalling €10 million. Costs
    associated with the Transformation through Standardisation programme of €69
    million. These costs were broken down as follows: -
      Restructuring
        - €34 millionThis
        included expenses for redundancy payments and social plans executed in
        2003 of €16 million including the cost for replacement of management
        and consultancy costs to set up the Transformation through Standardisation
        programme as well as additions to our restructuring provisions of €18
        million at year end. During the year 903 employees were made redundant
        due to these restructurings.


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-
      Refinements
        of estimates - €16 millionRefinements
        of estimates of accruals and supplier rebates.-
      Contract
        rationalisation - €6 millionCosts
        associated with contract terminations in 2003 as part of the application
        of the divisionís commercial practice rules.-
      Warehousing
        - €11 millionThis
        related to the upgrading of leased buildings to contract requirements,
        in particular for the closure of our Peschiera, Pandino and Pomezia warehouses
        in Italy and our Trappes warehouse in France. Of this amount €3 million
        was spent in 2003.-
      Legal
        - €2 millionThis
        related to claims and legal disputes. A
    total of €48 million of the deterioration in underlying business was
    attributed to France, Italy, Germany and Spain. The decline in earnings in
    these countries was due to operational difficulties on various contracts and
    increased fuel and staff costs that could not be fully transferred to the
    customer in France and Italy. Despite the positive revenue growth in Germany,
    earnings deteriorated due to declining volumes in our Innight business, which
    has a relatively high fixed-cost base coupled with a delay in the restructuring
    of our Innight operations. Deterioration in Spains earnings was predominantly
    due to the loss of a major contract in 2002, which accounted for 67% of Spains
    earnings in 2002. The
  adverse impact from France, Italy, Germany and Spain was partly offset by increases
  in organic earnings from operations totalling €26 million in the United
  Kingdom, North America, Benelux and China due to significant new contract wins
  and strong cost control. Foreign
  exchange rate effects decreased logistics earnings from operations in
  2003 by €15 million (-9.6%) and arose mainly from the appreciation of the
  euro against other currencies, especially in the United States, South America,
  United Kingdom and Asia. The net effect of acquisitions and disposals accounted
  for a decrease of €17 million (-10.8%) in earnings from operations in 2003,
  due primarily to the effect of a €15 million gain on the termination of
  an automotive contract and related joint venture in 2002. Overall
  earnings from operations as a percentage of logistics operating revenues in
  2003 decreased to 0.6% from 4.3% in 2002. The Transformation through Standardisation
  initiatives were aimed at reversing this trend.






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Chapter
  06    Corporate governance

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|06                         |  | 
|-------------------------- |  | 
|                           | 
|Corporate
      governance | 
|                           | 



Stairway, Shanghai

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LARGE
    COMPANY REGIMEPursuant
    to the Enabling Act as currently in force, we are subject to the full large
    company regime. See for more information chapter 14. BOARD OF MANAGEMENTWe are
    managed by a Board of Management, which is responsible for our overall results,
    our companys mission, the vision and the strategy (which is required
    to be initiated by the chief executive officer). The responsibility for the
    management of our company is vested in the Board of Management as a whole.
    Our Board of Management consists of five members: a chief executive officer, a chief financial officer and three group managing directors. Our three
    divisions are responsible for the day-to-day business decisions and for the
    development and execution of business strategy within the framework set by
  our corporate strategy. The three
  group managing directors are responsible for the management of their divisions.
  Our Board of Management is firmly committed to managing our company in a structured
  and transparent fashion. Our aim is to provide stakeholders with a clear view
  on corporate decisions and decision-making processes. We have a divisional structure
  across countries and regions, except for China where we operate as one unit.
  Value-based management provides us with an additional framework for forward-looking
  management of the company based on objective criteria. Our reporting
  structure is in line with the management supervision of distinct business activities
  and our corporate legal structure has largely been brought in line with our
  reporting structure. Responsibility for implementing and ensuring the continued
  effectiveness of business controls lies with management. The success of these
  business controls is measured by management review, management self-assessment
  and internal audits
  conducted by our corporate audit services department. Management of designated
  business activities and corporate audit services report on the strength of financial processes, and internal controls are presented to the Board of Management
  and discussed with the audit committee of the Supervisory Board. Our Board
  of Management performs its activities under the supervision of the Supervisory
  Board. In performing its duties, our Board of Management acts in accordance
  with the interests of our company and the business connected with it and, to
  that end, is required to consider all appropriate interests associated with
  our company. Our Board of Management must in due time provide the Supervisory
  Board with all information necessary for the proper performance of its duties.
  In addition, the Board of Management is required to provide the necessary means,
  allowing the Supervisory Board and its individual members to obtain all information
  which is necessary in order for them to be able to function as a supervisory
  body of our company. Our Board
  of Management is responsible for complying with all relevant legislation and
  regulations, for managing the risks associated with our companys activities
  and for our financing. Our Board of Management is required to report related
  developments to, and discusses the internal risk management and control systems
  with our Supervisory Board and its audit committee.




Representative
  authority, including with respect to the signing of documents, is vested in
  at least two members of the Board of Management acting jointly, as well as any
  other officers of our company as our Board of Management may appoint, subject
  to any restrictions imposed. The chief executive officer has discretion to
  exercise representative authority and sign documents in his individual capacity. In the
  event of a conflict between our company and a member of our Board of Management,
  we will be represented by another member of our Board of Management or a member
  of our Supervisory Board appointed by our Supervisory Board for this purpose.
  Members of the Board of Management are appointed and can be suspended or dismissed
  by the Supervisory Board. Share ownership is not required to qualify as a member
  of the Board of Management. The
    Board of Management is also responsible for our corporate sustainability policy,
    see chapter 9  Code of Business Principles & Corporate Social
    Responsibility. Committees
    Reporting to the Board of ManagementOur Board
    of Management has formed two internal committees to aid compliance with applicable
  corporate governance requirements. DISCLOSURE
    COMMITTEEThis
    committee assists our Board of Management by working to ensure that our disclosures
    in all filed reports are accurate, complete, timely, understandable and that
    they fairly present the condition of the group in all material respects. The
    terms of reference of the disclosure committee are available for public inspection
  on our website. ETHICS
    COMMITTEEThe aim
    of the ethics committee, formerly called the integrity committee, is to ensure
    full compliance with our code of business principles, our whistleblower policy-
    and procedure and other internal procedures. The committee reports to our
    Board of Management. The
    TPG Code of Business Principles Our code
    of ethics, called the TPG Code of Business Principles, including our whistleblower
    policy, is included in chapter 9  Code of Business Principles
    & Corporate Social Responsibility. The whistleblower policy as included
    in our code of business principles and our whistleblower procedure are available
    for public inspection on our website. Our whistleblower policy and procedure provide the possibility for employees to report alleged irregularities, which they reasonably believe occur, or have occurred, whether such
irregularities are of a general, operational and financial nature in the company to management, the group compliance officer, the ethics committee, the audit committee and the Supervisory Board. The whistleblower policy and procedure set out the
rights and obligations of any employee who makes a report under the policy and procedure and also sets out the duties of management. Employees who in accordance with the whistleblower policy and procedure report, or assist in reporting;
irregularities can do so without jeopardising their legal position.






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Chapter
  06    Corporate governance

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All our employees are encouraged to report to their management promptly any breach or suspected breach of any law, regulation, our code of business principles or other company
policies and guidelines. Such reports can be submitted confidentially and anonymously by employees regarding questionable accounting, internal accounting controls or auditory matters or any other matter. Any reports relating to Board of Management
members are directed to the chairman of the Supervisory Board. Internal
    risk management and control systems
    Our Board of Management is responsible for our system of internal risk management
    and control systems and for reviewing their effectiveness. These systems are
    designed to manage the risks that could prevent us from achieving our objectives,
    but cannot provide absolute assurance against material misstatements, fraud
    and violations of laws and regulations from happening. Our
    internal risk management and control systems were designed based on the COSO
    internal control framework. These processes encompass measures relating to
    the general control environment as well as tools for monitoring the controls
    environment (e.g. letters of representation signed by all managing and finance
    directors of our group entities, divisional and group level employees that
    report directly to the Board of Management and our internal audit function).
    In addition, there is a system of controls over financial reporting, including
    amongst others our internal auditors' review and the review and report of
    our disclosure committee. The
    Board of Management has reviewed and analysed the risks to which our group
    is exposed and has reviewed the control environment for the financial year
    ended on 31 December 2004. The outcome of this review and analysis has been
    shared with the audit committee and supervisory board and discussed with our
    external auditor. Our current key risks are summarised in chapter 10 of this
    document. As discussed
    in greater detail below under Controls and procedures / audit committee
    investigation, in 2004 we became aware that there are some functions
    where our internal control and risk management processes could be improved.
    We believe that we are taking adequate steps to strengthen our internal risk
    management process, see below. We
    are reviewing our internal risk management and control systems in view of
    our upcoming obligations under section 404 of the US Sarbanes-Oxley Act and
    related regulations. We do not imply an assessment of the adequacy and effectiveness
    of our internal control and risk management processes over financial reporting
    in this sense, as this will be required from us in future under section 404. Controls
    and procedures / audit committee investigationAs of
    the end of the period covered by this annual report, under the supervision
    and with the participation of our chief executive officer and chief financial
    officer, we evaluated the effectiveness of the design and operation of our
    disclosure controls and procedures. Based on this and in light of the audit
    committee investigations described below, our chief executive officer and




chief
    financial officer concluded that our disclosure controls and procedures should
    be strengthened with respect to our tax, finance and legal functions.Except
    as described below, there have been no changes in our internal controls over
    financial reporting during the period covered by this annual report that have
    materially affected, or are reasonably likely to affect materially, our internal
    controls over financial reporting. We are committed to the ongoing enhancement
    of our controls and are making changes that we believe will increase their
    efficiency and reliability. In February
    and March 2004, our audit committee, on behalf of our Supervisory Board, conducted
    an independent investigation regarding representations made to the UK Inland
    Revenue and to our auditors PricewaterhouseCoopers with respect to certain
    UK tax matters originally arising in the late 1990s relating to one of our
    UK subsidiaries. In addition to this investigation, our audit committee, with
    the assistance of independent tax advisors, conducted a review of other UK
    tax matters that arose from the same period. The investigations conducted
    by our audit committee, with the assistance of independent legal counsel,
    concluded that not all relevant details in connection with these tax matters
    were adequately disclosed to the UK Inland Revenue and PricewaterhouseCoopers.
    Based on the foregoing, the Board of Management made organisational and personnel
    changes with respect to certain UK subsidiaries in accordance with directions
    from our audit committee. In response
    to these matters and our review of other tax issues in the group, we have
    formalised and strengthened, and continue to adapt, our internal lines of
    communication and the functioning and monitoring of the tax and financial
    reporting functions around the group. The audit committee is monitoring our
    progress. In particular,
    the following changes are worth noting: 
      Some
        of our managers have had dual responsibilities that arose over the years.
        We have reviewed these responsibilities and have made changes in most
        cases.
      We
        established a separate function at group level with responsibility for
        developing, implementing and maintaining of policies, procedures and reporting
        related to our risk management and internal controls. We have rolled out
        our risk management and internal control framework in all relevant areas
        to enhance and strengthen our control environment. As part of this roll
        out, we have provided support to our local businesses in the area of testing
        and reporting on the effectiveness of the internal control framework at
        local level. We have commenced an extensive training programme to involve
        our managers in the monitoring process of our risk management and internal
        control process. We have harmonised our internal controls through the
        introduction of a group-wide control standard.
      In
        our tax function we are implementing a formal tax risk control framework.
        We have clarified and divided roles and responsibilities: the group level
        tax function is responsible for the overall maintenance of our tax risk
        control framework, international transfer pricing and internal tax advice
        while local businesses have responsibility for identifying and handling
        local tax issues. In each country where we have substantial business,
        we are appointing an officer with specific


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responsibility for tax matters
        related to all business we conduct in that country.
      In
        our finance area, we are implementing functional reporting lines from
        divisional finance management to our chief financial officer. Further,
        we are introducing a group business control function next to the group
        financial reporting function. By creating a separate focus on business
        control at group level, we aim to enhance the analysis and control over
        our business performance.
      We
        are increasing the staffing and enhancing the depth of knowledge of our
        group financial reporting department, particularly with regard to accounting
        in connection with pensions.
      We
        are in the process of strengthening the group legal function and the reporting
        lines from local business and divisions to the group level.
      We
        are introducing a new position of Group Director for Integrity and Security
        in 2005.
      We
        are reviewing the role of our external advisors and are taking steps to
        ensure that the group is responsible for the internal assessment and validation
        of our advisors' advice. Remuneration
    For detailed
    information concerning the remuneration of our Board of Management, see the
    remuneration report in chapter 8. The remuneration report, which includes
    the remuneration policy for our Board of Management can also be viewed on
    our website. The information on this website does not form part of this annual
    report. Our remuneration policy was adopted by the annual meeting of shareholders
    on 7 April 2004. At the 2005 annual meeting of shareholders, which is expected
    to take place on 7 April 2005, we will submit certain proposals to change
    aspects of the remuneration policy. Members of our Board of Management may not sell shares granted to them pursuant to our equity plans without financial consideration until the earlier of five years following the
grant of the shares and the end of the members employment with us, unless the member can demonstrate to our corporate secretary that the sale is prompted by required tax payments with respect to the shares. Our Supervisory Board has adopted a policy concerning the ownership of and transactions in securities other than our securities by members of the Board of Management and the
Supervisory Board. This policy is incorporated in the by-laws of the Board of Management and Supervisory Board and requires that each member of the Board of Management and Supervisory Board gives periodic notice, at least quarterly, to our corporate
secretary of any changes in his or her holding of securities in Dutch listed companies. A member of the Board of Management or the Supervisory Board who invests exclusively in listed investment funds or who has transferred the discretionary
management of his or her securities portfolio to an independent third party by means of a written mandate is exempted from compliance with these notification requirements. Conflicts
    of Interest/Related Party TransactionsThe Supervisory
    Board is responsible for deciding on how to resolve conflicts of interest
    between Board of Management members, Supervisory Board members and the external
    auditor on the one hand and the company on the other.




A member
    of the Board of Management or of the Supervisory Board is required to report
    immediately and provide all relevant information to the chairman of Supervisory
    Board and to the other members of the Board of Management (if it concerns
    a member of that board) about any conflict of interest or potential conflict
    of interest that may be of material significance to the company and/or to
    him, including any conflict concerning his/her spouse, registered partner
    or other life companion, foster child and relatives by blood or marriage up
    to the second degree. If the chairman of the Supervisory Board has a conflict
    of interest or potential conflict of interest that is of material significance
    to the company and/or to him, he is required to report this immediately to
    the vice-chairman of the Supervisory Board and provide all relevant information,
    including information concerning his wife, registered partner or other life
    companion, foster child and relatives by blood or marriage up to the second
    degree. A decision to enter into a transaction involving a conflict of interest with a Board of Management member or a member of the Supervisory Board that is of material significance to
us or to the Board of Management/ Supervisory Board member requires the approval of the Supervisory Board. The State is our only shareholder holding an interest exceeding 10% of our shares. In view of the transactions that we, with our mail, express and logistics business, may have with
the State and any of its instrumentalities, the by-laws of the Board of Management provide that a transaction between us and these parties shall not be deemed of material significance below a threshold of €22.5 million. Transactions with these
parties above the just mentioned threshold require the approval of the Supervisory Board. All transactions between us and the State and any of its instrumentalities are required to be agreed on terms that are customary in the sector
concerned.




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Chapter
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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | BOARD OF
      MANAGEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
| | M.P.
      BAKKER (1961)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | M.C.
        LOMBARD (1958)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
| | CEO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Group
      Managing Director Express                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 
| | Peter
      Bakker has been Chief Executive Officer since 1 November2001,
      on which date he succeeded Ad Scheepbouwer. Hejoined
      Royal TPG Post (then called PTT Post) in 1991 andwas
      appointed financial director of its parcels business unit in1993.
      He was appointed financial control director of TPG Postin
      1996 and became a member of the board of managementof
      TPG Post in 1997. Since the demerger of TPG N.V. fromKoninklijke
      PTT Nederland NV until his appointment as CEO, hewas
      Chief Financial Officer and a member of the TPG Board ofManagement.
      Before joining TPG Post, Mr. Bakker worked for TSSeeds
      Holdings.
      Shares owned as of the date of this report:12,832J.G.
      HAARS (1951)
      CFOJan
      Haars has been Chief Financial Officer and a member of theTPG
      Board of Management since 1 August 2002. Mr. Haarssucceeded
      Mr. Bakker, who was appointed Chief ExecutiveOfficer
      of TPG from 1 November 2001. Before joining thecompany,
      Mr. Haars worked for ABN AMRO Bank N.V., ThyssenBornemisza
      Group, Royal Boskalis Westminster N.V., RabobankNederland
      and most recently he worked for Unilever N.V., asworldwide
      Group Treasurer.
      Shares owned as of the date of this report:12,903H.M.
      KOORSTRA(1951) Group
      Managing Director Mail 
      Harry Koorstra has been Group Managing Director Mail and amember
      of the TPG Board of Management since July 2000. Hejoined
      TPG Post in 1991 as managing director of its then MediaService
      business unit and became a member of its board ofmanagement
      in 1997. Before joining the company, Mr. Koorstraworked
      for 15 years at the Netherlands largest publisher, VNUN.V.,
      most recently as general director of its Admedia/VNUMagazine
      Group.Shares owned as of the date of this report:12,031 |  | Marie-Christine
        Lombard has been Group Managing DirectorExpress
        since 1 January 2004. She joined Jet Services in Francein
        1993. From the acquisition of Jet Services in 1999, Mrs.Lombard
        joined TPG as the managing director of the domesticexpress
        business and from March 2001 until 1 January 2004was
        managing director of our international express business inFrance.Shares owned as of the date of this report:0D.G. KULIK (1948)Group Managing Director LogisticsDavid Kulik has been Group Managing Director Logistics andmember
        of the Board of Management since 1 September 2003.As
        Group Managing Director Logistics he is responsible forall
        our global logistics activities. Mr. Kulik joined us in 2000as
        managing director of TNT Logistics North America. Beforejoining
        the company, Mr. Kulik was president and chief executiveofficer
        of CTI Logistx Inc. since 1994. He had been employedby
        the parent company CSX Corporation since 1988.Shares
        owned as of the date of this report:5,871Mr. Bakker is an advisory board member of ABN AMRO Bank. Mr. Koorstrais
        a member of the supervisory board of Hermans Holding B.V. He is alsomember
        of the executive committee and general board of The Verbond vanNederlandse
        Ondernemingen. Mr. Kulikis
        a member of the business advisory board of the University ofNorth
        Florida (State owned and operated university system).The members of our Board of Managementhave
        no other board positions other than those refiected above.
      The
        business address of all members of the Board of Management is TPGN.V.,
        Neptunusstraat 41-63, Hoofddorp, 2132 JA, the Netherlands. | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 

SUPERVISORY
    BOARD The Supervisory
    Board is charged with supervising of the policies of the Board of Management
    and the general course of affairs of the company and the business connected
    with it, as well as assisting the Board of Management by providing advice.
    The Supervisory Board evaluates the main organisational structure and the
    control mechanisms established under the management of the Board of Management.
    The responsibility for proper performance of duties is vested in the Supervisory
    Board as a whole. The Supervisory Board members may adopt an independent stance
    vis-à-vis the Board of Management. In performing
    its duties the Supervisory Board is charged with acting in accordance with
    the interests of our company and the business connected with it and, to that
    end, considering all appropriate interests associated with the company. Supervisory
    Board members perform their duties without mandate and




independent of any
    interest in the business of the company. They should not support one interest
    without regard to the other interests involved. Our Supervisory Board is responsible for the quality of its own performance. Expertise
    and CompositionThe Supervisory
    Board consists of a minimum of seven and a maximum of 12 members. At present,
    our Supervisory Board has eight members with one vacancy. Share ownership
    is not required to qualify as a member of the Supervisory Board. The Supervisory
    Board has prepared a profile of its size and composition, taking account of
    the nature of our business and activities and the desired expertise and background
    of the Supervisory Board members. The Supervisory Board evaluates


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the profile annually and discusses the profile with the annual general meeting of shareholders and our Central Works Council upon adoption and in case any changes are made. According to our by-laws and the profile of the Supervisory Board, a person may be appointed to the Supervisory Board for a maximum of three terms of four-years. Our articles of association
    and by-laws of the Supervisory Board also provide that Supervisory Board members
    shall retire periodically in accordance with a rotation plan to be drawn up
    by the Supervisory Board in order to avoid, as far as possible, a situation
    in which many reappointments occur simultaneously. The rotation plan can be
    viewed on our website. The State of the Netherlands has relinquished its right to appoint three members of our Supervisory Board, and we amended our articles of association to that effect on 20 June 2002.
This did not affect the term of office of the member of the Supervisory Board, Mr. J.H.M. Hommen who was previously appointed by the Minister of Transport. Mr. J.H.M. Hommens term expires in 2005. In accordance with the Dutch Corporate Governance Code, it is the intention of the Supervisory Board that its members will not hold more than five memberships in supervisory boards
of Dutch listed companies (including our company). In this connection, a chairmanship counts twice. Each member of our Supervisory Board holding more than five such board memberships has committed himself to reduce his number of board memberships
to a maximum of five by the middle of 2005. No new member of our Supervisory Board who holds more than five such board memberships will be appointed. There is an agreed procedure for Supervisory Board members to take independent professional advice at the companys expense, if so required. For a description of our Supervisory Boards activities in 2004, see the Report of the Supervisory Board in chapter 7. The by-laws of the Supervisory Board are available for public inspection on our website, together with other information with respect to each member of our Supervisory Board. Chairman
    and Corporate SecretaryThe chairman
  of our Supervisory Board, Mr. M. Tabaksblat determines the agenda and presides
  over meetings of the Supervisory Board. The chairman is responsible for the
  proper functioning of the Supervisory Board and its committees. Furthermore,
  the chairman arranges for the induction and training programme for its members
  and initiates the evaluation of the functioning of our Supervisory Board and
  the Board of Management. The chairman of our Supervisory Board may not be a former member of our Board of Management. The Supervisory Board is assisted by our corporate secretary. All members of the Board of Management and the Supervisory Board have access to the advice and services of the corporate
secretary, who is responsible to the Supervisory Board for ensuring that Supervisory Board procedures are followed




and that the Supervisory Board acts in accordance with its statutory obligations under the Articles of Association. The corporate
secretary is appointed and dismissed by the Board of Management, after the approval of the Supervisory Board has been obtained. Committees
    of the Supervisory BoardThe Supervisory
  Board has formed an audit committee, a remuneration committee, a nominations
  committee and a public affairs committee. The terms of reference of these committees
  can be viewed on our website. AUDIT
    COMMITTEEThe audit
  committee operates pursuant to terms of reference approved and adopted by the
  Supervisory Board according to the rules and regulations of the Dutch Corporate
  Governance Code. The audit committee annually reviews and reassesses the adequacy
  of the terms of reference. The audit committee is charged with assisting the
  Supervisory Board in advising on and monitoring of, inter alia, the integrity
  of our financial statements, our financing and finance related strategies and
  tax planning. The audit
    committees terms of reference require it to consist of at least three
    members. All members of the audit committee must be Supervisory Board members
    who are independent within the meaning of the by-laws of the Supervisory Board.
    Each member of the audit committee must be financially literate and at least
    one member of the audit committee must have accounting or related financial
    management expertise. At least one member of the audit committee must be a
    financial expert as defined by the US Securities and Exchange Commission.
    A member of the audit committee may not simultaneously serve on the audit
    committees of more than two other companies unless the Supervisory Board determines
    that this simultaneous service would not impair the ability of such member
    to serve effectively on the audit committee. The audit committee and the remuneration committee may not consist of the same members. The Supervisory Board has determined that Mr. J. Hommen and Mr. R.J.N. Abrahamsen qualify as audit committee financial experts as defined in Item 16A of Form
20-F. REMUNERATION
    COMMITTEEThe remuneration
    committee is appointed by the Supervisory Board to draft the proposal of the
    remuneration policy for members of the Board of Management and for the Supervisory
    Board and to draft a proposal for the remuneration of the individual members
    of the Board of Management, for adoption by the Supervisory Board, and to
    determine the remuneration of the individual members of the Board of Management
    in accordance with the proposal so adopted. Furthermore, the remuneration
    committee prepares the allocation of management options and rights to shares
    in the companys capital to other senior management of the company by
    the Supervisory Board. NOMINATIONS
    COMMITTEEThe nominations
  committee prepares the appointments by the Supervisory Board of members of the
  Supervisory Board and the Board of Management. The nominations committee is
  appointed by the Supervisory Board to draw up selection criteria and


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Chapter
  06    Corporate governance

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appointment
  procedures for Supervisory Board members and Board of Management members, to
  set up procedures to secure adequate succession of members of the Board of Management
  and the assessment of such candidates and to make proposals for appointments
  and reappointments. PUBLIC
    AFFAIRS COMMITTEEThe public
    affairs committee is appointed by the Supervisory Board to act as a sounding
    board and advisory committee for the Board of Management and its public affairs
    council in formulating and developing our public affairs policy, in particular
    for our mail division and for the implementation and tactical elaboration of its policy. The public affairs committee monitors the effectiveness of our public affairs policy and the
implementation thereof by our public affairs council.




|Additional
      Supervisory Board Information |  |             |                 
|---------------------------------------------- |  | ----------- | ----------------
|                                              
|                                               |  | Nationality | Appointed       
|                                              
|R.J.N.
      Abrahamsen                        |  | Dutch       | May
      2004  
|J.M.T.
      Cochrane                          |  | British     | June
      1998 
|R.
      Dahan                                 |  | Dutch       | April
      2003
|V.
      Halberstadt                           |  | Dutch       | June
      1998 
|J.H.M.
      Hommen                            |  | Dutch       | June
      1998 
|W.
      Kok                                   |  | Dutch       | April
      2003
|R.W.H.
      Stomberg                          |  | German      | June
      1998 
|M.
      Tabaksblat                            |  | Dutch       | June
      1998 
|Vacancy                                        |  |             |                 
|                                              

AUDITOR Our external
    auditor is appointed by our shareholders meeting. Our audit committee
    has the sole authority, subject to confirmation by our Supervisory Board,
    to recommend to our shareholders meeting the appointment or replacement
    of the external auditor. The audit committee on behalf of the Supervisory
    Board is required to be directly responsible for the compensation and oversight
    of the work of the external auditor (including resolution of disagreements
    between management and the external auditor regarding financial reporting)
    for the purpose of preparing or issuing an audit report or related work. The
    audit committee is required to pre-approve all auditing and audit related
    services, and permitted non-audit services (including the fees and terms thereof)
    to be performed for us by the external auditor. Conflicts of interest and potential conflicts of interest between the external auditor and the company are resolved in accordance with the terms of reference of the audit committee
and in particular the following annexes thereto: the TPG policy on auditor independence and the TPG audit committee audit, audit-related, and non-audit services pre-approval policy, which can be viewed on our website. We will only use the external auditor to provide services in cases where these services do not conflict with the external auditors independence. To maintain the external
auditors independence and comply with applicable law and regulation, the TPG policy on auditor independence




and comply with applicable law and regulation, the TPG policy an auditor independence
    governs how and when we may engage the external auditor. The TPG policy on
    auditor independence can be viewed on our website. The audit committee and the Board of Management are required once every three years to conduct a thorough assessment of the functioning of the external auditor within the various
entities and in the different capacities in which the external auditor acts. The main conclusions of this assessment are required to be communicated to the general meeting of shareholders. Internal auditors are required to operate under the responsibility of our Board of Management subject to monitoring of our internal audit function by the Supervisory Board, assisted
by the audit committee. The Board of Management is required to ensure that the external auditor and the audit committee will be involved in drawing up the tasks of the internal auditors. The independent external auditor is required to attend the meetings of the Supervisory Board at which the report of the external auditor with respect to the audit of the annual
accounts is discussed and at which the approval of the annual accounts is determined. See note
    19 to the financial statements for the fees paid to PricewaterhouseCoopers
    Accountants N.V.


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DUTCH
    CORPORATE GOVERNANCE CODE
    We fully comply with the Dutch Corporate Governance Code by applying its principles
    and best practice provisions that are addressed to the Board of Management
    and the Supervisory Board or by explaining why it deviates therefrom. Subject
    to the amendments of the articles of association proposed to the 2005 annual
    general meeting of shareholders, we fully apply such principles and best practice
    provisions, with the exception of the following provision that is not fully
    applied: 
      Provision
        II.2.7: Maximum remuneration in the event of dismissal of members of the
        Board of Management. See Severance, chapter 8, page 68 and chapter 12,
        page 132. Each substantial
    change in the corporate governance structure of the company and in the compliance
    of the company with the Dutch Corporate Governance Code is required to be
    submitted to the annual general meeting of shareholders for discussion under
    a separate agenda item. The
    full text of the Dutch Corporate Governance Code can be viewed on our website,
    www.tpg.com. The information on our website, however, does not form part of
    this annual report. In addition to the Dutch Corporate Governance Code we
    are subject to the New York Stock Exchange corporate governance rules and
    to the US Sarbanes-Oxley Act. We are not subject to any other corporate governance
    code. NEW YORK
    STOCK EXCHANGE CORPORATE GOVERNANCE RULES We comply
    with the corporate governance rules applicable to foreign private issuers
    listed on the New York Stock Exchange (NYSE). As a foreign issuer with American
    Depositary Shares listed on the NYSE, we are allowed to follow our home-country
    practices with respect to most corporate governance matters instead of those
    that apply to US domestic issuers provided that we disclose any significant
    ways in which our corporate governance practices differ from listed domestic
    US companies under the NYSE listing standards. Like
    many public Dutch companies, we have a two-tier governance standard. As set
    out in more detail above, our Board of Management is comprised of executive
    directors under the supervision of our Supervisory Board, which comprised
    of non-executive directors. Members of the Board of Management and other
    officers and employees cannot simultaneously act as members of the Supervisory
    Board. The Supervisory Board must approve specified decisions of the Board
    of Management. Both the Dutch Corporate Governance Code requirements and the NYSE rules require that a majority (or more) of the members of a board of directors be independent, but the relevant definitions of independence differ in their details. In some cases,
  the Dutch requirement is stricter, such as by requiring a longer look back period for former executive directors; in others the NYSE requirement is the stricter of the two. The NYSE listing standards also require that the external
  auditor be appointed by a companys audit committee. As discussed above, in accordance with Dutch law, our external auditor is appointed by the shareholders meeting and not by our audit committee, although our audit committee has the sole
  authority to recommend such appointment, subject to confirmation by our Supervisory Board.




Our audit committee complies with the provisions of the NYSE listing standards applicable to foreign private issuers. In general, we believe that our current
    corporate governance practices are consistent in principle with the standards required of US companies listed on the NYSE.


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Chapter
  07    Report of the Supervisory Board

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|07                                    |  | 
|------------------------------------- |  | 
|                                      | 
|Report
      of the Supervisory Board | 
|                                      | 

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In 2004
    the Supervisory Board met eight times with the Board of Management. Five of
    these meetings were preceded by meetings of the Supervisory Board with the
    CEO. There was no frequent absence of any member of the Supervisory Board. Considerable time was devoted to our strategic plan, the divisional strategies, the TPG-1 programme and plans with regard to moving our business in China forward. The Supervisory
Board discussed with the Board of Management our objectives, strategy, associated risks and mechanisms for controlling financial risks. Our plans for corporate sustainability were discussed, as was our partnership with the United Nations World Food
Programme. Early in 2004, the Supervisory Board completed a thorough review of our corporate governance, which took place in view of the developments and changed laws and regulations in the
United States, the Netherlands and Europe. New bylaws and terms of reference for the Supervisory Board, the Board of Management and various committees were approved as was a whistleblower procedure. The Supervisory Board approved a proposal for the
remuneration policy for the Board of Management, which was adopted by our annual general meeting of shareholders held on 7 April 2004. In February 2004, our audit committee, on behalf of the Supervisory Board, conducted an independent investigation regarding representations made to the UK Inland Revenue and to our
external auditors, PricewaterhouseCoopers Accountants N.V., with respect to certain UK tax matters originally arising in the late 1990s relating to one of our UK subsidiaries. In addition to this investigation, our audit committee, with the
assistance of independent tax advisors, conducted a review of other UK tax matters that arose from the same period. The investigations conducted by our audit committee, with the assistance of independent legal counsel, concluded that not all
relevant details in connection with these tax matters were adequately disclosed to the UK Inland Revenue and PricewaterhouseCoopers. The Supervisory Board discussed the outcome of the investigations and approved proposed remedial actions such as a
review of the tax, finance and legal functions. Since April 2004 the Supervisory Board has regularly been updated about the status of the implementation of the remedial actions and our ongoing discussions with the UK Inland Revenue. In March 2004, the Supervisory Board met to adopt our 2003 annual results and approved the dividend for 2003. This meeting was attended by our auditors, PricewaterhouseCoopers. In
April 2004 the Supervisory Board approved the 2004 first quarter results. In August 2004 the Supervisory Board approved the 2004 half-year results and interim dividend and in October 2004 the third quarter results. In its December meeting the
Supervisory Board approved the budget for 2005. During 2004, the Supervisory Board discussed with the Board of Management growth initiatives. The Supervisory Board approved the acquisition of the freight management company Wilson
and a proposal to purchase of a 25% stake in Post Denmark. The Supervisory Board approved a request by the express division for capital expenditure to expand the express hub in Liège. The Supervisory Board was updated by the Board of
Management on a regular basis about the progress of the turnaround in our logistic division.




Other issues discussed by the Supervisory Board were the sale of shares in TPG by the State and the repurchase of a part of these shares by the company. In December 2004 the
Supervisory Board approved a proposal to rename TPG N.V. as TNT N.V. and rename our principal mail subsidiary, Royal TPG Post B.V., as Royal TNT Post B.V. In October 2004 the Supervisory Board together with the Board of Management visited the Liège hub during its night operations and was briefed by local management about
activities there. In a private meeting in December 2004, which was partly attended by the CEO, the Supervisory Board evaluated its working methods, procedures, its own functioning and that of its
committees as well as the functioning of the Board of Management, both as a whole and as individual members. The Supervisory Board also evaluated its relationship with the Board of Management. It discussed the composition of the Supervisory Board
and its committees. The Supervisory Board Profile was discussed, but not changed (see our website www.tpg.com). The information on our website does not form part of this annual report. The Supervisory Board approved and adopted an induction and
training programme for its members. The Supervisory
    Board has four committees, which met separately throughout the year. The audit
    committee, currently consisting of three members listed on page 55, met 13
    times and reported its findings to the full Supervisory Board. The audit committee
    discussed our annual, half-year and quarterly results with our auditors PricewaterhouseCoopers
    in attendance. It also reviewed press releases related thereto. Our company
    control environment and risk management processes were discussed and reviewed.
    The new vision for group finance was discussed. A lot of these meetings were
    devoted to the investigations regarding representations made to the UK Inland
    Revenue and our auditors and the implementation of the subsequent remedial
    actions. The audit committee also discussed the proposal for the 2004 dividend
    and dealt with matters as auditor independence, pre-approval of audit and
    non-audit services by such auditors and appraisal of the services by our auditors.
    Other matters discussed by the audit committee in 2004 were our finance strategy,
    our tax risk profile and the budget for 2005. The Supervisory Board expresses
    its gratitude to the members of the audit committee for their diligence. In 2004, the remuneration committee met six times and had several telephone conferences. The remuneration committee drafted a remuneration policy for the Board of Management that was
adopted by the annual general meeting held on 7 April 2004. Other matters dealt with were, amongst others things: the employment contracts with Mr Kulik and Mrs Lombard, equity-related compensation plans, compliance with the Dutch corporate
governance code, incentive and variable compensation for members of the Board of Management and the compensation of Supervisory Board members. The nominations committee met two times and had several telephone conferences. The nominations committee devoted much of its time to finding a good successor for Mr Bernabè,
a member of the Supervisory Board whose tenure ended on 7 April 2004. Its members had several individual meetings with candidates.


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Chapter
  07    Report of the Supervisory Board

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The public affairs committee met once by telephone conference and discussed regulatory issues. At the
    time of our annual general meeting of shareholders on 7 April 2005 Mr Tabaksblat
    and Mr Hommen will reach the end of their tenure. Mr Hommen is available for
    re-appointment; Mr Tabaksblat has indicated that he is not available for re-appointment,
    for personal reasons. As previously
    mentioned, during 2004 the nominations committee on behalf of the Supervisory
    Board searched for a successor of Mr Bernabè. Two suitable candidates
    were found. The Central Works Council decided to nominate Mrs Giovanna Monnas
    as its candidate for appointment to the Supervisory Board. The Central Works
    Council also indicated that it considers Messrs Halberstadt and Kok as members
    of the Supervisory Board proposed by it. In view of its increased responsibilities
    and workload, the Supervisory Board decided to also nominate Mr Shemaya Levy
    for appointment to the Supervisory Board. The Supervisory Board therefore
    nominates the following persons for appointment by the annual general meeting
    of shareholders to the Supervisory Board under the condition that the annual
    general meeting of shareholders does not propose other candidates: Mr
        J.H.M. Hommen,
      for
        a term of 4 years;Mr
        S. Levy,
      for
        a term of 4 years; andMrs
        G. Monnas,
      for
        a term of 4 years. All these
    candidates have the support of the Central Works Council. Data as mentioned in article 2:142 (3) of the Dutch Civil Code can be found in the enclosed agenda for the annual general meeting of shareholders. In addition, each Supervisory Board
members year of birth, current and former positions, number of shares held and other supervisory board memberships are presented below. Also listed are the date and term of first appointment, current term of office and memberships of
Supervisory Board committees. Independence
    of members of the Supervisory Board All Supervisory
    Board members can be deemed to be independent in the sense of section III.2.2
    of the Dutch corporate governance code. This means that none of the members
    of the Supervisory Board (or their partner or close relative):  
      has
        been a employee or member of the Board of Managementof our company;
   receives personal financial compensation from our companyor an associated company other than the compensationreceived as Supervisory Board member;
   has had an important business relationship with our companyor a company associated with it, in the year prior to theappointment;
   is a member of the management board of a company in whicha member of the Board of Management is a Supervisory Boardmember;
   holds at least 10% of the shares in our company;





   is a member of the management board or supervisory boardof a legal entity that holds at least 10% of our shares; or
   has temporarily managed our company during the previous 12months. Occasional
    non-compliance There has
    been no decision in 2004 by the Supervisory Board not to comply with its by-laws. Remuneration
    Policy For the
    remuneration policy adopted by the remuneration committee see chapter 8; the
    remuneration of members of the Board of Management and the Supervisory Board
    over 2004, see note 17 to the consolidated financial statements. FINANCIAL
    STATEMENTSIn its
    meeting of 25 February 2005, the Supervisory Board approved the financial
    statements on the recommendation of the Board of Management following the
    examination of these statements by PricewaterhouseCoopers. 
    PricewaterhouseCoopers report can be found on page 161. The Supervisory
    Board recommends that the general meeting of shareholders adopt the 2004 financial
    statements of TPG. The shareholders will be asked to approve separately the
    Board of Managements execution of company affairs in 2004 and the supervision
    exercised by the Supervisory Board. The appropriation of net income approved
    by the Supervisory Board can be found on page 162. Subject
    to adoption of the financial statements, a final dividend of €0.37 per
    ordinary share of € 0.48 par value will be paid in respect of the 2004
    financial year. An interim dividend of €0.20 has already been paid in
    2004 so the total dividend per ordinary share in respect of 2004 will be €0.57. Finally, the Supervisory Board wishes to commend the Board of Management and all TPG employees for their contributions to TPG in 2004. On behalf of the Supervisory Board,  M. Tabaksblat
    
    ChairmanAmsterdam,
    25 February 2005






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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 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| | SUPERVISORY
      BOARD                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
| | M.
      TABAKSBLAT (1937)Mr. Tabaksblat is chairman of the Supervisory Board. He wasinitially
      appointed member of the Supervisory Board on 28 June1998
      and his term was extended for four years, until 2005, atthe
      Annual Shareholders Meeting held in 2001. He was appointedas
      chairman of the Supervisory Board on 30 August 2001. Mr.Tabaksblat
      is chairman of the supervisory boards of AEGONN.V.,
      Reed Elsevier N.V. and Reed Elsevier plc. He was formerlychairman
      and CEO of Unilever N.V.Shares owned:0J.M.T. COCHRANE (1944)Mr. Cochrane has been vice chairman of the SupervisoryBoard
      since 2 November 2001. He was appointed memberof
      the Supervisory Board on 28 June 1998 and his term wasextended
      for four years, until 2006, at the annual shareholdersmeeting
      held in 2002. Mr. Cochrane is chairman of Avidex Ltd.and
      chairman of SW London Strategic Health Authority. Heis
      a former director of Glaxo Wellcome plc, responsible forinternational
      operations, and a former executive director ofGlaxo
      Wellcome.Shares owned:0R.J.N. ABRAHAMSEN (1938)Mr. Abrahamsen was appointed as a member of the SupervisoryBoard
      by the Minister of Transport on 9 May 2000. He wasre-appointed
      for four years after the annual shareholdersmeeting
      held in 2004. His term expires in 2008. Mr. Abrahamsenis
      member of the supervisory boards of Fluor Daniel B.V.,PON
      Holdings B.V., Havenbedrijf Rotterdam B.V., OptimixVermogensbeheer
      N.V., ANP, Madurodam B.V., Royal BAMGroup,
      Trans Link Systems and Vitens N.V. He is a formermember
      of the management board and chief financial officerof
      KLM Royal Dutch Airlines N.V. and senior executive vicepresident
      of ABN AMRO Bank N.V.Shares owned:0R. DAHAN (1941)Mr. Dahan was appointed as a member of the SupervisoryBoard
      on 1 April 2003. His term expires in 2007. Mr. Dahan isacting
      chairman of the supervisory board of Royal Ahold N.V.,a
      member of the supervisory boards of VNU N.V. and AEGONN.V.,
      a member of the International Advisory Board of theInstituto
      de Empresa Business School in Madrid, a member of theInternational
      Advisory Board CVC Capital Partners in Londonand
      a member of the Advisory Board of the Guggenheim Groupin
      New York. He was formerly Executive Vice President andDirector
      of Exxon Mobil Corporation and held various positionswith
      its subsidiaries.Shares owned:0 |  | V.
        HALBERSTADT (1939)Mr.
        Halberstadt was appointed as a Member of the SupervisoryBoard
        on 28 June 1998 and re-appointed in 1999 and in 2003. His term expires
        in 2007. Mr. Halberstadt is Professor of public finance at Leiden University,
        international advisor of Goldman Sachs Group Inc., non-executive director
        of PA Holdings Ltd, and Chairman of the international advisory board of
        DaimlerChrysler AG. Furthermore, he is a member of the supervisory boards
        of DaimlerChrysler AG until April 2005, Royal KPN N.V. and Concertgebouw
        N.V. Mr. Halberstadt served previously as a.o. president of the International
        Institute of Public Finance and Crown-member of the Social and Economic
        Council.Shares owned:0J.H.M.
        HOMMEN (1943)Mr. Hommen was appointed to the Supervisory Board on 28June
        1998 and in 2001 he was re appointed for four years by theMinister
        of Transport. His term expires in 2005. Since 28 March2002
        Mr. Hommen is vice chairman of the board of managementand
        chief financial officer of Royal Philips Electronics N.V., fromwhich
        positions he will retire on 1 May 2005. Mr. Hommen wasformerly
        executive vice president and chief financial officer ofthe
        Aluminum Company of America (Alcoa). He is a memberof
        the supervisory board of Royal Ahold N.V., chairman of thesupervisory
        board of the Academisch Ziekenhuis Maastricht,chairman
        of the college van beheer of Philips Pension Fund andchairman
        of the board of directors of MedQuist, USA.Shares owned:0
      W.
        KOK (1938)Mr. Kok was appointed as a member of the Supervisory Boardon
        1 April 2003. His term expires in 2007. Mr. Kok is member ofthe
        supervisory boards of Royal Dutch Petroleum Company N.V.,ING
        Group N.V. and KLM Royal Dutch Airlines N.V. Mr. Kok wasformerly
        Prime Minister of the Netherlands, Minister of Finance,Member
        of Parliament, chairman of the Confederation of DutchTrade
        Unions and the European Trade Union Confederation.Shares
        owned:0
      R.W.H.
        STOMBERG (1940)Mr. Stomberg was appointed as a member of the SupervisoryBoard
        on 28 June 1998 and his term was extended for fouryears,
        until 2006, at the annual shareholders meeting held in2002.
        Mr. Stomberg is chairman of Management ConsultingGroup
        plc and a non executive director of Smith & Nephewplc,
        Reed Elsevier N.V. and Reed Elsevier plc. Mr. Stomberg isalso
        member of the supervisory board of Scania AB, chairmanof
        supervisory board of Deutsche BP AG, chairman of theadvisory
        board of Hoyer GmbH in Hamburg and chairman of thesupervisory
        board of Lanxess AG in Leverkusen. Mr. Stombergwas
        formerly a managing director of British Petroleum Companyplc,
        the chief executive of BP Oil International, chairman of JohnMowlem
        & Co plc, chairman of Unipoly S.A. and member of thesupervisory
        board of Stinnes AG.Shares owned:0The business address of all members of the Supervisory Board is TPG N.V.,Neptunusstraat
        41-63, Hoofddorp, 2132 JA, the Netherlands. | 
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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  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Chapter
        08
      Remuneration report


|08                        |  | 
|------------------------- |  | 
|                          | 
|Remuneration
      report | 
|                          | 



Sydney
  Opera House

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Introduction In accordance
    with our articles of association, the remuneration of the members of the Board
    of Management is the responsibility of the Supervisory Board. The remuneration
    of the individual members of the Board of Management (including equity-based
    compensation) has to be in compliance with the remuneration policy. The remuneration
    policy is adopted by the annual general meeting of shareholders. The remuneration
    committee is appointed by our Supervisory Board to assess and propose the
    remuneration policy for members of the Board of Management and the proposal
    for the remuneration for the individual members of the Board of Management. The remuneration
    committee is made up of at least three members of the Supervisory Board and
    is chaired by the vice-chairman of the Supervisory Board. In 2004 the remuneration
    committee comprised J.M.T. Cochrane (chairman), V. Halberstadt and R.W.H.
    Stomberg. None of the members of the remuneration committee is a member of
    the management board of another Dutch listed company and none of the members
    of the remuneration committee is member of the audit committee. During 2004,
    the remuneration committee met five times. The chief executive officer was
    invited for all meetings except the meeting where his own terms or conditions
    were discussed. The secretaryship of the committee is filled by our corporate
    human resources department. The
        remuneration committee used professional advice from thefollowing
        independent external advisors:
      Allen
        & Overy provided legal advice on employment relatedmatters,
      Towers
        Perrin and Hewitt Associates advised on remunerationmarket
        practice and equity based compensation and provided the valuations used
        for the long-term incentives,
      Petercam
        Bank Nederland B.V. advised on our totalshareholder return performance compared to our peergroup, and
      Ernst
        & Young provided tax advice relating to the employmentof
        the US based members of the Board of Management. This
    report sets out the policies on the remuneration of the members of the Board
    of Management and the members of the Supervisory Board. For the disclosure
    of the remuneration paid to individual members of the Board of Management,
    see note 17 of the consolidated financial statements. REMUNERATION
    POLICY FOR THE SUPERVISORY BOARD The remuneration of the members of the Supervisory Board is currently based on a base compensation and a variable compensation linked to attendance of the meetings of the committees
of the Supervisory Board. The members of the Supervisory Board do not receive any performance- or equity-related compensation and do not accrue any pension rights with our company. The members of the Supervisory Board do not receive any severance
payments in the event of termination. The current
    remuneration scheme was introduced in 1998 when TPG was demerged from Royal
    PTT Nederland NV and the




Supervisory
    Board of TPG was first formed. The remuneration structure has not been reviewed
    until now. In the annual report over 2003 we reported that there is a discrepancy
    between market practice and the current remuneration of the Supervisory Board.
    Benchmark studies by Towers Perrin and HayGroup have made clear that the current
    remuneration of the members of the Supervisory Board is below European market
    practice and does not reflect the increase in involvement resulting from regulatory
    and Corporate Governance developments over the last few years. The following
    remuneration scheme for the Supervisory Board is designed to reflect these
    developments. Remuneration Supervisory BoardSupervisory
          Board
      Base
          Fee
      Committee
    
      Per
          meeting feeChairman
    60,000
    Audit & Remuneration
    Chairman Member
    2,5001,500Member
    45,000
    Nomination & Public Affairs
    Chairman Member
    1,5001,000 REMUNERATION
    POLICY FOR THE BOARD OF MANAGEMENT The remuneration
    policy for the members of the Board of Management set forth below is drawn
    up by the Supervisory Board and will be submitted to the annual general meeting
    of shareholders on 7 April 2005. In the following sections the remuneration policy has been revised compared to 2004: 
      Short
        term incentive:Non-financial
        targets related to our mission have been addedto
        the existing financial performance targets for short termvariable pay for the Board of Management.
      Long
        term incentive:The
        normal grant of options for 2005 is replaced with anequivalent value performance share grant for the Board ofManagement
        under the existing plan rules of the PerformanceShare plan. Please refer to the appropriate sections below for information on the policies. Term of
    appointment and employment contracts The members
    of the Board of Management appointed before September 2003 have been appointed
    for an indefinite term. As of September 2003, new members of the Board of
    Management are appointed for a period of four years. On expiry of the four-year
    term, a member of the Board of Management may be reappointed for successive
    terms of four years per term. In case of a proposed re-appointment the performance
    of the candidate as a member of the Board of Management is taken into account.
    The Supervisory Board has agreed with the members of the Board of Management
    that as of 2004, each year a board member will step down and be eligible for
    re-appointment for a new four-year term according to the following re-appointment
    plan:


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|Chapter
      08 | Remuneration report
|---------------- | -------------------

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|                                                                                               
|-----------------------------------------------------------------------------------------------
|                                                                                               
|                                                                                               
|Harry
        Koorstra                                                                         
|Jan
        Haars                                                                              
|Dave
        Kulik                                                                             
|Marie-Christine
        Lombard                                                                
|Peter
        Bakker1                                                                          
|                                                                                               
|1
      Peter Bakker was appointed CFO of the Board of Management effective 28 June
      1998.

Objective
    of remunerationThe
    objective of the remuneration policy is to attract, motivate and retain qualified
    members of the Board of Management of the highest calibre, with an international
    mindset and background essential to the successful leadership and effective
    management of a large global company and to reward them accordingly based
    on performance. The remuneration structure for the Board of Management is
    therefore designed to balance short-term operational performance with the
    longer term objectives of the company. Total remuneration is benchmarked against
    the relevant market. Remuneration
    elements The remuneration
    for members of our Board of Management comprises of the following elements:
    a base salary and other periodically paid compensation, a short-term incentive
    component, a share-matching scheme, a long-term incentive component and pension
    arrangements. Only the periodically paid compensation is fixed, all other
    components are linked to performance. Total compensation
    is set at a medium level for total compensation relative to the European reference
    market for executive directors of multinational companies. The European market
    is defined as the composite market of the Netherlands, the United Kingdom,
    Germany, France, Belgium, Switzerland and Italy: Country
      Refence
          marketThe
        Netherlands
      AEXUnited
        Kingdom
      FTSE
          100Germany
      DAX
          30France
      CAC
          40Belgium
      BEL
          20Switzerland
      SMI
          25Italy
      MIB
          30 This reference market reflects companies with comparable revenue, number of employees and international character. Base salary
    The base
    salary for members of the Board of Management is set at a median level relative
    to the European reference market for executive directors of multinational
    companies as set out above. For the base salary of members of the Board of
    Management the remuneration level of the country of residence is benchmarked




against
    the average European market. In case the remuneration level in the country
    of residence exceeds the European market then the base salary is set against
    the reference market of the country of residence. Other periodically
    paid compensation Members
    of the Board of Management benefit from other periodically paid compensation
    or benefits in kind. These compensation elements can comprise elements based
    on historic contractual benefits or compensation elements based on local practice.
    Typical examples are a company car or an allowance for medical insurance. Variable
    compensation We consider
    variable compensation an important part of the remuneration package for the
    members of the Board of Management. The bonus targets and performance conditions
    reflect the key drivers for value creation and medium to long-term growth
    in shareholder value. Therefore, a considerable part of the total compensation
    consists of variable compensation, depending on performance measures. Consistent with the above principles, approximately half of the total compensation of a member of the Board of Management is performance linked when at target performance is
achieved. The members of the Board of Management have the same schemes and opportunity for earning variable compensation with the exception of the long-term incentive grant size for the CEO
and an additional special cash incentive for the Group Managing Director Logistics. The total long-term incentive grant for the CEO is twice the size of the grant for the other members of the Board of Management. This is based on the practice in our
reference market and our aim to have approximately half of the total compensation linked to performance relative to his higher base salary. In addition,
    the Group Managing Director Logistics can receive a special additional reward
    for achieving a higher than budgeted performance for the logistics division. Short-term
    incentive: cash bonusThe cash
    bonus plans for the Board of Management consist of the mission related short-term
    incentive plan for all members of the Board of Management and the special
    incentive for the Group Managing Director of Logistics. All
    members of the Board of Management are eligible to participate in a short-term
    incentive programme that provides


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an annual bonus for the achievement of predetermined targets. These targets are agreed and set by our Supervisory Board at the beginning of each financial year. The at-target bonus
level is 60% of base salary with an additional 15% available for over-achievement towards a stretched target. The performance challenge for the Board of Management is to achieve sustainable performance on both the short term and the long term. Our mission is aimed at achieving this by
continuously exceeding the expectations of our customers, leading the industry by instilling pride in our people, creating value for our shareholders and by sharing responsibility for our world. Starting 2005, the short term incentive programme for the Board of Management reflects the accountability for our mission by rewarding both for the financial and non-financial
performance required for sustainable results. The financial targets for the chief executive officer and the chief financial officer are set in terms of earnings per share growth from continuing operations. This target was
continued because it best reflects our commitment to create value for our shareholders. The targets for a divisional member of the Board of Management consist of targeted earnings per share growth from continuing operations of the company as a
whole and of internal targeted economic profit of the relevant division. The divisional members of the Board of Management have these two targets to illustrate their responsibility towards our company as a whole as well as towards a profitability
of their own division. Both targets are measured independently and the realisation of these targets can independently lead to bonus payments. The non-financial
    targets are related to the elements of our mission that do not directly impact
    our financial performance in the short term but are crucial to the continued
    success of the company in the long term by engaging our people, exceeding
    the




expectations
    of our customers and sharing responsibility for the world around us. For
        each member of the Board of Management specific non-financial
        targets are agreed with the Supervisory Board on the following elements
        of the Mission:
      Instilling
        pride in people: Continuous improvement in engaging our people which can
        be measured though employee satisfaction surveys
      Exceeding
        customer expectations: Continued improvements in our relations with customers,
        which can be measured through customer satisfaction surveys and by assessing
        the relationship with our customers in person.
      Responsibility
        for the world: Making a difference to our environment which can be accounted
        for by our global initiatives as a company such as our involvement with
        the World Food Programme on a global scale and local initiatives to improve
        the direct environment we live in.The Supervisory Board will designate
        specific projects and initiatives to each member of the Board of Management
        for which the individual member will be personally responsible. The at
    target bonus consists for 70% of reward for financial performance and
    30% of reward for non-financial performance to reflect the importance of financial
    performance.The three non-financial targets described above, each contribute
    10% to the at target bonus.The 70% of at target bonus
    for the CEO and CFO is set on targeted earnings per share growth from continuing
    operations. For the Group Managing Directors 50% is set on targeted earnings
    per share growth from continuing operations and 20% is set on internal targeted
    economic profit of the relevant division. The
    bonus as percentage of base salary at different performance levels is set
    out below:


|                             
|-----------------------------
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|Peter
      Bakker           
|Jan
      Haars              
|Harry
      Koorstra         
|Dave
      Kulik             
|Marie-Christine
      Lombard
|                             

The bonus
    based on financial performance will be calculated using a sliding scale between
    the minimum performance and the stretch performance. Below the minimum required
    performance, the bonus for financial performance is zero. The same sliding scale between minimum and stretch is also applicable for the determination of the part of the bonus for the divisional members of the Board of Management based on the divisional economic profit results.




The bonus
    for non-financial performance does not have a sliding scale. The Supervisory
    Board allocates the non-financial bonus to the achievement of individual targets
    of the Board of Management and determines the associated pay-out. As a result, the bonus for the members of the Board of Management is zero
    when the financial performance is below minimum and the non-financial targets
    are not met and 60% when all financial and non-financial targets are met.
    The stretch pay-out of 75% can only be achieved through stretch performance
    on financial targets.


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|Chapter
      08 | Remuneration
      report
|---------------- | -------------------------

---

The additional
    special incentive for the Group Managing Director Logistics is awarded when
    at least 150% of the cumulative target EBITA after three years is achieved.
    The award amounts to 90% of the base salary after three years for at target
    performance up to 180% of base salary for achieving stretch performance. The
    performance is determined at the end of the three year period as a cumulative
    performance versus the cumulative annual EBITA target. SHARE-MATCHING
    SCHEMEAny bonus
    payable under the short-term incentive scheme described above will be paid
    75% in cash and 25% in our shares at the then current market value with an
    accompanying right on matching shares. The number of bonus shares involved
    is calculated by dividing the 25% of the bonus by the share price on the day
    of grant. The day of grant is the day following the announcement of the first
    quarter results. If at least 50% of the shares are retained for a period of
    at least three years, the company will match the amount of shares earned under
    the short-term incentive scheme on a one-to-one basis. In compliance with
    the Corporate Governance Code, the members of the Board of Management will
    not sell their matching shares before the earlier of five years from the date
    of grant or the end of the employment. Any sale of shares for the purpose
    of using the proceeds for the tax relating to the grant of these shares is
    exempted from this practice. Long-term
    incentives: share options and performance shares The option
    grant for 2005 is replaced by an equivalent grant under the existing Performance
    share plan. This will increase the share ownership of the members of the Board
    of Management, whilst aligning their reward closely to the future development
    of the share price and the resulting value creation for our shareholders and
    strengthen the commitment of the Board of Management to the company and its
    objectives. We consider options to be less effective in aligning the interest of the Board of Management to the interests of the shareholders than performance shares. Performance shares more
accurately reflect the share price development that creates value for our shareholder. The conversion of the option grant to a performance share grant will not affect the remuneration value of the Long term incentive compensation. A conversion factor is applied that
ensures an equal accounting cost for the performance share grant in return for the option grant, based on the IFRS2 accounting rules which apply to both the option plan and the performance share plan starting 2005. In 2005 we will grant in addition to the normal performance share grant, one additional performance share for every 2.5 options under the normal option grant policy. Below we
    will continue to disclose both the share option and performance share plan
    since the option plan is still in effect for the option grants made until
    2004. We will not convert any of the past grants under the option plan. The long-term
    incentive for the members of the Board of Management comprises of two elements:
    the TPG share option




scheme
    and the TPG performance share scheme. Both long-term incentives were designed
    to focus Board of Management members on the growth of long-term sustainable
    value for shareholders. These incentive schemes operate under a performance
    schedule and compensate Board of Management members for improved shareholder
    performance over a three-year financial period. Under the share option scheme, share options were awarded to the Board of Management members until 2004. The options exercise price equals the average market price on Euronext
Amsterdam on the day following the announcement of first quarter results. The share options are exercisable after three years. Please refer to the paragraph on the TPG option scheme for more information. Under the performance share scheme, rights on our shares are awarded to Board of Management members, which are exercisable after three years. The number of shares is calculated by
dividing the available amount by the share price on the day following the announcement of first quarter results. Please refer to the paragraph on the TPG performance share scheme for more information. The total grants to the members of the Board of Management under the long-term incentive scheme are benchmarked on a yearly basis against market practice using the same reference
market as described earlier. The market practice developments in this respect are derived from periodic reports prepared by Towers Perrin. Based on the outcome of this benchmark the grants under the long-term incentive scheme to the members of the
Board of Management might be adjusted to reflect the medium to third quartile total compensation position we want to maintain. Both long-term incentive schemes operate on the basis of the same performance schedule. The vesting of options and performance shares is conditional on the achievement after three
years of certain targeted levels of total shareholder return when compared against two benchmarks: (a) the AEX index of Euronext Amsterdam and (b) a peer group of direct competitors. Total shareholder return is defined for this purpose as the
return to shareholders from investing in shares, in terms of both share price appreciation and dividends, assuming reinvestment of dividends. Under this performance schedule 0%  150% of the base allocation of the share options and 0% -
120% of the base allocation of the performance shares might vest depending on our relative total shareholder return performance during the three financial years starting with the year of grant. During
    the vesting period, the total shareholder return data are compiled by the
    bank Petercam Nederland B.V. based on the information from objective data
    providers (Bloomberg) and reported quarterly. After the three-year vesting
    period, the remuneration committee will advise the Supervisory Board on the
    vesting of performance shares and share options. The previous
    option grants and all grants of performance shares are divided into two equal
    parts. The two parts will vest as follows:


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1.
      The
        vesting of 50% of the share options and performance shares will be
        determined by reference to the relative position of our total shareholder
        return after three years in the peer group consisting of other Euronext
        Amsterdam listed companies. 2.
      The
        vesting of the remaining 50% of the share options and performance shares
        will be determined by reference to the




relative
        position of our total shareholder return after three years in the peer
        group of international direct competitors. 1.   AEX
    PEER GROUPHalf
    of the options or performance shares will vest by reference to our relative
    position in the AEX index of Euronext Amsterdam as calculated in accordance
    with the following ranking table.




|                                                                 
|-----------------------------------------------------------------
|TSR
      performance against the Euronext Amsterdam peer group  
|                                                                 
|TSR
        ranking after performanceperiod within AEX peer group
|                                                                 
|1
      - 6                                                      
|7
      - 12                                                     
|13
      - 18                                                    
|19
      - 25                                                    
|                                                                 
|                                                                 

|1. | Calculated using a base allocation of 1000 option/shares.
|-- | ---------------------------------------------------------
|2. | Share options 75%, performance shares 60%.               



2.
    DIRECT
    COMPETITION PEER GROUPThe remaining
    half of the previous share options and all performance shares will vest by
    reference to our relative position in the international direct competition
    peer group as calculated in accordance with the following ranking table. For
    this purpose, our peer group of direct competitors consists of UPS, FedEx,
    DPWN and Exel. For the grant in 2004 the Supervisory Board has decided to
    not replace Hays by a new peer group company after they had sold their logistics
    divisions. None of the existing companies in the logistics and/or express
    mail industry were




considered
    to be comparable enough as a company in our peer group. The calculation of
    quartiles of TSR performance allows for a smaller peer group. The first table below shows how our relative TSR performance is calculated versus the direct competition peer group including Hays for the grants in 2002 and 2003. The second table
shows the calculation of relative TSR performance versus the peer group excluding Hays for the grants in 2004.




|                                                                   
|-------------------------------------------------------------------
|TSR
      performance against direct competitors (DC) 2002 and 2003
|                                                                   
|TSR
      ranking after performanceperiod within DC peer group     
|                                                                   
|1                                                                  
|2
      - 3                                                        
|4
      - 5                                                        
|6                                                                  
|                                                                   
|                                                                   

|1. | Calculated
      using a base allocation of 1000 options/shares.
|-- | ----------------------------------------------------------------
|2. | Share
      options 75%, performance shares 60%.                



|                                                              
|--------------------------------------------------------------
|TSR
        performance against direct competitors (DC) 2004  
|                                                              
|TSR
      ranking after performanceperiod within DC peer group
|                                                              
|1                                                             
|2
      - 3                                                   
|4                                                             
|5                                                             
|                                                              
|                                                              

|1. | Calculated
      using a base allocation of 1000 options/shares.
|-- | ----------------------------------------------------------------
|2. | Share
      options 75%, performance shares 60%.                



Shares granted to our Board of Management via our equity plans without financial consideration must be retained for a period of at least five years after grant or until at least
the end of employment, if this period is shorter, unless it can be demonstrated to our corporate secretary that their sale is prompted by required tax payments with respect to these shares.





Pension
    Our pension
    policy is that pension arrangements should be in line with local practice
    in the country of residence of the Board members and the pension benefits
    provided should be consistent with those provided by other multinational companies
    in those countries. The pension policy for the members of the Board


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|Chapter
      08 | Remuneration
      report
|---------------- | -------------------------

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of Management
    aims at a retirement age between 60 and 65 with a benefit commensurate with
    benefits for members of the Board of Management of comparable companies in
    the country of residence. The pension arrangements for all Board members include
    entitlement to a pension in the event of ill health or disability and a spouses/
    dependants pension on death. We have closely followed the discussions
    on pensions in the Netherlands and in Europe. We are aware of the development
    towards career average pensions and will review how this could impact the
    pensions for the existing members of the Board when these developments would
    require that. Severance
    In relation
    to contracts with new members of the Board of Management we aim to set the
    severance payments at one-year of base salary. Contracts entered into before
    2004 will remain unaltered. For members of the Board of Management, who are
    not a resident of the Netherlands, we follow local market practice for the
    severance for a portion of the base salary. This portion of the salary is
    earned in the country of residence and the severance on that part would be
    applied based on local practices. Loans
    We do not
    grant personal loans to any of our Board of Management and Supervisory Board
    members. In connection with the grant of share options in 1999, loans were
    offered to the Board of Management to pay the Netherlands tax arising from
    the grant, which was levied at the time the grant was made. The current members
    of the Board of Management have repaid their loans to the company as reported
    in the annual report over 2003. The company decided not to request the former
    members of the Board of Management repayment of the loans that were associated
    with the tax paid on grant of the 1999 management options that expired in
    2004. The severance payments in 2004 relate to the waiver of these loans to
    former members of the Board of Management (John Fellows, Carel Paauwe, Bert
    van Doorn).






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|09                                                                  |  | 
|------------------------------------------------------------------- |  | 
|                                                                    | 
|Code
      of Business Principles & Corporate Social Responsibility | 
|                                                                    | 



On the road, Puerto Rico

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|Chapter
      09 | Code
      of Business Principles & Corporate Social Responsibility
|---------------- | -------------------------------------------------------------------

---

TPG
    Code of Business Principles The text
  of our Code of Business Principles is reproduced in full below. We require that
  all employees understand and comply with our values and policies. Our people
  therefore share the TPG way of working. STANDARDS
    OF CONDUCT - UN GLOBAL COMPACTWe conduct
  our business with fairness, honesty, integrity and respect for the interests
  of our stakeholders in a wide variety of social, political and economic environments. TPG supports
    the ten principles of the UN Global Compact (www.unglobalcompact.org) with respect
    to human rights, labour rights and the protection of the environment. HUMAN
    RESOURCESOur mission
    is to become a recognised world leader by providing excellent service to customers.
    This can only be achieved by continuously strengthening our outstanding team
    of committed people. We are committed to the Investor in People standard (www.iipuk.co.uk),
    which is a recognised training and people management system that delivers
    proven performance improvements in business. We employ
      competent, capable and enthusiastic people. We provide our employees with
      the necessary resources, training and recognition to maximise their own potential
      and individual contributions to the business. We aim to create equal opportunities
      for all our employees, without discrimination under equal circumstances on
    grounds of sex, race, religion, marital status and age. CONFLICTS
    OF INTERESTWe expect
  our employees to avoid any improper personal benefits for themselves or their
  family members that result from the employees position at TPG or personal,
  family, financial and other interests or actions that could conflict with the
  commitment to perform their jobs objectively and effectively. Employees must
  report to TPG management any material transaction or relationship that could
  reasonably be expected to give rise to a conflict of interest and will be given
  appropriate guidance upon request. TPG employees also may not take business
  opportunities for themselves that properly belong to TPG, use TPG assets for
  personal gain or compete with TPG. SAFETYTPG must
  comply with all applicable international and national safety regulations.
  Safety
  policies that systematically identify and eliminate hazards are deployed throughout
  the organisation. Safety representatives and improvement groups exist at every
  location where we operate. We strive to adopt best practice approaches that
  under optimal circumstances may exceed the requirements imposed by safety legislation,
  and we constantly measure our performance in this vital part of our business. SUSTAINABLE
    DEVELOPMENTOur daily
    activities impact on communities around the globe, and we are committed to
    policies and practices that promote sustainable development. We are an environmentally
    responsible organisation and know that the quality of our environmental




footprint
    will be a determining factor in whether we will be allowed to operate in the
    long-term. ENVIRONMENTAL
    PROTECTIONWe are
    committed to reducing the impact of our operations on the environment, and
    we invest in programmes that achieve high standards of environmental care.
    Where conditions are optimal, we will go beyond the current economic and regulatory
    frameworks of regional and national governments to minimise potential adverse
    ecological impacts caused by our operations. PUBLIC
    ACTIVITIESTPG neither
  supports political parties nor contributes to the funds of groups whose activities
  promote political interests. TPG companies are encouraged to promote and defend
  their legitimate business interests. Moreover, TPG expects its companies to
  positively respond to requests from governments and other public agencies for
  information, observations or opinions appropriate to our business and the community.
  Any response to such requests will be governed by respect for the privacy of
  individuals and employees. SERVICE
    ASSURANCEWe are
  committed to providing excellent services for customers in terms of value and
  quality. We consistently strive to achieve best-in-class performance and to
  be the most value-creating company in the mail, express and logistics industries. COMPETITIONWe believe
  that open and fair competition should exist in all markets where we conduct
  business. We support the liberalisation of markets and the introduction or application
  of appropriate competition laws. RELIABILITY
    OF PUBLIC REPORTINGOur accounting
  statements, public reporting documents and other public communications provide
  full, fair, accurate, timely and understandable disclosure of the position of
  the company in accordance with accounting principles generally accepted in the
  Netherlands and legal requirements applicable to the company. We comply with
  all local accounting rules and the financial reporting requirements included
  in Part 9, Book 2 of the Netherlands Civil Code as well as requirements of relevant
  securities exchanges. BUSINESS
    INTEGRITYWe neither
  pay nor accept bribes to gain or render orders, services or financial benefits.
  TPG employees are instructed to turn down any attempt of bribery immediately.
  Violation of business integrity can lead to disciplinary measures, dismissal
  and civil or criminal prosecution. TPG does not tolerate fraud, theft, loss
  through recklessness, waste or use of TPGs business assets for private
  use. Therefore, TPG adheres to a strict policy in order to protect the companys
  assets. FACILITATING
    PAYMENTSAs an
    internationally operating company TPG observes high standards to avoid any
    corrupt practices. We prohibit the making, directly or indirectly, of facilitating
    payments, unless such facilitating payments are approved in advance by our
    Ethics Committee on behalf of the Board of Management. Facilitating


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payments
    must be limited to the payment of small cash sums or the provision of small
    gifts, when customary and necessary to expedite or secure the performance
    of routine governmental action. All facilitating payments must be fairly and
    accurately recorded and accounted for, to allow for the monitoring of these
    payments by our Ethics Committee. OBEYING
    THE LAWTPG companies
  are required to be good corporate citizens, and this involves complying with
  the laws, rules and regulations of the countries in which we conduct operations. APPLICATIONOur code
  of business principles applies to all TPG companies throughout the world.
  Implementation
  of the code influences our decisions as to whether TPG or its subsidiaries should
  participate in alliances or enter joint ventures. Any change to our code or
  waiver any of its provisions will be made only by the TPG Supervisory Board
  or a TPG Supervisory Board committee and will be promptly disclosed. WHISTLE
    BLOWINGWe encourage
  TPG employees to report to management promptly any breach or suspected breach
  of this code or other company guidelines. If an employee has any concerns regarding
  questionable accounting or auditing matters, he or she may also notify a member
  of the audit committee. Any reports or complaints by employees under this code
  shall be dealt with strictly confidential and investigated promptly by management
  or the audit committee, as the case may be. TPG will not retaliate or undertake
  action against any employee for filing a report or complaint under this code
  of business principles or for assisting thereto. The TPG business principles
  require from both management and employee that any reports or complaints under
  this code shall be dealt with according to principles of fairness, honesty and
  integrity. In that respect TPG employees shall avoid any form of external or
  internal publicity concerning any breach or suspected breach they might want
  to report, unless management or audit committee have refused to investigate
  the matter and all alternatives for internal consultation have been exhausted. COMPLIANCEThe TPG
  Board of Management is responsible for communication, understanding and observation
  of these business principles. Our internal audit and security functions support
  the TPG Management Board in monitoring compliance with the code. Any loss of
  business resulting from adherence to these principles is not criticised nor
  does any employee suffer any negative consequence for pointing out a breach
  or suspected breach of the code to TPG management or for taking any other lawful
  action with regard to a breach or suspected breach. Failure to adhere to this
  code will be considered a breach of business integrity and will lead to appropriate
  consequences, which may be severe.




TPGs
    Corporate Sustainability Policy The
    corporate sustainability policy sets forth our aspirations for environmental
    care and community involvement. The text of this policy is reproduced in full
    below. Our
    AspirationsTPG is
    a global business that strives to improve its social and environmental impact
    on communities around the world. We aspire to help people realise their potential
    and meet the needs of the current generation without producing a poorer world
    for our children by compromising the ability of future generations to meet
    their own needs. To meet these aspirations towards our stakeholders, we subscribe
    to the United Nations Global Compact that embraces, supports and enacts a
    range of values in the areas of human rights, labour standards and the environment
    that we can influence. The quality of our footprint on local, regional, national and global societies
  is a key factor when communities decide whether to extend their consent to
  our operations in the long-term. TPG is developing and maintaining policies
  and practices that promote a positive and sustainable environmental and social
  contribution to every community in which we operate. The TPG Code of Business
  Principles underpins this commitment to legal compliance, continuous improvement
  and sustainability. The principles are based on the OECD guidelines and the
  ILO standards, which demonstrates our support for the OECD and ILO standards. Our
    CommunicationsWe are
  committed to communicating and building a dialogue with internal and external
  stakeholders about our challenges and accomplishments in achieving our sustainable
  development and environmental management goals. Our
    Internal AwardWe hold
  an annual competition to celebrate the best internal initiatives and results
  in the field of sustainable development and environmental management. Public
    ReportingWe will
  reflect our progress and future plans in our reporting to enable all our stakeholders
  to understand and monitor our performance and future plans. PROGRESS
    IN 2004 We have
  set forth our corporate sustainability ambition on three consecutive levels.
  In 2004 we took steps in the following areas: 
    global
      standards at the base,
    industry-related
      initiatives in the middle, and
    our
      unique approach at the top. Global
    standardsOur ambition is
    to certify all our fully-owned operations. The following systems for measuring
    actions are implemented across many of our business units. By 2007, we will
    roll these systems out across all business units.


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|Chapter
      09 | Code
      of Business Principles & Corporate Social Responsibility
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
      ISO
        9001 to ensure operational excellence,
      OHSAS
        18001 to ensure a safe workplaces,
      ISO
        14001 to ensure responsible treatment of the environment,
      Investors
        in People to enable our employees to continuously develop,
      SA
        8000 to demonstrate sustainability, particularly in non-OECD countries,
        and
      Global
        Reporting Initiative guidelines to report corporate sustainability performance. Industry-Related
    InitiativesThe second
    tier of our ambition with respect to corporate sustainability calls for us
    to help enhance the reputation of our entire sector. We aim to do that via
    the World Economic Forums logistics and transportation corporate citizenship
    initiative, which comprises companies from across the industry, from sea freighters
    to our company's key global competitors. We have been actively involved in
    this group since mid-2003. Chairmanship
  of the group is awarded annually to a participating company, and in 2004 TPG
  CEO Peter Bakker led the effort. In January, CEOs of participating companies
  signed the Logistics and Transportation Corporate Citizenship Principles and
  called on their peers to place corporate citizenship at the core of their business
  strategies. The principles
  include conducting an open dialogue with key sector stakeholders. The dialogue
  was begun in 2004, when the group asked 182 organisations to provide input on
  those corporate citizenship issues they believe the sector should focus on.
  The dialogue continued with a discussion with customers, which will be followed
  in 2005 by one with employees. Based on this input, involved companies are selecting
  Global Reporting Initiative key performance indicators (KPIs) relevant for the
  sector and encouraging an industry-wide ambition to comply with those KPIs. Our
    Unique Approach: Industry LeadershipThe third
    tier of our corporate sustainability ambition aims to distinguish our company
    from its peers. Here, we have defined three specific areas where we want to
    put our company at the front of the industry: 
    Delivering
      Clean: Supporting the reduction of carbon dioxideemissions.
    Driving
      Safety: Developing a plan to enhance road safety and reduce
      the number of road accidents we are involved in.
    Moving
      the World and Moving our City: Helping the WorldFood
      Programme fight hunger; developing a neighbourhoodsurvey
      in order to make focussed contributions to worthycauses
      in our own communities. Our
    Rating in the Dow-Jones Sustainability IndexIn 2004,
    our company's economic, environmental and social dimensions were reviewed
    and rated by the Dow-Jones Sustainability Index. The results gave our company
    a total sustainability score of 46 out of a possible 100 points. The best-ranked
    company in our industry group achieved a total score of 69.




Partnership
    with United Nations World Food Programme (WFP) The United
    Nations World Food Programme and TPG launched a groundbreaking partnership
    in December 2002 aimed at a single common goal: fighting world hunger. The
    World Food Programme is the world's largest humanitarian aid agency. In 2003,
    it fed over 104 million people in 81 countries, including most of the world's
    refugees and internally displaced people. As the United Nations logistics
    arm for humanitarian aid, it coordinates with other United Nations agencies,
    governments and non-governmental organisations to deliver food to the right
    place, at the right time. Our company is committed to sharing its resources
    and know-how with the United Nations World Food Programme in order to make
    a lifesaving difference. 
    The partnership with the World Food Programme forms the cornerstone of our
    commitment to the community on a global scale. The dedication and enthusiasm
    of our employees is helping the World Food Programme take on one of the greatest
    logistical challenges of all: helping to feed the world. Our partnership with World Food Programme consists of three levels of support and resulted in the following achievements in 2004: 
        Knowledge
          transfer  applying our (logistics) knowledge to enhance, for example,
          the World Food Programme's supply chain management capabilities, increase
          its fleet management systems and provide air operations training for
          its officials.
        Hands-on
          support  providing organisational expertise and logistical assistance
          in order to respond to emergencies more effectively. In 2004, 32 of
          our employees each volunteered to spend three months building kitchens,
          latrines and classrooms, among other projects, as part of the World
          Food Programme's Global School Feeding Campaign. In addition, in 2004
          we donated €1.5 million in in-kind support to the World Food Programme's
          disaster relief efforts in the region. The funds fall under the Emergency
          Response initiative of the Moving the World programme and will be used
          to cover the costs of transport, warehousing and any TNT personnel deployed
          in direct support of the World Food Programme in the region. In
          January 2005 our employees donated €0.8 million with respect to
          which we made a matching grant of €0.8 million in cash.

      Funding
          & Awareness  helping raise funds and awareness for the World Food
          Programme. In 2004, our employees raised almost €1.8 million in
          cash donations for the agency's school feeding projects, with respect
          to which we made an additional grant of €1 million. We are also
          helping the World Food Programme to attract new corporate partners and
          to increase awareness in both the public and private sectors. In 2004,
    we invested a total of €8.7 million in the partnership with the World
    Food Programme of which €7.2 million came in the form of in-kind services
    and knowledge transfer projects and €1.5 million as a cash donation.


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|10                 |  | 
|------------------ |  | 
|                   | 
|Risk
      factors | 
|                   | 



Holiday
  atomosphere, Sanghai

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|Chapter
      10 | Risk
      factors
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Cautionary
    statement regarding forward looking statements Except
    for historical statements and discussions, statements contained in this annual
    report constitute forward looking statements within the meaning
    of Section 27A of the US Securities Act of 1933 and Section 21E of the US
    Securities Exchange Act of 1934. Other documents of TPG N.V. filed with or
    furnished to the Securities and Exchange Commission, including those incorporated
    by reference in this annual report, may also include forward looking statements,
    and other written or oral forward looking statements have been made and may
    in the future be made from time to time by us or on our behalf. Forward-looking
    statements include, without limitation, statements concerning our financial
    position and business strategy, our future results of operations, the impact
    of regulatory initiatives on our operations, our share of new and




existing
  markets, general industry and macro-economic growth rates and our performance
  relative to these growth rates. Forward looking statements generally can be
  identified by the use of terms such as aim, hope, ambition, may,
  will, expect, intend, estimate,
  anticipate, believe, plan, seek,
  continue or similar terms. By their
  nature, forward-looking statements involve risk and uncertainty because they
  relate to events and depend on circumstances that will occur in the future.
  These forward-looking statements are based on current expectations, estimates,
  forecasts and projections about the industries in which TPG operates, managements
  beliefs and assumptions made by management about future events. These forward
  looking statements involve known and unknown risks, uncertainties and other
  factors, many of which are outside of our control, that may cause actual results
  to differ materially from any future results expressed in or implied by the
  forward looking statements.




Important
  factors that may cause such differences include, but are not limited to:


      substitution
        of alternative methods for delivering informationfor
        our mail and express services,
      regulatory
        developments and changes, including with respectto
        the levels of tariffs, the scope of mandatory and reservedservices,
        quality standard, liberalisation in the Dutch andEuropean
        postal markets and the outcome of pendingregulatory
        proceedings,
      competition
        in the mail, express and logistics businesses,
      decisions
        of competition authorities regarding proposed jointventures
        or acquisitions,
      costs
        of complying with governmental regulations,
      general
        economic conditions, government and regulatorypolicies
        and business conditions in the markets served byus,
        including adverse effects of terrorist attacks, use of ourdelivery
        capabilities by criminals, anthrax incidents, war or theoutbreak
        of hostilities or epidemic diseases,
      higher
        costs of or the impossibility to get insurance coveragefor
        future claims caused by acts of war, terrorism, sabotage,hijacking
        or other similar perils,
      the
        effect of an economic downturn and other risks andtrends
        in the world economy and the timing, speed andmagnitude
        of any economic recovery,
      our
        ability to achieve cost savings and realise productivityimprovements
        and the success of investments, joint venturesand
        alliances,
      fluctuations
        in fuel costs,
      our
        ability to increase our fuel surcharge in response to risingfuel
        prices due to competitive pressures,
      changes
        in currency and interest rates,





    changes
      in our credit rating and their impact on our financingcosts
      and requirements,
    changes
      in our relationship with the State of the Netherlands,
    disruptions
      at key sites,
    incidents
      resulting from the transport of hazardous materials,
    mismatches
      between our investment in infrastructure(aircraft,
      depots and trucks) and our actual capacity needs,
    strikes,
      work stoppages and work slowdowns and increases inemployee
      costs,
    costs
      of completing acquisitions or divestitures and integratingnewly-
      acquired businesses,
    changes
      to the international conventions regarding thelimitation
      of liability for the carriage of goods,
    significant
      changes in the volumes of shipments transportedthrough
      our network, the mix of services purchased by ourcustomers
      or the prices we obtain for our services,
    market
      acceptance of our new service and growth initiatives,
    changes
      in customer demand patterns,
    the
      impact of technology developments on our operationsand
      on demand for our services,
    disruptions
      to our technology infrastructure, including ourcomputer
      systems and website,
    our
      ability to maintain aviation rights in importantinternational
      markets,
    adverse
      weather conditions,
      if
        our subcontractors employees were to be considered ouremployees,
      changes
        in tax laws or their interpretation by authorities, and disagreements
        with authorities about our interpretations of tax laws,
      changes
        in accounting rules causing different valuation ofassets
        and liabilities, and
      higher
        costs related to implementation of regulations such as the US Sarbanes-Oxley
        Act.


For further
    discussion of these and other factors, see the Risk factors below,
    chapter 2 - Information on the company, chapter 3 - The
    mail division, chapter 4 - The express division, chapter
    5 - The logistics division and chapter 11 - Other financial
    information on the company.




As a result of these and other factors, no assurance can be given as to our
    future results and achievements. You are cautioned not to put undue reliance
    on these forward looking statements, which are neither predictions nor guarantees
    of future events or circumstances. We disclaim any intention or obligation
    to update or revise any forward looking statements, whether as a result of


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new
    information, future events or circumstances or otherwise. All subsequent written
    and oral forward looking statements attributable to us or persons acting on
    our behalf are similarly qualified. Important
    Risk FactorsYou should
    consider the risks and uncertainties described below and other information
    in this annual report. The
    increasing substitution of alternatives for our mail delivery services could
    reduce the revenues and profitability of our mail business and adversely affect
    our revenues and profitability. Our mail
  business is an integral part of our total business and during 2004 represented
  30.9% of our total operating revenue and 71.0% of our total operating income.
  Our postal mail business delivers information such as letters and bank statements
  as well as printed matter (such as direct mail and periodicals). Technologies
  such as facsimiles, e-mails and the Internet (e.g. electronic banking) can be
  used to send or make available such information faster and, in many cases, at
  a lower price than traditional mail services. Due to increased substitution,
  among other factors, traditional mail volumes in the Netherlands have decreased
  in recent years, and we expect this downward trend in mail volume to continue
  in the next years. An increase in the use of these substitute technologies would
  likely result in a further decrease in the use of our traditional mail services.
  If substitution continues on a large scale, it could adversely affect the volumes,
  revenues and profitability of our mail business and our company as a whole.
  Substitution could also adversely affect volumes, revenues and profitability
  of our express business. The
    further liberalisation of the Dutch and EU postal markets could adversely
    affect our revenues and profitability. In
    the Netherlands, the process of liberalisation of the postal market, which
    began in the late 1980s, is continuing. This presents a number of risks to
    our mail business. Pursuant to the European Postal Directive, as of 1 January
    2006 the restrictions that reserve the provision of certain postal services
    exclusively to us (the reserved postal services) will be reduced to 50 grammes.
    In 2004, the Dutch Minister of Economic Affairs published his vision on the
    postal market in the Netherlands. As discussed in greater detail in chapter
    13 - Regulatory environment, this vision addresses a number of
    issues that are directly relevant to our business, including full market liberalisation,
    price controls and the scope of the mandatory postal services. This
  vision will be the basis for a new Postal Act, which legislation may adversely
  affect our business, revenues and profitability. For example, a possible expanded
  role for OPTA in price determination for competitors might have an adverse effect
  on our competitive position. Intensifying
    competition may put downward pressure on prices and could have an adverse
    effect on our revenues and profitability. We compete
    with many companies and services on a local, regional, European and international
    level. Our competitors




include
    the incumbent postal operators of other nations in Europe and the United States,
    motor carriers, express companies, logistics service providers, freight forwarders,
    air couriers and others. We expect competition to intensify in the future
    in all of our three business areas. Targeted, aggressive actions by competitors
    may negatively impact our prices. In the Netherlands, our present market share
    in the mail business results from being the former government operated monopoly.
    We expect our market share to erode due to the relatively recent entrance
    of serious competitors and, on the longer term, the continuing liberalisation
    of the Dutch mail regulatory regime. In Europe, we face heightened competition
    in our express business. Our mail division strategy focuses on the quality
    of services rather than on price discounts. Nevertheless, increased competition
    may force prices for our services down and thus cause our revenues and profits
    to decrease. Increased competition in the logistics business may lead to pressure
    on the price we charge our customers and the ability of our logistics business
    to capture value over the life of its customer contracts. The trends
  towards liberalisation of European postal markets may also result in further
  consolidation within the mail and express businesses as competitors seek to
  expand into newly opened geographic markets and former state postal monopolies
  enter into acquisitions or alliances in order to expand the range and geographic
  coverage of their services. In logistics, we expect the present trend towards
  consolidation to continue. Consolidation within the mail, express and logistics
  businesses may result in increased competition and, as a consequence, adversely
  affect our business, revenues and profitability. A
    sustained economic downturn could adversely affect our business, results of
    operations and financial condition. Developments
  and trends in the world economy may have a material adverse effect on our financial
  condition and results of operations. For example, a sustained decline in the
  international economy, which slowed as of 2001 and continued throughout 2004,
  typically results in a decline in the demand for express delivery services.
  Because our express delivery business has high fixed costs and greatly depends
  on high volume to recover such costs, a global economic downturn could have
  a material adverse effect on the results of our express delivery business, and
  this would adversely affect the results of our business as a whole. In addition,
  a continued economic downturn could lead to our customers asking for price reductions
  that could adversely affect our margins. A slow economy may also result in a
  continued decline in demand for direct mail in the Netherlands. Unfavourable
    decisions of competition authorities concerning joint ventures or acquisitions
    could restrict our growth and ability to compete in the market for mail, express
    and logistics services. As a
    part of our strategy to expand our businesses, from time to time we seek alliances
    with other postal operators, express integrators and providers of logistics
    services, acquire shares in companies providing these services or acquire
    these businesses. Any approval of a joint venture or an acquisition of shares
    or a business by competition authorities may contain certain restrictions
    or conditions with respect to the intended transaction. For example, in 2001,
    the Merger Task Force of the European Community required that we divest our
    Dutch cross


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|Chapter
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border
    mail business operated under the TNT International Mail brand in order to
    obtain the approval for the establishment of our 51% owned subsidiary Spring,
    with Royal Mail Group and Singapore Post. We may
  not be able to implement a transaction as contemplated in compliance with any
  restrictions or conditions imposed by the Merger Task Force of the European
  Community or national competition boards, and these restrictions or conditions
  may negatively affect the revenues and profitability of joint ventures or acquired
  businesses. If we are unable to implement a foreseen transaction under the restrictions
  or conditions applicable, or if the intended transaction is prohibited, we may
  be unable to develop alternative approaches to expand our business geographically.
  This would have an adverse effect on our ability to pursue our growth strategy
  and to achieve a recognised world leadership position in the mail, express and
  logistics service businesses. Compliance
    with regulations may result in a significant cost increase and limit our flexibility
    in operating our business and negatively affect our revenues and profitability. We are
  subject to a wide variety of complex and stringent aviation, transportation,
  environment, employment and other laws and regulations in the Netherlands, the
  European Union and the other jurisdictions where we operate. Existing regulations
  are subject to constant revision, and new regulations are constantly being adopted.
  The interpretation and enforcement of such laws and regulations vary and could
  limit our ability to provide our services in certain markets. It is uncertain
  whether existing laws and regulations or future regulatory, judicial and legislative
  changes will have a material adverse effect on us, whether national or international
  regulators, competition authorities or third parties will raise material issues
  with regard to our compliance or non-compliance with applicable laws and regulations,
  or whether other regulatory activities will have a material adverse effect on
  our business, revenues and profitability. For example,
    in our express businesses, we operate various types of aircraft throughout
    Europe and are required to comply with a wide variety of international and
    national laws and regulations. In some of the markets in which we operate,
    regulations have been adopted (or proposed) which impose night time take-off
    and landing restrictions, aircraft capacity limitations and similar measures
    in order to address the concerns of local constituencies. Night-time operations
    at our Liège, Belgium air express hub have been challenged. A curtailment
    of night-time take-offs and landings at any of our key facilities, such as
    Liège, would likely harm our business. Some governments have imposed
    stringent new security measures on air carriers that could result in additional
    operating costs. Our failure to comply with or the costs of complying with
    existing or future government regulation, could negatively affect our revenues
    and profitability. In addition, existing or future regulation on transport
    of goods may negatively affect our ability to perform our services to our
    customers or may increase the costs of providing our services. In our mail
    business in the Netherlands, from time to time discussions come up whether
    or not we should provide access to our mailboxes as a collecting point for
    our competitors. Our competitors




currently
    focus on large volume clients and do not compete in the consumers market.
    Change in this view of competitors and support of this view by the regulator,
    could negatively affect costs and profitability. We
    are exposed to various global and local risks that may have a material adverse
    effect on our financial condition and results of operations. We operate
  around the globe and provide a worldwide service with facilities in many countries,
  which means that we are confronted with complex legal and regulatory requirements
  in many jurisdictions. These include tariffs, trade barriers and requirements
  relating to withholding taxes on remittances and other payments. Our international
  operations are also exposed to local business risks and challenges. We face
  potential difficulties in staffing and managing local operations, succession
  coverage of key individuals and talent management. We are exposed to the credit
  risks of local customers and distributors. These difficulties will increase
  as we pursue our strategy to expand our operations to new markets. Our overall
  success as a global business depends, in part, on our ability to succeed in
  different economic, social and political conditions. We may not succeed in developing
  and implementing policies and strategies that are effective in the locations
  where our business is conducted. Failure to do so may have a material adverse
  effect on our financial condition and results of operations. We
    are exposed to currency fluctuations that could have an adverse effect on
    our financial condition and results of operations and the comparability of
    our financial statements. We report
  the financial condition and results of operations of our businesses in the relevant
  local currency and then translate them into euro at applicable exchange rates
  so that these results can be included in our financial statements. The exchange
  rates between these currencies and the euro may fluctuate substantially. We
  generate a significant part of our total revenues and our operating expenses
  in currencies other than euro. As we expand our international operations, we
  expect that an even greater portion of our revenues and costs will be denominated
  in non-euro currencies. In addition, the value of the euro has fluctuated significantly
  since its introduction on 1 January 1999. As a result, currency fluctuations
  could have a material adverse effect on our financial condition and results
  of operations in any given reporting period, and may significantly affect the
  comparability of our financial statements from period to period. Although we
  generally enter into hedging arrangements and other contracts in order to attempt
  to reduce our exposure to currency fluctuations, these measures may be inadequate
  or may subject us to increased operating costs. A
    decline in the value of the euro could reduce the value of your investment
    and any dividends you receive. Since
  its introduction on 1 January 1999, the value of the euro relative to the dollar
  has fluctuated widely. Fluctuations in the exchange rate between the US dollar
  and the euro will affect the US dollar equivalent of the euro price per American
  Depositary Receipt (ADR) and the US dollar value of any cash dividends. If the
  value of the euro relative to the US dollar declines, the market price of our
  ADRs is likely to be adversely affected. Any


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decline
    in the value of the euro would also adversely affect the US dollar amounts
    received by shareholders on the conversion of any cash dividends paid in euro
    on our ADRs. A
    downgrade in our credit rating may increase our financing costs and harm our
    ability to finance our operations and acquisitions, which could negatively
    affect our revenues and profitability. A downgrade
  in our credit rating may negatively affect our ability to obtain funds from
  financial institutions and banks and increase our financing costs by increasing
  the interest rates of our outstanding debt or the interest rates at which we
  are able to refinance existing debt or incur new debt. On 11 June 2004, Standard
  & Poors Ratings Services re-affirmed our A long-term and
  A-1 short-term corporate credit ratings, but revised its outlook
  for our long-term rating from negative to stable. For
  Moodys Investor Services Ltd. our current long-term rating is A1
  and our short-term rating is P-1. The
    State of the Netherlands is our largest shareholder, which may
    adversely affect the value of your investment. The State
  of the Netherlands is presently our largest shareholder, holding approximately
  19% of our outstanding ordinary shares. The State announced in March 2001 its
  intention to limit its involvement with us and, as part of this, plans to reduce
  its shareholdings to approximately 10% of our outstanding shares. Future substantial
  sales by the State of our ordinary shares, or the availability of large amounts
  of our ordinary shares for sale, may adversely affect the market price of the
  shares and the value of your investment. It may also negatively affect our ability
  to raise additional capital by offering new ordinary shares. The
    State of the Netherlands has the right to approve important decisions concerning
    our business. Besides
    being our largest shareholder, the State currently has a number of rights
    under our articles of association and other arrangements with us that provide
    it with significant influence over us. For example, the State has a veto right
    (See note 26 to the consolidated financial statements) over many important
    decisions concerning our business, including decisions about fundamental changes
    in our business and our corporate structure. The State has committed itself
    to exercise its influence to safeguard its general interest in having an efficiently
    operating Dutch postal system and also to protect its financial interest as
    a shareholder. The interests of the State may, however, differ from the interests
    of our other investors. Among other things, the State may exercise its rights
    to delay, deter or prevent a potential change of our control or the exercise
    of influence by another large shareholder. The States substantial ownership
    and the existence of these special rights may discourage bids for our ordinary
    shares by third parties. This could adversely affect the price of our shares
    and the value of your investment.




We depend on a number of infrastructure facilities for which we have limited
    or no back-up facilities, so if operations were disrupted at one or more of
    these facilities, our business and operating results would suffer. A portion
    of our infrastructure is concentrated in single locations for which we have
    limited or no back-up facilities or very expensive fall back scenarios in
    the event of a disruption of operations. An example of this is our European
    express air hub in Liège, Belgium. The operation of our facilities
    involves many risks, including power failures, the breakdown, failure or substandard
    performance of equipment, the possibility of work stoppages or civil unrest,
    natural disasters, catastrophic incidents such as airplane crashes, fires
    and explosions and normal hazards associated with operating a complex infrastructure.
    If there were a significant interruption of operations at one or more of our
    key facilities and operations could not be transferred or only at very high
    costs to other locations we might not meet the needs of our customers, and
    our business and operating results would be adversely affected. Incidents
    resulting from our transport of hazardous materials or a major incident involving
    our sorting centers, warehousing facilities, air or road fleet may adversely
    affect our revenues, profitability and reputation. We transport
  hazardous materials for a number of our customers in the automotive, biomedical
  and chemical industries. The hazardous consignments include airbags, batteries,
  paint, blood samples, medical substances, dry ice and chemicals. As part of
  our express and mail services, we may also transport hazardous or dangerous
  goods without having been notified about the nature of the goods we transport.
  We face a number of risks by transporting these materials, such as personal
  injury or loss of life, severe damage to and destruction of property and equipment
  and environmental damage. Incidents involving these materials could result from
  a variety of causes including sabotage, terrorism, accidents or the improper
  packaging or handling of the materials. If a significant incident occurred our
  operations could be disrupted and we could be subject to a wide range of potentially
  large civil and criminal liabilities. For example, an incident occurred at the
  end of 2004 in our Liège hub, involving undeclared goods, which closed
  down the operations in the hub for a few hours, although nobody was hurt. This
  could negatively affect our revenues and profitability. A significant incident,
  particularly a well-publicised incident involving potential or actual harm to
  members of the public, could also hurt our reputation. As an
  owner and operator of a large fleet of aircraft and trucks we are involved in
  activities which expose us to liability in the case of a major air or road incident,
  not only for our employees, facilities and third party property, but also for
  the general public. An incident involving one of our aircraft or vehicles could
  cause significant loss of life and property and could adversely affect our reputation
  and affect the price of our shares adversely. A major
  incident caused by hazardous materials could lead to additional measures or
  restrictions imposed on us by local or governmental authorities. Such additional
  measures or restrictions could disrupt our processes and may lead to additional
  operating costs.


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|Chapter
      10 | Risk
      factors
|---------------- | ------------------

---

We
    may not accurately forecast our futureInfrastructure
    requirements, which could result in excess capacity or insufficient capacity
    and negatively affect our revenues and profitability. In order
  to maintain our market position and grow our business we must make large on-going
  investments in infrastructure such as aircraft, trucks and depots. In our logistics
  business we are at times required to make large investments in order to meet
  our obligations under agreements with major customers. For example, we are currently
  considering investments in our road and air network for a significant amount.
  These investments often require substantial lead times and involve significant
  fixed costs. We base our infrastructure investments on forecasts of our future
  capacity requirements. It may be difficult to forecast accurately our future
  requirements, since they are based on a large number of factors, including factors
  beyond our control such as general economic conditions and changes in governmental
  regulation. As a consequence, there may be a mismatch between our investment
  and our actual requirements. If we underestimate our future capacity requirements
  we will not be able to meet the needs of our customers and could lose business,
  market share, revenues and profits. If we overestimate our future needs, or
  if major contracts are cancelled by customers, we will experience costly excess
  capacity and this could adversely affect our profitability. Strikes,
    work stoppages and work slowdowns by our employees and the terms of new collective
    labour agreements could negatively affect our revenues and profitability. The success
  of our business also depends upon avoiding strikes, work stoppages and slowdowns
  by our employees. Industrial action by large unions or even relatively small
  but key groups of our employees, such as airline pilots, could seriously disrupt
  our operations. Industrial action may occur for reasons unrelated to our collective
  labour agreements with a particular union or group of employees. For example,
  our employees may refuse crossing picket lines established by other unions from
  other companies. Our collective labour agreement with approximately 60,000 employees
  in the Netherlands is subject to a renewal in May 2005. If we are not able to
  renew this agreement or other key agreements with our employees, and a strike,
  work stoppage or work slowdown occurs, our revenues and profitability could
  be adversely affected. Our business
  may also be negatively affected by the terms of collective labour agreements
  that we conclude with our employees. These terms could include increases in
  compensation and employee benefits, work rules less flexible than those of our
  competitors, and limitations on future workforce reductions. Our profitability
  could suffer if we are not able to conclude collective labour agreements on
  satisfactory terms with our employees.




The
    integration of our newly acquired businesses involves significant challenges
    and costs and may not be successful, which could adversely affect our operating
    results. We have
  entered into a number of significant acquisitions in recent years, most recently
  our acquisition of Wilson Logistics in 2004, and growth through acquisitions
  remains a key element of our strategy. The integration of newly acquired businesses
  involves inherent costs and uncertainties that include the effect on the acquired
  businesses of integration into our organisation and culture and the availability
  of and demands on management resources to oversee the integration and manage
  the newly acquired businesses. The integration of the international companies
  we have acquired, particularly in the logistics division, has resulted in significant
  challenges and costs in the areas of accounting, finance, operations, IT, strategy
  and human resources. If an existing or future integration effort is delayed
  or is not successful we may incur additional costs, the value of our investment
  in the acquired company may decrease significantly and our growth strategy may
  not be successfully achieved. Any material delays, unexpected costs or other
  problems encountered in connection with integrating newly acquired businesses
  could have an adverse effect on our revenues and profitability. The
    legal concept of limited liability for loss or damage of goods we carry is
    increasingly being challenged and this may result in increased exposure to
    claims. We transport
  goods under the conditions of the international conventions in respect of the
  carriage of goods by air (Warsaw Convention) and by road (CMR Conventions).
  These conventions contain provisions that limit our liability in the event that
  we lose or damage shipments belonging to our customers. In the past this principle
  was generally accepted as normal business practice but in recent years the courts
  and regulators in an increasing number of jurisdictions are more sympathetic
  to allegations of gross negligence or lack of due care,
  thereby setting aside the principles of limited liability. This trend exposes
  us to more and increased loss and damage claims. Furthermore, a number of major
  customers are no longer prepared to accept these established limits of liability
  and these factors, together with the increased value of the goods we carry,
  have resulted in a significant increase in our financial exposure to claims.
  If this trend continues, it could adversely affect our profitability. Determination
    that our subcontractors were to be considered our employees would affect
    our current business model, causing our operating expenses to rise and our
    net income to suffer. In various
    jurisdictions, we use subcontractors to perform aspects of our business, such
    as picking up and delivering parcels, as is common practice in our industry.
    In certain jurisdictions, the authorities have brought criminal and/or civil
    actions alleging that our subcontractors or their employees are to be regarded
    as our own unregistered employees. In particular, several actions are currently
    pending in France. See chapter 12, note 15  Legal proceedings.
    If these allegations were upheld by a court, we would incur, in addition to
    criminal fines, costs such as social security contributions, wage taxes and
    overtime payments in respect of such employees. Subcontractors could also
    bring civil actions seeking the re-characterisation of subcontractor relationships
    in employment contracts. If these actions were


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successful,
    our operating expenses would rise and our net income would suffer. Changes
    in tax laws or their interpretation by authorities, and disagreements with
    authorities about our interpretations of tax laws, could adversely affect
    our financial position and results of operations. We operate globally
    and our earnings are subject to taxation in many jurisdictions at different
    rates. Relevant tax authorities may disagree with our interpretation and application
    in practice of tax laws. We periodically estimate our probable tax obligations
    in the countries in which we conduct our business. If the tax laws change,
    or if there is a successful challenge of our tax position, our interpretation
    and application of tax laws in practice, we will need to recognise additional
    tax liabilities, which may include interest and penalties. This would adversely
    affect our financial position and results of operations. See notes 14 and
    21 to our consolidated financial statements in chapter 12. Our
    ongoing issues with the UK Inland Revenue may lead to material additional
    expenses, which would adversely affect our net income. In February and March 2004, our audit committee, on behalf of our Supervisory Board, conducted an independent investigation regarding representations made to
the UK Inland Revenue and to our external auditors, PricewaterhouseCoopers, with respect to certain UK tax matters originally arising in the late 1990s relating to one of our UK subsidiaries. In addition to this investigation, our audit committee,
with the assistance of independent tax advisors, conducted a review of other UK tax matters that arose from the same period. The investigations conducted by our audit committee, with the assistance of independent legal counsel, concluded that not
all relevant details in connection with these tax matters were adequately disclosed to the UK Inland Revenue and PricewaterhouseCoopers. In August 2004, we submitted a report to the UK Inland Revenue in relation to these UK tax issues pursuant to a procedure under UK law designed to ensure full
disclosure of all relevant information to the UK Inland Revenue. We will be providing an addendum to our original report with additional information, and are continuing discussions with the UK Inland Revenue in connection with their related
comprehensive investigation. The outcome of the UK Inland Revenues investigation is not certain, and we do not expect these matters with the UK Inland Revenue will be resolved before 2006. The UK Inland Revenue could assess further taxes, penalties and interest that would exceed the amounts we have accrued in our financial statements. If the
actual taxes, penalties and interest imposed exceed the amounts we have accrued, it could reduce our net income. Our
    restructurings of operations and other measures we take to reduce
    costs may not achieve the results we intend and may adversely affect our revenues
    and profitability. From
    time to time we restructure, redesign or integrate various aspects of our
    operations in an effort to achieve cost savings, flexibility and other efficiencies.
    For example, in our mail division we have initiated a comprehensive cost flexibility
    programme that includes a wide range of efficiency measures designed to offset




the
    ongoing decline in mail volumes in the Netherlands. In 2003, we put in place
    a comprehensive programme in our logistics division to standardise operating
    and business development practices to address operational performance issues
    and establish more stringent financial control. In early 2004, we introduced
    a new corporate programme called TPG-1 that is expected to achieve savings
    over the next few years by integrating some customer facing and back office
    functions across our divisions. Our restructuring of operations and other
    cost reducing measures may not achieve the results we intend and may invoke
    restructuring and other costs and changes to our business that adversely affect
    our revenues and profitability. A
    downturn in capital markets may decrease the value of investments made in
    these markets for our pension schemes, which in turn could require significant
    additional funding by us. Our main
  Dutch defined benefit pension scheme has total assets of over €3 billion,
  some of which are funded by investments held in equities with a view to benefiting
  from capital appreciation. The value of these securities may be volatile and
  a downturn in the capital markets could significantly reduce the value of these
  assets. Should the returns on these investments fall below the minimum funding
  requirements prescribed by De Nederlandsche Bank, into which the Independent
  Supervisory Authority for Pensions and Insurance has been merged during 2004,
  whether from declines in the overall equity markets or because the investments
  underperform the markets, we will be required to increase our contributions
  to the funds. If the assets were to lose a substantial amount of their value,
  we might be required to make large payments into the funds, which would adversely
  affect our liquidity over a number of years. Employee
    misconduct could result in financial losses, the loss of clients and fines
    or other sanctions by the governments of the countries in which we do business. We may
  be unable to prevent our employees from engaging in misconduct, fraud or other
  improper activities that could adversely affect our business and reputation.
  Misconduct could include the failure to comply with applicable law or our business
  principles. The precautions we take to prevent and detect this activity may
  not be effective. Our investigations of suspected fraudulent activity could
  expose us to additional sanctions if an investigation is ineffective or hampered
  by local legal restrictions. As a result of employee misconduct, we could face
  fines and penalties imposed by governments in the countries in which we do business.
  In addition, negative publicity in relation to employee misconduct could negatively
  affect our reputation, harm our ability to recruit employees and managers and
  reduce our revenues. Fines and sanctions; any necessary financial restatements
  and resulting liabilities could reduce our profitability.


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|Chapter
      10 | Risk
      factors
|---------------- | ------------------

---

Changes
    in markets and our business plans have resulted and may in the future result
    in substantial write-downs of the carrying value of our assets, thereby reducing
    our net income. Our regular
  review of the carrying value of our assets (including our intangible, tangible
  and financial fixed assets) has resulted in significant impairments, and we
  may in the future be required to
recognise
    additional impairment charges. Events in the markets where we conduct our
    businesses, including significant declines in stock prices, market capitalisations
    and credit ratings of market participants, as well as our ongoing review and
    refinement of our business plans, have resulted and may result in further
    substantial impairment write-downs of our intangible or other assets at any
    time in the future. In addition,
  we have been and may be required in the future to recognise increased depreciation
  and amortisation charges if we determine that the useful lives of our fixed
  assets are shorter than we originally expected. Further such changes would have
  the effect of reducing our net income. We
    may be unable to comply in a timely manner with the requirements of the Sarbanes-Oxley
    Act relating to the assessment by us and PwC of the effectiveness of our internal
    controls over financial reporting, and our assessment may identify material
    weaknesses and may result in an attestation with an adverse opinion from our
    auditors, each of which could adversely affect our reputation and share price. Section
  404 of the Sarbanes-Oxley Act of 2002 and related regulations require us to
  include in our future annual reports an assessment by management of the effectiveness
  of our internal control over financial reporting. In addition, PricewaterhouseCoopers,
  our independent registered public accounting firm, must attest to and report
  on managements assessment. This requirement is currently expected first
  to apply to our annual report on Form 20-F for our fiscal year ending December
  31, 2005. We are evaluating our internal control systems to allow our management
  to report on, and our auditors to attest to, our internal control over financial
  reporting. As a result, we have incurred additional expenses in 2004 and a diversion
  of our managements time, and we expect this to continue at least into
  financial year 2005. While
    we have dedicated a significant amount of time and resources to ensuring compliance,
    there can be no assurance that we or our auditors will complete the necessary
    work to comply with all aspects of Section 404 and related regulations in
    a timely manner. If we have a material weakness in our internal control over
    financial reporting, we may be unable to prevent or detect material misstatements
    in a timely manner. Any failure to implement required new or improved controls,
    or difficulties encountered in their implementation, could harm our operating
    results or cause us to fail to meet our reporting obligations. If the assessment
    of our internal control identifies material weaknesses that must be disclosed,
    we may receive an attestation with an adverse opinion from our auditors as
    to the adequacy of our internal control over financial reporting. Furthermore,
    potential acquisitions of businesses that are currently not in compliance
    with Section 404 requirements could lead to disclosures on currently unforeseen
    deficiencies in our internal control over financial reporting. This could
    adversely affect our reputation and




our
    financial results. Each of these consequences could reduce the markets
    confidence in our financial statements and negatively affect the price of
    our shares. The
    continuation of the operational difficulties faced by our operations in France
    may divert significant, long-term management attention from other
    important areas of our business. Our logistics
  operations in France have faced continued difficult conditions for several years,
  with even deeper margin pressure in 2003 and 2004. Our transport activities
  are under severe competitive cost pressure by new entrants from those Eastern
  European countries that recently joined the European Union. In addition, the
  volumes being handled in many industries in France, including the retail market,
  continue to be suppressed by low economic growth. In this difficult environment,
  our efforts to turn around our business in France as part of our Transformation
  through Standardisation programme have not sufficed to bring this business back
  to profitability. Remedying this situation may divert substantial senior management
  time and attention from other areas of our business, which could impair our
  ability to operate effectively, negatively affect our competitive position and
  profitability and involve additional restructuring costs. A
    sustained economic downturn or loss of a strategic customer could adversely
    affect our business and results of operations. Developments
  and trends in the world economy and a continued slowdown in the target sectors
  we operate our business in may have a material adverse effect on our financial
  condition and results of operations. For example, a decline in the automotive
  industry, one of our main target sectors, or loss of a strategic customer could
  result in a decline in the demand for our logistics services. Because a significant
  portion of the customers of our logistics business are automotive companies,
  a decline in the demand from our automotive customers may have a material adverse
  effect on our logistics business.


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|11                                                     |  | 
|------------------------------------------------------ |  | 
|                                                       | 
|Other
      financial information
      on the company | 
|                                                       | 



Shanghai
  Skyline

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|Chapter
      11 | Other
      financial information on the company
|---------------- | ------------------------------------------------

---

|                                                |     
|----------------------------------------------- | ----
|                                                |     
|                                                |     
|                                                | 2004
|                                                |     
|                                                |     
|                                                |     
|Fixed
      assets                              |     
|Current
      assets                            |     
|                                                |     
|Total
      assets                              |     
|                                                |     
|Group
      equity                              |     
|Deferred
      tax liabilities                  |     
|Provisions
      for pension liabilities        |     
|Other
      provisions                          |     
|Long-term
      liabilities                     |     
|Current
      liabilities                       |     
|                                                |     
|Total
      liabilities and group equity        |     
|                                                |     
|Return
      on assets2                         |     
|Return
      on average total capital3          |     
|Net
      return on equity4                     |     
|Gearing
      at year end5                      |     
|Interest
      cover6                           |     
|                                                |     
|Net
      cash provided by operating activities |     
|Net
      cash used in investing activities     |     
|Net
      cash used by financing activities     |     
|                                                |     
|Changes
      in cash and cash equivalents7     |     
|                                                |     
|                                                |     
|Cash
      conversion efficiency8               |     
|                                                |     



|(in
      millions, except percentages)
|---------------------------------------
|1.                                     
|                                       
|2.                                     
|3.                                     
|4.                                     
|5.                                     
|6.                                     
|7.                                     
|8.                                     
|                                       
|                                       

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---

Cash
    flow dataCash and cash equivalents totalled €633 million at 31 December 2004,
    compared to €470 million at 31 December 2003. The following table provides
    a summary of cash flows for the years ended 31 December 2004, 2003 and 2002:






|                                                                            |                                   |       |   |       |   |          |   |      |  
|--------------------------------------------------------------------------- | --------------------------------- | ----- | - | ----- | - | -------- | - | ---- | -
|                                                                            | Year
        ended at 31 December
|                                                                            |                                   |       |   |       |   |          |   |      |  
|                                                                            | 2004                              | %     |   | 2003  |   | %        |   | 2002 |  
|                                                                            |                                   |       |   |       |   |          |   |      |  
|                                                                            |                                   |       |   |       |   | VARIANCE |   |      |  
|                                                                            |                                   |       |   |       |   |          |   |      |  
|                                                                            |                                   | US$   |   | €     |   |          |   | €    |  
|                                                                            |                                   |       |   |       |   |          |   |      |  
|Net
      cash provided by operating activities                             |                                   | 1,354 |   | 1,000 |   | 6.7      |   | 937  |  
|                                                                            |                                   |       |   |       |   |          |   |      |  
|Net
      cash used in investing activities                                 |                                   |       |   |       |   |          |   |      |  
|Net
      cash used for acquisitions and disposals                          |                                   | (309  | ) | (228  | ) | (240.3   | ) | (67  | )
|Net
      cash used for capital investments and disposals                   |                                   | (420  | ) | (310  | ) | (0.6     | ) | (308 | )
|Net
      cash used for other investing activities                          |                                   | 271   |   | 200   |   | 9,900.0  |   | 2    |  
|                                                                            |                                   |       |   |       |   |          |   |      |  
|Net
      cash used by financing activities                                 |                                   |       |   |       |   |          |   |      |  
|Net
      cash used for dividends and other changes in shareholders equity |                                   | (521  | ) | (385  | ) | (88.7    | ) | (204 | )
|Net
      cash from debt financing activities                               |                                   | (156  | ) | (115  | ) | 50.4     |   | (232 | )
|                                                                            |                                   |       |   |       |   |          |   |      |  
|Changes
      in cash and cash equivalents1                                 |                                   | 219   |   | 162   |   | 26.6     |   | 128  |  
|                                                                            |                                   |       |   |       |   |          |   |      |  

|(in
      millions, except percentages)
|---------------------------------------
|1.                                     



NET
    CASH PROVIDED BY OPERATING ACTIVITIES2004Net cash
    provided by operating activities was €1,000 million, which is 7% above
    last year (€937 million). Net income contributed €667 million or
    €1,200 million if corrected for the non-cash impact of depreciation,
    amortisation and impairments, an increase of €189 million or 19% to last
    year (€1,011 million). The
    change in deferred taxes of €82 million was a non-cash item that was
    primarily attributable to tax deductible pension payments in 2004 and utilisation
    of tax losses carried forward, partly offset by an adjustment to our net deferred
    tax position, due to the decrease of the Dutch statutory tax rate from 34.5%
    in 2004 to 31.5%, 30.5% and 30.0% in respectively 2005, 2006 and 2007 and
    beyond. This resulted into a reduction of our current income tax payable position
    included in working capital. The
    negative non-cash impact of €3 million from other provisions was primarily
    the result of releases and withdrawals, which were partly offset by additions. The
    changes in pension liabilities of €309 million reflects the total non-cash
    cost for the defined benefit pension schemes of €41 million, the non-cash
    costs related to the Personal Seniors Arrangement of €87 million (see
    also chapter 3  The mail division) and total cash payments
    of €437 million. Cash contributions to various pension funds, the majority
    of which for our Dutch employees who fall under our collective labour agreement,
    totalled €200 million, of these payments €91 million was contributed
    as prescribed by the minimum funding requirements of the DNB. Our cash payments
    for pensions, which fall under transitional plan of our Dutch collective labour
    agreement and are directly paid by TPG (see note 9 to our financial statements),
    amounted to €95 million. The remaining




cash
    contribution of €142 million related to the Personal Seniors Arrangement. Working
    capital decreased by €30 million in 2004 versus an increase of €26
    million in 2003. Most of the decrease in 2004 related to the trade receivable
    position that moved favourably by €77 million. The net income tax receivable
    position of €32 million reflected total income tax payments in 2004 of
    €396 million compared to €288 million in 2003. Net interest paid
    in 2004 amounted to €64 million compared to €84 million in 2003.
    Trade payables decreased the cash flow by €66 million and compared unfavourable
    with a decrease of €19 million in 2003. In 2004 both debtor days and
    creditor days decreased. The decrease in debtor days contributed to the decrease
    in working capital, whereas the decrease in creditor days slightly increased
    working capital. Other current assets moved unfavourably by €11 million
    caused by an increase of prepayments and accrued income. 2003Net cash
    provided by operating activities was €937 million, which was 9% below
    2002. Net income contributed €300 million, or €1,011 million if
    corrected for the non-cash impact of depreciation, amortisation and impairments,
    a decrease of €78 million (7.2%). The
    change in deferred taxes of €180 million was a non-cash item primarily
    attributable to increased tax deductible pension payments in 2003 and utilisation
    of tax losses carry forward, both resulting in a reduction of our current
    income tax payable position included in working capital.


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|Chapter
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The
    changes in pension liabilities of €221 million reflected the total non-cash
    cost for the defined benefit pension schemes of €43 million and our total
    cash contributions of €185 million to various pension funds, the majority
    of which for our Dutch employees that fell under our collective labour agreement,
    plus our cash
  payment of €79 million for pensions that fell under the transitional plan
  of our Dutch collective labour agreement and that are directly paid by TPG.
  In total these payments were €131 million higher than in 2002, in particular
  due to additional contributions totalling €100 million as prescribed in
  the minimum funding requirements by the Independent Supervisory Authority for
  Pensions and Insurance. Working
    capital increased by €26 million in 2003 versus a decrease of €84
    million in 2002. Most of the increase in 2003 related to the accounts receivable
    position that moved unfavourably by €37 million caused by other accounts
    receivables for €41 million, partly offset by trade receivables that
    improved by €4 million (€94 million in 2002). The income tax payable
    position of €181 million included in current liabilities reflected total
    income tax payments in 2003 of € 288 million compared to €276 million
    in 2002. Interest paid in the year amounted to €84 million. Trade payables
    decreased the current liabilities by €19 million and compared unfavourably
    with an improvement of €55 million in 2002. The improvements to our accounts
    receivable and trade payable position in 2002 were realised via considerable
    improvements of the debtor and creditor days in all our divisions; in 2003
    these debtor and creditor days were maintained at the 2002 level. Other
  current assets moved unfavourably by €10 million (€74 million in 2002)
  caused by an increase of prepayments and accrued income. NET
    CASH USED IN INVESTING ACTIVITIESNet cash
    used for acquisitions and disposals2004In 2004
    the total payments for acquisitions of group and affiliated




companies
    amounted to €228 million, which was primarily attributable to the acquisition
    of Wilson (€190 million) in the logistics division. The payments of €190
    million included the total acquisition price of €183 million and transaction
    costs of €7 million.We
    also made several smaller acquisitions in our mail division for an amount
    of €14 million, including the remaining shares of Höfinger and the
    establishment of the JV Cendris BSC Customer Contact and in our express division
    for an amount of €2 million. In our logistics division, the other acquisitions
    included Ventana and the remaining 60% shares of Overtrans in Italy and the
    remaining 50% of the shares of TNT Lojistik ve Dagitim Hizmetleri A.S. in
    Turkey for a total amount of €11 million. The funds we used for acquisitions
    of affiliated companies amounted to €11 million, primarily related to
    additional capital contributions to our affiliate Logispring of €10 million. During
  2004, we also disposed of some interests in group and affiliated companies with
  a rounded net book value of zero, the largest of which was TNT-DFDS Transport
  Logistics. 2003In 2003
    we acquired several group and affiliated companies at a total costs of €75
    million. In addition to several smaller acquisitions, our largest acquisitions
    in 2003 took place in mail (€34 million) including Blitzpunkt GmbH (€7
    million), Olaf Jepsen (€9 million for remaining 49%) and DocVision (€9
    million). Logistics acquired for an amount of €21 million, mainly related
    to deferred considerations for Schrader, Barlatier S.A. and Mendy Developpement
    SAS (€14 million). Express acquired for an amount of €4 million,
    related to the acquisition of Archive and Data Storage. The funds we used
    for the acquisitions of affiliated companies (€16 million) are related
    primarily to capital contributions made to our affiliate Logispring (€13
    million). During
  2003, we also disposed of some interests in group and affiliated companies with
  a net book value of €8 million, of which the largest was Geldnet Holding
  B.V.


NET CASH
  USED FOR CAPITAL INVESTMENTS AND DISPOSALS

Capital expenditures on property, plant and equipment and other intangibles

|                                    |     
|----------------------------------- | ----
|                                    |     
|                                    |     
|                                    | 2004
|                                    |     
|                                    |     
|                                    |     
|Investments                         |     
|Property,
      plant and equipment |     
|Other
      intangible assets       |     
|                                    |     
|Subtotal                            |     
|                                    |     
|Disposals                           |     
|Property,
      plant and equipment |     
|Other
      intangible assets       |     
|                                    |     
|Subtotal                            |     
|                                    |     
|Total                               |     
|                                    |     
|(in
      millions)                 |     

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Our
    capital expenditure on property, plant and equipment and other intangible
    assets by division for the three years 2002-2004 was as follows:






|              |                                 |     
|------------- | ------------------------------- | ----
|              | Year
      ended at 31 December |     
|              |                                 |     
|              | 2004                            | 2003
|              |                                 |     
|              |                                 | US$ 
|              |                                 |     
|Mail          |                                 | 133 
|Express       |                                 | 231 
|Logistics     |                                 | 111 
|Non-allocated |                                 | 9   
|              |                                 |     
|Total         |                                 | 484 
|              |                                 |     

|
|

|(in
      millions)
|-------------------
|1.                 

In 2004,
    capital expenditures on property, plant and equipment amounted to €290
    million. Of this amount €75 million related to mail, €140 million
    to express, €69 million to logistics and €6 million to corporate.
    The capital expenditures on intangible assets of €67 million mainly related
    to software (€63 million) and the remainder related to prepayments on
    intangible assets (€4 million). In
    mail, the major capital expenditures related mostly to sorting equipment and
    information technology, needed among other reasons to support the introduction
    of sequence sorting. In express, capital expenditures included investments
    in depots, hubs and warehouses, and replacements and operational equipment
    including automated sorting systems. In logistics the majority of capital
    expenditures related to warehouses and equipment (e.g. forklifts, racking
    systems, trailers and trucks) dedicated to the operation of contracts and
    offices. Disposals
    of property plant and equipment in 2004 totalled €32 million in 2004
    related to the sale of buildings at Belgische Distributie Dienst (€5
    million) and Postkantoren (€2 million) in the mail division and at TNT
    Express Properties in Germany (€3 million) in the express division and
    to various smaller disposals of property plant and equipment throughout the
    company. The disposal of intangible assets of €15 million is a combination
    of disposed goodwill for €13 million, mainly related to TNT-DFDS Transport
    Logistics and software for €2 million. In 2004,
  non-cash investing activities totalled €11 million, related to additional
  finance leases. MAIL2004Capital
    expenditure on property, plant and equipment and other intangible assets by
    our mail division totalled €98 million in 2004, which was a decrease
    of 8.4% compared to 2003 (€107 million). This decrease reflected large
    2003 spending within European Mail Networks on seal machines (VSP) and a decrease
    in housing expenditures within Real Estate compared to the previous year. The
    main capital expenditures in 2004 related to machinery (€22 million),
    software (€19 million), hardware (€12 million) and housing (€11
    million). The remaining €34 million of capital expenditure related to
    various smaller projects, most of which




were
    individually less than €1 million and included building refurbishments
    mainly in the Netherlands, replacement of IT equipment and various other capital
    expenditures. Significant
    investments were made in the sorting process, with a total amount of €23
    million invested in sequence sorting machines and sequence sorting software
    and €6 million invested in tray cart unloaders. 2003Capital
    expenditure on property, plant and equipment and other intangible assets by
    our mail division totalled €107 million in 2003, a 17.7% decrease compared
    to 2002. This primarily resulted from the postponement of regularly scheduled
    refurbishment of our Netherlands distribution sites and delay in a few large
    projects, such as the tray cart unloader and Spring software. The postponement
    of refurbishment of distribution sites will continue until the impact of the
    installation of new sorting equipment within these sites can be fully assessed.
    The main capital expenditures in 2003 related to software (€25 million),
    hardware (€6 million), housing (€21 million), and machinery (€23
    million) of which €9 million was invested in sequence sorting machines.
    The remaining €32 million of capital expenditures were individually less
    than €1 million and include small building refurbishments, replacement
    of IT equipment, and various maintenance-related capital expenditures. EXPRESS2004Capital
    expenditure on property plant and equipment and other intangible assets by
    our express division totalled €171 million in 2004, which was an increase
    of 6.9% compared to 2003 (€160 million). The capital expenditure related
    to depots, hubs and warehouses (€76 million), depot equipment used in
    operations, including fleet expansions and replacements (€23 million),
    and information technology, communication and other operational equipment,
    including automated sorting systems (€41 million). Of the total €140
    million capital expenditure on property, plant and equipment, €126 million,
    or 90%, was spent in Europe. During
  2004, capital expenditures on other intangible assets totalled
    €31 million (2003: €36 million) and related primarily to the development
    of financial systems (e-back office) software and further enhancements to
    our international shared systems.


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|Chapter
      11 | Other
      financial information on the company
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Some
  of the larger express capital expenditures in 2004 included the investments
  for warehouse and IT related to our pan-government archiving contract in the
  UK (€10 million), a new head office for France in Lyon (€10 million),
  the replacement of trailers and tractor units in the UK (€7 million), depots
  in Stockholm (€6 million), Birmingham (€3 million) and Enfield (€3
  million) and the first investments in the expansion of the Air hub in Liège
  (€4 million). 2003Capital
    expenditure on property plant and equipment and other intangibles assets by
    our express division totalled €160 million in 2003, which was 10.1% below
    the level of 2002. Some of the larger capital expenditures in 2003 related
    to depots, hubs and warehouses (€55 million), depot equipment used in
    operations including fleet expansions and replacements (€30 million),
    information technology, communication and other operational equipment including
    automated sorting systems (€39 million). Of the total €124 million
    express capital expenditure on property, plant and equipment, €84 million
    (68%) was spent in Europe. During
  2003, capital expenditures on other intangible assets totalled €36 million
  and relates primarily to the development of financial systems (e-back office)
  software and further enhancements to our international shared systems. LOGISTICS2004Capital
    expenditure on property, plant and equipment and other intangible assets by
    our logistics division totalled €82 million in 2004, which is comparable
    to the capital expenditures in 2003 (€83 million). The majority of the
    expenditures in property, plant and equipment related to new business acquired
    and to other equipment dedicated to operate logistics contracts throughout
    the world. The largest
  capital expenditures on property plant and equipment and other intangibles in
  the logistics division were concentrated in the United Kingdom (€18 million),
  followed by Central and Eastern Europe (€ 12 million), North America (€10
  million), Italy (€13 million), Asia (€5 million) and South America
  (€4 million). The
    €18 million invested in the United Kingdom was mainly spent on warehouses
    and equipment. In Central and Eastern Europe, €6 million was invested
    in warehouses and equipment to service the DaimlerChrysler contract in Germany.
    In the remainder of continental Europe, €33 million was invested in warehouses,
    new depots and automated warehouse racking, information technology and systems
    security engineering. In Italy, €13m was invested in warehouse equipment,
    information technology and systems security engineering. In Australia, €5
    million was invested in warehouses and equipment for new and existing contracts,
    and in North America €10 million was spent on warehouses, information
    technology and equipment for renewals and new contracts. In Asia, €5
    million was invested in warehouses and information technology. An amount of
    €4 million was spent on warehouses and equipment for new and existing
    contracts in South America. During
    2004, capital expenditures on other intangible assets totalled €13 million,
    primarily attributable to the acquisition and implementation of a JD Edwards
    system and warehouse




management
    software in the United Kingdom and Italy Automotive & South America. 2003Capital
    expenditure on property, plant and equipment and other intangible assets by
    our logistics division totalled €83 million in 2003, a 49.4% decrease
    compared to 2002 due primarily to delays in the implementation of new business
    contracts. The majority of the expenditures in property, plant and equipment
    related to new business acquired and to other equipment dedicated to operate
    logistics contracts throughout the world. In the United Kingdom, €15
    million was invested in warehouses and equipment. In continental Europe, €38
    million was invested in warehouses, new depots and automated warehouse racking.
    €2 million was invested in warehouses and equipment for new and existing
    contracts in South America. In Australia, €7 million was invested in
    warehouses and equipment for new contracts, and in North America €11
    million was invested in warehouses and information technology equipment for
    new contracts. In Asia €4 million was invested in warehouses and information
    technology. During
  2003, capital expenditures on other intangible assets totalled €6 million,
  due primarily to the continued development of financial systems (e-back office)
  software for the entire division. Net
    cash used for other investing activities2004The net
    cash generated by other investing activities totalled €200 million, which
    was an increase of €198 million compared to 2003. €160 million was
    attributable to the settlement of a USD 435 million cross currency interest
    rate swap, which provided a hedge against USD denominated assets. The remaining
    €40 million, partly adjustments of non-cash movements in the net cash
    provided by operating activities, was the result of the combined effect of
    a decrease in long-term prepayments and accrued income (€25 million),
    changes relating to affiliated companies (€8 million), changes in other
    securities (€1 million) and the effect of minority interests (€6
    million). NET
    CASH USED BY FINANCING ACTIVITIESNet cash
    used for dividends and other changes in shareholders equity2004A final
    cash dividend for 2003 amounting to €142 million and a cash interim dividend
    for 2004 of €95 million were paid in 2004. In
    2004, €151 million was paid as consideration for the repurchase of 7.6
    million shares from the State of the Netherlands. An amount of €3 million
    was received as a result of the exercise of options and share grants. 2003A final
    cash dividend for 2002 amounting to €119 million and a cash interim dividend
    for 2003 of €85 million were paid in 2003. The
    proposed final dividend for 2003 of €0.30 per share resulted in an aggregate
    €142 million payment made in April 2004.


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Net
    cash debt financing activities2004Movements
    in long-term liabilities resulted in a cash outflow of €48 million. The
    acquired long-term liabilities totalling €52 million included €11
    million of finance leases, a €5 million increase in local bank loans
    and €36 million in non-interest bearing liabilities. A total of €100
    million in repayments of long-term liabilities related, amongst others, to
    the repayment of Wilson bank loans (€53 million), scheduled repayments
    on aircraft leases and other leases (€15 million), other loans (€3
    million), €1 million due to foreign currency movement and movements in
    non-interest-bearing liabilities of €20 million. Changes
    in short-term financing for 2004 resulted in a cash outflow of €67 million,
    compared to an outflow of €219 million in 2003. Short-term financing
    decreased due to the repayment of short-term debt at our Italian logistics
    business (€19 million), repayment of loans existing within the Wilson
    group (€20 million) and various other repayments of loans within our
    express and mail divisions. In
    2004, non-cash financing activities totalled €11 million and related
    to additional finance leases. 2003New long-term
    liabilities, net of repayments, resulted in a cash outflow of €13 million.
    The acquired long-term liabilities totalling €70 million included €20
    million of finance leases, €20 million increase in local bank loans,
    and €30 million in non-interest bearing liabilities. A total of €83
    million in repayments of long-term liabilities related to scheduled repayments
    on aircraft leases and other leases (€13 million), a bilateral facility
    (€13 million), other loans (€19 million), €13 million due to
    foreign currency movement and movements in non-interest-bearing liabilities
    of €25 million. Changes
  in short-term financing resulted in a cash outflow of €219 million. Short-term
  financing decreased by €72 million due to the scheduled repayment of State
  Loans, €119 million due to repayment of local Italian short-term facilities
  and €28 million of other net repayments. In 2003,
    non-cash financing activities totalled €26 million, related to additional
    finance leases. LIQUIDITY
    AND CAPITAL RESOURCESThe groups
    capital resources include funds provided by our operating activities and capital
    raised in the financial markets. As regards the former, the group generates
    strong cash flows from operating activities (€1,000 million in 2004,
    €937 million in 2003 and €1,032 million in 2002). As with any global
    organisation, these operating cash flows are affected by economic and business
    trends. The majority of our cash flows are derived from our mail division,
    particularly from operations in the Netherlands. Amongst other factors, the
    impact of electronic substitution on mail volumes, postal regulations in the
    Netherlands and the pace of postal liberalisation in Europe continue to affect
    those cash flows, although it is not possible to predict what the long-term
    cash flow effects will be. Although
    cash requirements for capital expenditure do fluctuate from year to year,
    depending on the extent of strategic capital




projects,
    they have been well covered by operating cash flows and showed an improving
    trend for the most recent three financial years. Specifically, the ratio of
    operating cash flows to net capital expenditure was 3.2 times in 2004, 3.0
    times in 2003 and 2.5 times in 2002. This ratio is calculated as follows:
    net cash provided by operating activities divided by the sum of capital expenditure
    on other intangible assets, disposals of other intangible assets, capital
    expenditure on property, plant and equipment and disposals of property, plant
    and equipment, all as stated in the consolidated cash flow statements. We
    expect operating cash flows to continue to cover our capital expenditure requirements
    in the foreseeable future. We believe our working capital is sufficient for
    our present requirements. For any
  acquisitions that exceed the groups immediate cash resources the group
  would seek to raise capital in the financial markets by means of bank borrowings
  and private or publicly traded debt. For very substantial transactions, we would
  also consider issuing equity in order to protect our credit rating position.
  Given the strength of our financial position, credit ratings, and bank relationships,
  we do not foresee an inability to access a wide range of capital markets including
  equity, public debt, private debt and bank borrowing. We monitor and manage
  key financial ratios that are consistent with a strong credit rating. There
  are no aspects of our current capital structure that we believe would trigger
  a material increase in the cost of our debt or access to capital markets. We do
  not have any material undisclosed off-balance sheet financial arrangements. We have
  €600 million of undrawn committed credit maturing in 2008 to provide for
  unforeseen cash requirements. We are negotiating to extend this back-up facility
  and increase its size to €1 billion. We expect that this new facility will
  mature in 2012. We also have outstanding €1 billion of 5.125% notes due
  2008. In 2004
  we updated the documentation and increased the limit of our Euro commercial
  paper programme from €500 million to €1 billion. This programme was
  established by us in 1999 and has not been used in recent years as our expenditures
  have been funded largely by our operating cash flow and Eurobond. For
    details on the interest rates charged on our most important long-term loans
    as well as the maturity of our long-term loans and commitments see notes 11
    and 14 to our consolidated financial statements. We do
  not hold or issue financial instruments for trading purposes nor do we allow
  our subsidiaries to do so. For details on our
    use of financial derivatives for hedging purposes, see note 14 to our consolidated
    financial statements. Cash
    and net debtAt 31
    December 2004, our net debt position was €858 million (2003: €1,073
    million). This consisted of €51 million of short-term debt (2003: €69
    million) and €1,440 million (2003: €1,474 million) of long-term
    debt, offset by €633 million of cash and cash equivalents (2003: €470
    million). At 31
    December 2004, short-term debt consisted of €8 million of bank loans
    bearing variable interest rates, €23 million of


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|Chapter
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current
    portion of long-term finance leases and €20 million of numerous other
    liabilities at fixed and variable rates. At 31
  December 2004, long-term debt consisted of a €1 billion Eurobond with a
  coupon of 5.125% issued in December 2001, a €186 million 5-year plus one
  day syndicated facility bearing an interest rate of 3-month Canadian LIBOR plus
  a margin of 0.325% signed in May 2001, a bilateral loan agreement amounting
  to €129 million which has been revised from an amortising loan maturing
  in year 2020 with fixed interest rate of 5.85% into a bullet loan maturing in
  2006 with a fixed interest of 2.54%, €86 million of finance lease obligations
  and €39 million of other long-term liabilities at fixed and variable rates. At
    31 December 2004, our total cash position amounted to €633 million, an
    increase of €163 million compared to year-end 2003. Included in the €633
    million of total cash was €171 million of restricted cash (2003: €167
    million) held mainly by consolidated joint ventures and insurance captives.
    The cash held in consolidated joint ventures is considered to be restricted
    by virtue of the fact that we require the agreement of our joint venture partners
    before we are able to access this cash. Our total cash position was primarily
    denominated in euro.




Credit
    facilitiesAt 31
    December 2004, committed facilities with domestic and international banks
    amounted to €786 million, of which €600 million remained undrawn.
    The undrawn committed facilities consisted of a €600 million revolving,
    syndicated facility signed in October 2003, which supports our euro commercial
    paper programme. In addition, at 31 December 2004, we had €474 million
    of uncommitted facilities, of which €438 million remained undrawn. At 31
  December 2004, our long-term credit ratings are A (stable outlook) by Standard
  & Poors and A1 (stable outlook) by Moodys. On 11 June 2004 Standard
  & Poors removed the negative watch on our credit rating, which was
  originally attached on 2 February 2003. Cash
    obligationsAt 31
    December 2004, our gross interest bearing borrowings, including finance lease
    obligations, totalled €1,491 million (2003: €1,543 million), of
    which 84% (2003: 82%) was at fixed rates of interest and €1,440 million
    (2003: €1,474 million) represented long-term debt. We had operating lease
    commitments of €1,675 million (2003: €1,679 million) and guarantees
    outstanding to third parties totalling €350 million (2003: €263
    million). The following
  tables show the maturity of these amounts:


|                                               |                                         |                        
|---------------------------------------------- | --------------------------------------- | -----------------------
|                                               | Amounts
      of payments due by period |                        
|                                               |                                         |                        
|                                               |                                         | TOTAL
      OBLIGATIONS
|                                               |                                         |                        
|Total
      gross borrowings, excluding leases |                                         | 1,391                  
|Financial
      leases                         |                                         | 100                    
|Rent
      and operating lease commitments     |                                         | 1,675                  
|                                               |                                         |                        
|Total
      contractual cash obligations       |                                         | 3,166                  
|                                               |                                         |                        
|(in
      € millions)                          |                                         |                        

GUARANTEES

Total
    financial guarantees at 31 December 2004 were €350 million (2003: €263
    million) of which €164 million (2003: €94 million) amounted to corporate
    guarantees. Furthermore, banks and other financial institutions have issued
    guarantees to cover obligations of group companies up to an amount of €127
    million (2003: €90 million). These guarantees were issued




in
    connection with our obligations under lease contracts, customs duty deferment
    and local credit lines. The obligations under the guarantees issued by banks
    and other financial institutions have been secured by our company or by our
    subsidiaries. The amount covered hereby is not included in the amount stated
    above for corporate guarantees.




|                      | Amounts
      of commitment expiration by period |                        
|--------------------- | ------------------------------------------------ | -----------------------
|                      |                                                  |                        
|                      |                                                  | TOTAL
      COMMITMENTS
|                      |                                                  |                        
|Guarantees            |                                                  | 350                    
|                      |                                                  |                        
|(in
      € millions) |                                                  |                        

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CONTINGENCIESOur total
    operating lease commitments at the end of the year were €1,675 million
    (2003: €1,679 million), of which real estate accounted for €1,459
    million (2003: €1,436 million), transport equipment for €165 million
    (2003: €199 million) and computer equipment and other equipment for €51
    million (2003: €44 million). The total
  commitments as at 31 December 2004 relating to capital expenditure were €33
  million (2003: €58 million). At
    31 December 2004 we had unconditional purchase commitments of €84 million
    (2003: €100 million), which were primarily related to various service
    and maintenance contracts. Furthermore, at 31 December 2004, we had an unconditional
    commitment to repurchase 13.1 million ordinary shares for the State of the
    Netherlands. These shares were delivered on 5 January 2005, for which a total
    purchase price was paid amounting to €259 million. See note 26 to our
    consolidated financial statements. A review
    of our tax position of certain of our subsidiaries relating to prior years
    has identified a limited number of items where our interpretation of relevant
    tax laws and regulations may be open to challenge. If these items were successfully
    challenged, it could result in a total liability between 0 and €400 million.
    Following a detailed review of the issues involved and legal advice from outside
    tax counsel, we currently believe that we have no liability in this regard. In
    February and March 2004, our audit committee, on behalf of our Supervisory
    Board, conducted an independent investigation regarding representations made
    to the UK Inland Revenue and to our external auditors, PricewaterhouseCoopers,
    with respect to certain UK tax matters originally arising in the late 1990s
    relating to one of our UK subsidiaries. In addition to this investigation,
    our audit committee, with the assistance of independent tax advisors, conducted
    a review of other UK tax matters that arose from the same period. The investigations
    conducted by our audit committee, with the assistance of independent legal
    counsel, concluded that not all relevant details in connection with these
    tax matters were adequately disclosed to the UK Inland Revenue and PricewaterhouseCoopers. In
    August 2004, we submitted a report to the UK Inland Revenue in relation to
    these UK tax issues pursuant to a procedure under UK law designed to ensure
    full disclosure of all relevant information to the UK Inland Revenue. We will
    be providing an addendum to our original report with additional information,
    and are continuing discussions with the UK Inland Revenue in connection with
    their related comprehensive investigation. The outcome of the UK Inland Revenues
    investigation is not certain, and we do not expect these matters with the
    UK Inland Revenue will be resolved before 2006. The
    UK Inland Revenue could assess further taxes, penalties and interest that
    would exceed the amounts we have accrued in our financial statements. For
    a further description of these contingencies see note 14 to our consolidated
    financial statements.




CAPITAL
    EXPENDITURES PROJECTION FOR 2005The total
    projected 2005 capital expenditures on property, plant and equipment and other
    intangible assets for our divisions is estimated to be €583 million,
    which is expected to be spent on similar types of property, plant and equipment
    and other intangible assets as in 2004. We believe that the net cash provided
    by our operating activities will be sufficient to fund these expenditures. RELATED
    PARTY TRANSACTIONS AND BALANCESOur group
    companies have trading relationships with a number of our partially consolidated
    joint ventures as well as with unconsolidated companies in which we only hold
    minority stakes. In some cases there are contractual arrangements in place
    under which our group companies source supplies from us. During 2004, sales
    made by our group companies to our joint ventures amounted to €125 million,
    compared to €136 million in 2003. Purchases from our joint ventures for
    2004 amounted to €24 million, compared to €24 million in 2003. The
    net amounts due from joint venture entities as at 31 December 2004 totalled
    €49 million, compared to €35 million in 2003. Loans
    receivable from affiliated companies are disclosed in notes 3 and 5 to our
    consolidated financial statements. As of 31 December 2004, no material amounts
    were payable by TPG to affiliated companies. We believe that all transactions
    with joint ventures and affiliated companies are conducted in the ordinary
    course of business and under normal arms length commercial terms and
    conditions. For
    further disclosure of the related party transactions and balances we refer
    to below and note 27 to our consolidated financial statements. For information
    on our relationship with the State of the Netherlands please see chapter 14
     Additional information and note 26 to our consolidated
    financial statements. CRITICAL
    ACCOUNTING POLICIES AND ESTIMATESOur reported
    financial condition and results of operations are sensitive to accounting
    policies, assumptions and estimates that underlie the preparation of our financial
    statements. The profile of critical accounting policies, the judgements and
    other uncertainties affecting application of those policies and the sensitivity
    of reported results to changes in conditions and assumptions are factors to
    be considered, together with reviewing our financial statements and the discussion
    in this item. The
    four critical accounting policies that we believe are either the most judgmental,
    or involve the selection or application of alternative accounting policies,
    and are material to our financial statements, are those relating to business
    combinations and impairment of intangible assets and goodwill, accounting
    for pensions, income taxes and restructuring costs. We also have to estimate
    the deferred revenues from stamps sold but not yet used by our customers.
    We have discussed the development and selection of these critical accounting
    policies and estimates with our independent auditors. In addition, our financial
    statements contain a summary of our significant accounting policies.


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|Chapter
      11 | Other
      financial information on the company
|---------------- | ------------------------------------------------

---

Our financial
  statements are prepared in accordance with generally accepted accounting principles
  in the Netherlands (Dutch GAAP), which differ in certain respects from generally
  accepted accounting principles in the United States (US GAAP). In the case that
  our Dutch GAAP compliant accounting policies do not correspond with the required
  US GAAP accounting treatment, and this is estimated to have a significant effect
  on our consolidated net income and shareholders equity, we have highlighted
  these differences in the discussion below. Business
    combinations and impairment of intangible assets and goodwillAccounting
    policies for business combinations and impairment of goodwill and other tangible
    and intangible assets differ between Dutch GAAP and US GAAP. Under
    both Dutch and US GAAP, all of our business combinations are accounted for
    as purchases. The cost of an acquired company is assigned to the tangible
    and intangible assets purchased and the liabilities assumed on the basis of
    their fair values at the date of acquisition. The determination of fair values
    of assets and liabilities acquired requires us to make estimates and use valuation
    techniques when market value is not readily available. Under US GAAP, we have
    identified certain intangible assets that were not separately identified under
    Dutch GAAP.




Any
    excess of purchase price over the fair value of the tangible and intangible
    assets acquired is allocated to goodwill. For
    Dutch GAAP, goodwill is amortised on a straight-line basis over its estimated
    useful life. For US GAAP, goodwill is no longer amortised but reviewed for
    possible impairment. In the
  event that the useful life of goodwill that we amortise is determined to be
  less than managements original estimate, we will be subject to an increased
  amortisation charge our statement of income. If this were to happen with respect
  to our goodwill amortised over a 40-year period, this would result in an increase
  from the current annual charge of €31 million to the following:


|                                        
|----------------------------------------
|                                        
|                                        
|                                        
|                                        
|Revised
      annual amortisation charge
|                                        
|(in
      € millions)                   

The above sensitivity analysis has been provided only for goodwill amortised
    over 40 years because a revision of the useful life of this particular goodwill
    would have the most significant impact on our financial statements. As this
    amortisation charge is not tax deductible, the above additional charges would
    impact net income directly. Charges associated with goodwill amortised over
    a period of up to 20 years would be similarly affected by determinations about
    the estimate of its useful life. Under
  Dutch GAAP, goodwill is assessed for impairment if changes in circumstances
  indicate that an impairment may have occurred or on an annual basis if the estimated
  useful lives of the goodwill exceeds 20 years. Under US GAAP, we evaluate our
  goodwill for impairment at least annually and more frequently if specific events
  indicate that an impairment in value may have occurred. Our goodwill
  impairment tests include judgements regarding when to perform a test, and assumptions
  regarding the level of testing, future cash flow and discount rates. Judgement
    is required to determine whether there has been a change in circumstances
    such that goodwill may be impaired. If we do not identify changes in circumstances
    on a timely basis, the timing or amount of impairment losses, may be impacted.
    The level we identify for impairment testing and the criteria we use to determine
    which groups should be aggregated also require judgement. Higher or lower
    testing level could affect whether




an
    impairment is recorded, and the amount of the impairment loss. Changes in
    our business activities or structure may result in changes to the level of
    testing in future periods. Additionally, the level of testing for Dutch GAAP
    can be lower than the level of testing for US GAAP, which adds another layer
    of complexity. To determine
    whether goodwill is impaired, we use valuation techniques that involve estimating
    cash flows for future periods and discounting these cash flows to determine
    fair values. We have to make estimates regarding expected revenues and costs
    as well as capital expenditures. Due to the inherent nature of estimates,
    our actual experienced revenues, costs and capital expenditures in the past
    have varied, in some cases materially, from our expectations. The use of different
    assumptions for our cash flow estimates could affect the amount of any impairment
    losses recognised. We also use significant judgement to determine the discount
    rate. Under
    US GAAP, there is a two-step impairment test. In the first step, we are required
    to make estimates regarding the fair values of assets and liabilities, including
    unrecorded intangible assets in determining whether a goodwill impairment
    exists. The second test, compares this fair value with the carrying amount
    of the reporting units goodwill in determining the amount of the impairment
    charge. We use valuation techniques to determine some of the fair values,
    which involve the same judgements mentioned above regarding cash flows and
    discount rates.


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Under
    both Dutch and US GAAP, we review our tangible and intangible assets for impairment
    whenever events or changes in circumstances indicate that the carrying amount
    of an asset may not be recoverable (a triggering event). The review
    for recoverability requires us to estimate the future cash flows expected
    to result from the use of the asset and its eventual disposition. The determination
    of whether a triggering event has occurred as well as the development of the
    assumptions used to estimate future cash flows and determine fair value, requires
    the use of judgement, as mentioned above. Accounting
    for Pensions We operate
    a number of pension plans around the world. Most of our non-Dutch pension
    plans are defined contribution plans. For our non-Dutch employees we also
    operate a limited number of defined benefit plans. The liabilities for these
    employees are separately covered by private insurers and foreign pension funds. Two
    retirement plans are applicable to most Dutch employees. These two plans are
    the most significant pension plans of TPG: a pension plan and a conditional
    early retirement arrangement. As
    required by Dutch law the plan is carried out by a separate legal entity and
    is managed by an independent board that falls under the supervision of the
    Nederlandsche Bank (DNB) into which the Independent Supervisory Authority
    for Pensions and Insurance has merged. The
    pension fund runs an actively managed investment portfolio. The pension funds
    uses asset and liability management studies that generate future scenarios
    to determine its optimal asset mix. During 2004, the dynamic weight of equity
    investments increased to 44.9%, the dynamic weight of fixed interest investments
    decreased to 46.5%, and the weight of real estate investments (including international)
    went down to 8.6%. Actual
        
        asset mix
        at 31 December
        2004
      
      Actual
        asset mix
        at 31 December
        2003Equities
      
      44.9%
      
      43.6%Fixed
        interest
      
      46.5%
      
      46.9%Real
        estate
      
      8.6%
      
      9.4%Cash
      
      
      
      0.1%Total
      
      100.0%
      
      100.0% The
    assets of our major plan cover approximately 93% of our total pension assets
    and the liabilities described in the section above cover approximately 95%
    of our total pension liabilities. The return on plan assets totalled 8.8%
    in 2004 (2003: 9.1%). Historical
    returns 2004
      
      10-year
        average
      
      12-year
        averageEquities
      
      10.6%
      
      10.5%
      
      10.8%Fixed
        interest
      
      7.7%
      
      8.0%
      
      7.8%Real
        estate
      
      6.8%
      
      9.8%
      
      10.0%




Pension
    developmentsVarious
    changes will be made to pension laws in the Netherlands in the coming years.
    They include a new Pensions Act, a modified regime for annuities, alterations
    to state incapacity benefits and introduction of a financial means test. The
    Board of Trustees of the pension fund will amend the pension regulations accordingly,
    as and when necessary. The future of the Dutch transitional plan is currently under discussion due
    to a change in the Dutch tax regime. The current tax benefits for this plan
    might be abolished as from 1 January 2006. Starting 2006 a charge of 26% could
    be applicable on premiums paid by the employer. As from 2011 this charge would
    be 52%. Pension
    costInherent
    in the valuation of our pensions and the determination of our pension cost
    are key assumptions which include: employee turnover, mortality and retirement
    ages, discount rates, expected long-term returns on plan assets and future
    wage increases which are usually updated on an annual basis at the beginning
    of each fiscal year. Actual circumstances may vary from these assumptions
    giving rise to a different pension liability, which would be reflected as
    an additional profit or expense in our statement of income. Changes
    in the related net periodic pension cost may occur in the future due to changes
    in the assumptions. In
    2004, our net periodic pension cost was €128 million (€43 million
    in 2003). This included termination benefit costs of €57 million and
    a pro rata part of the unrecognised settlement losses of €30 million. Total
    cash contributions in 2004 amounted to €437 million (€264 million
    in 2003) and are expected to amount approximate €296 million in 2005.
    Cash contributions to various pension funds, the majority of which were for
    our Dutch employees who fall under our collective labour agreement, totalled
    €200 million. Of these payments €91 million was contributed as prescribed
    by the minimum funding requirements of the DNB. Our cash payments for pensions,
    which fall under the transitional plan of our Dutch collective labour agreement
    and are directly paid by TPG (see note 9 to our consolidated financial statements),
    amounted to €95 million. The remaining cash contribution of €142
    million related to the Personal Seniors Arrangement. Our
    accumulated benefit obligation in connection with our pension plans exceeds
    the fair value of the plan assets as per 31 December 2004. As a result, SFAS
    87 requires us to account for an additional minimum liability amounting to
    €654 million. The reason for the increase in the accumulated benefit
    obligation compared to plan assets is mainly caused by the fact that the interest
    rate decreased from 5.5% in 2003 to 4.75% in 2004 (impact approximately €560
    million) and an adjustment in estimated employee turnover within the mail
    division (impact approximately €260 million). Under SFAS 87, this increase
    can not be offset by the increase in our plan assets in 2004. Full
    application of SFAS 87 requires us to recognise an additional minimum liability
    representing a net loss that under SFAS 87 is not yet to be recognised as
    net periodic pension cost, but to be reported as a separate component (that
    is a reduction) of equity.


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|Chapter
      11 | Other
      financial information on the company
|---------------- | ------------------------------------------------

---

We have
    deducted an amount of €454 million from our equity (net of tax). The
    accrued pension costs have increased with the minimum liability of €654
    million and we accounted for a deferred tax asset amounting to €200 million.
    No intangible assets have been recognised. Please note that after the




conversion
    to IFRS (effectively as from 1 January 2004) this direct equity movement no
    longer exists since the minimum liability is no requirement under IAS 19. The table
  below shows the sensitivity of the net periodic pension cost to deviations in
  assumptions.


|                                                                                      |  |                               |    |                                          |  
|------------------------------------------------------------------------------------- |  | ----------------------------- | -- | ---------------------------------------- | -
|                                                                                      |  |                               |    |                                          |  
|                                                                                      |  | %-CHANGE
      IN ASSUMPTIONS |    | CHANGE
      IN NETPERIODIC
      COSTS1 |  
|                                                                                      |  |                               |    |                                          |  
|Net
      periodic pension costs                                                      |  |                               |    | (41                                      | )
|Discount
      rate                                                                   |  | +
      0.5                   | %  | 19                                       |  
|Expected
      return on assets                                                       |  | +0.5                          | %  | 17                                       |  
|Rate
      of compensation increase                                                   |  | +0.5                          | %  | (16                                      | )
|Rate
      of benefit increase                                                        |  | +0.5                          | %  | (48                                      | )
|                                                                                      |  |                               |    |                                          |  
|Net
      periodic pension costs                                                      |  |                               |    | (41                                      | )
|Discount
      rate                                                                   |  | (0.5                          | )% | (46                                      | )
|Expected
      return on assets                                                       |  | (0.5                          | )% | (17                                      | )
|Rate
      of compensation increase                                                   |  | (0.5                          | )% | 15                                       |  
|Rate
      of benefit increase                                                        |  | (0.5                          | )% | 26                                       |  
|                                                                                      |  |                               |    |                                          |  
|(in
      € millions, except percentages)                                             |  |                               |    |                                          |  
|1.  
      Excluding one-off termination benefit costs and settlement losses in 2004. |  |                               |    |                                          |  

For
    further discussion see note 9 to our consolidated financial statements. INCOME
    TAXESWe currently
    have significant deferred tax assets resulting from net operating loss carry
    forwards and deductible temporary differences, which will reduce taxable income
    in future periods. A valuation allowance is required when it is more likely
    than not that all or a portion of a deferred tax asset will not be realised.
    We assess the likelihood that our deferred tax assets will be realised from
    future taxable income, and, to the extent we believe that recovery is not
    likely, we establish a valuation allowance. We consider future taxable income
    projections, historical results and ongoing tax planning strategies in assessing
    the recoverability of deferred tax assets. However, adjustments could be required
    in the future if we determine that the amount to be realised is less or greater
    than the amount we have recorded. Such adjustments, if any, may have a material
    impact on our results of operations. In
    valuing our deferred tax assets, we provided valuation allowances on future
    tax benefits of €162 million, €138 million, and €145 million
    at the end of 2004, 2003, and 2002, respectively. For
    further discussion of income taxes see note 21 to our consolidated financial
    statements. RESTRUCTURINGWe periodically
    record restructuring charges resulting from restructuring operations, including
    consolidations and/or relocations of operations, changes in our strategic
    plan, or managerial responses to declines in demand, increasing costs or other
    market factors. Restructuring provisions reflect many




estimates,
    including those pertaining to separation costs, consolidation of excess facilities,
    contract settlements and tangible asset impairments. Actual experience has
    been and may continue to be different from these estimates. As of 31 December
    2004 and 2003, restructuring provisions were €33 million and €42
    million, respectively. For
    a further discussion see note 10 to our consolidated financial statements. Reconciliation
    of Dutch GAAP to US GAAP Our financial
    statements are prepared in accordance with generally accepted accounting principles
    in the Netherlands (Dutch GAAP), which differ in certain respects from generally
    accepted accounting principles in the United States (US GAAP). In the case
    that our Dutch GAAP accounting policies do not correspond with the required
    US GAAP accounting treatment, and this is estimated to have a significant
    effect on our consolidated net income and shareholders equity, we have
    highlighted these differences in the reconciliation of our Dutch GAAP net
    income and shareholders equity to those under US GAAP, as presented
    in note 29 to our financial statements. Net
    income determined in accordance with US GAAP was €714 million in 2004
    (2003: €332 million and 2002: €717 million), which was €47
    million higher than net income determined in accordance with Dutch GAAP (2003:
    €32 million higher and 2002: €118 million lower). In 2004 the effect
    of not amortising goodwill under US GAAP (€146 million) was largely offset
    by the unwinding of an insurance contract in the mail division


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with
    a remaining balance of €130 million at the moment of the termination
    of the contract. In addition, US GAAP net income was impacted in 2004 by amortisation
    of other long-lived intangible assets, the realisation of gains on real estate
    sales (recognised under Dutch GAAP in prior years) and a positive tax effect
    on the reconciling items. Our
    shareholders equity determined in accordance with US GAAP was €2,622
    million at 31 December 2004 (€3,146 million at 31 December 2003), which
    was €143 million lower (€177




million
    higher at 31 December 2003) than shareholders equity determined in accordance
    with Dutch GAAP. The lower equity under US GAAP was mainly caused by a direct
    equity movement that only impact our figures under US GAAP: our repurchase
    of shares (€259 million), the tranche of 5 January 2005, which qualifies
    under US GAAP as financial liability rather than equity. The following
  table indicates our 2004 operating income determined in accordance with Dutch
  GAAP, compared to that determined in accordance with US GAAP:


|                                          |                                 |       |   |       |      |                  |   |  |       |                  |       |   |       |  
|----------------------------------------- | ------------------------------- | ----- | - | ----- | ---- | ---------------- | - |  | ----- | ---------------- | ----- | - | ----- | -
|                                          |                                 |       |   |       |      |                  |   |  |       |                  |       |   |       |  
|                                          | Year
      ended at 31 December |      
|                                          |                                 |       |   |       |      |                  |   |  |       |                  |      
|                                          | DUTCH
      GAAP                |       |   |       |      | US
      GAAP    |   |  |      
|                                          |                                 |       |   |       |      |                  |   |  |       |                  |      
|                                          | 2004                            |       | % |       | 2004 | %                |  
|                                          |                                 |       |   |       |      |                  |   |  |       | OF
        TOTAL |      
|                                          |                                 | US$   |   | €     |      | OF
        TOTAL |   |  | US$   |                  | €     |   |       |  
|                                          |                                 |       |   |       |      |                  |   |  |       |                  |       |   |       |  
|Mail                                      |                                 | 1,127 |   | 833   |      | 70.9             |   |  | 1,011 |                  | 747   |   | 62.8  |  
|Express                                   |                                 | 436   |   | 322   |      | 27.4             |   |  | 506   |                  | 374   |   | 31.4  |  
|Logistics                                 |                                 | 122   |   | 90    |      | 7.7              |   |  | 192   |                  | 142   |   | 11.9  |  
|Non-allocated                             |                                 | (96   | ) | (71   | )    | (6.0             | ) |  | (99   | )                | (73   | ) | (6.1  | )
|                                          |                                 |       |   |       |      |                  |   |  |       |                  |       |   |       |  
|Total                                     |                                 | 1,589 |   | 1,174 |      | 100.0            |   |  | 1,611 |                  | 1,190 |   | 100.0 |  
|                                          |                                 |       |   |       |      |                  |   |  |       |                  |       |   |       |  
|(in
      € millions, except percentages) |                                 |       |   |       |      |                  |   |  |       |                  |       |   |       |  

In 2004
    the Dutch GAAP operating income in the mail division was higher than under
    US GAAP. This was caused by the fact that the reversal of the goodwill amortisation
    was more than offset by the unwinding of an insurance contract. The agreement
    with an insurance company related to settling future wage guarantees that
    was entered into in 2001 was terminated in December 2004 following an unfavourable
    court decision with regard to the timing of the deductibility of the consideration
    for tax purposes. As per
    23 December 2004 there is no reconciling item anymore. Within express and
    logistics the difference between Dutch




GAAP
    and US GAAP operating income was primarily the result of reversing Dutch GAAP
    goodwill amortisation, amortisation of other long-lived intangible assets
    recognised under US GAAP, revaluing our financial derivatives for US GAAP
    purposes and expensing long-term contract incentives that are considered prepaid
    expenses under Dutch GAAP. The following
  table indicates our 2003 operating income determined in accordance with Dutch
  GAAP, compared to that determined in accordance with US GAAP:


|                                          |                                 |      |               |                    |   |  |      |   |                    |  
|----------------------------------------- | ------------------------------- | ---- | ------------- | ------------------ | - |  | ---- | - | ------------------ | -
|                                          |                                 |      |               |                    |   |  |      |   |                    |  
|                                          | Year
      ended at 31 December
|                                          |                                 |      |               |                    |   |  |      |  
|                                          | DUTCH
      GAAP                |      | US
      GAAP
|                                          |                                 |      |               |                    |   |  |      |   |                    |  
|                                          |                                 | 2003 |               | %
        OF TOTAL |   |  | 2003 |   | %
        OF TOTAL |  
|                                          |                                 |      |               |                    |   |  |      |   |                    |  
|Mail                                      |                                 | 766  |               | 99.9               |   |  | 800  |   | 108.5              |  
|Express                                   |                                 | 223  |               | 29.1               |   |  | 277  |   | 37.5               |  
|Logistics                                 |                                 | (203 | )             | (26.5              | ) |  | (320 | ) | (43.4              | )
|Non-allocated                             |                                 | (19  | )             | (2.5               | ) |  | (19  | ) | (2.6               | )
|                                          |                                 |      |               |                    |   |  |      |   |                    |  
|Total                                     |                                 | 767  |               | 100.0              |   |  | 738  |   | 100.0              |  
|                                          |                                 |      |               |                    |   |  |      |   |                    |  
|(in
      € millions, except percentages) |                                 |      |               |                    |   |  |      |   |                    |  

The difference
    in 2003 between Dutch GAAP and US GAAP operating income on a divisional basis
    was primarily the result of reversing Dutch GAAP goodwill amortisation and
    impairments and recognising US GAAP goodwill impairments, revaluing our financial
    derivatives for US GAAP purposes, adjusting for timing




differences
    related to settling future wage guarantees, deferring gains on certain real
    estate sales and expensing long-term contract incentives that are considered
    prepaid expenses under Dutch GAAP.


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|Chapter
      11 | Other
      financial information on the company
|---------------- | ------------------------------------------------

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The following
  table indicates our 2002 operating income determined in accordance with Dutch
  GAAP, compared to that determined in accordance with US GAAP:






|              |                                   |       |                 |                      |  |  |       |  |                      | 
|------------- | --------------------------------- | ----- | --------------- | -------------------- |  |  | ----- |  | -------------------- | 
|              |                                   |       |                 |                      |  |  |       |  |                      | 
|              | Year
        ended at 31 December
|              |                                   |       |                 |                      |  |  |       | 
|              | DUTCH
        GAAP                |       | US
        GAAP
|              |                                   |       |                 |                      |  |  |       |  |                      | 
|              |                                   | 2002  |                 | %
          OF TOTAL |  |  | 2002  |  | %
          OF TOTAL | 
|              |                                   |       |                 |                      |  |  |       |  |                      | 
|Mail          |                                   | 774   |                 | 73.2                 |  |  | 760   |  | 65.6                
|Express1      |                                   | 192   |                 | 18.1                 |  |  | 246   |  | 21.2                
|Logistics1    |                                   | 87    |                 | 8.2                  |  |  | 148   |  | 12.8                
|Non-allocated |                                   | 5     |                 | 0.5                  |  |  | 5     |  | 0.4                 
|              |                                   |       |                 |                      |  |  |       |  |                      | 
|Total         |                                   | 1,058 |                 | 100.0                |  |  | 1,159 |  | 100.0                | 
|              |                                   |       |                 |                      |  |  |       |  |                     
|
|

|(in
        € millions, except percentages)
|-------------------------------------------
|1.                                         

The
      difference in 2002 between Dutch GAAP and US GAAP operating income on a
      divisional basis was primarily the result of reversing goodwill amortisation,
      revaluing our financial derivatives for US GAAP purposes, adjusting for
      timing differences related to settling future wage guarantees, deferring
      gains on certain real estate sales and expensing long-term contract incentives
      that are considered prepaid expenses under Dutch GAAP. Transition
      to International Financial Reporting StandardsMost
      of the changes in Dutch guidelines for Annual Reporting relate to the further
      alignment between Dutch GAAP and IFRS. TPG
      currently prepares its financial statements under Dutch GAAP. As from 2005
      onwards we have to report our consolidated financial information in accordance
      with International Financial Reporting Standards (IFRS). This change applies
      to all financial reporting for accounting periods beginning on or after
      1 January 2005 and, consequently, our first IFRS results will be our interim
      results for Q1 2005. The financial statements for the year ending 31 December
      2005 will include comparative amounts that have been restated for 2004 to
      comply with IFRS standards that will be in force at the end of 2005. We
      expect to have a pro forma IFRS restated 2004 balance sheet and profit and
      loss account presented on 27 April 2005, before our Q1 2005 results. During
      2004 we have further investigated the key differences between Dutch GAAP
      and IFRS and have revised our accounting manual to be able to consistently
      apply IFRS within the group. We also finalised the review of our reporting
      routines and internal control processes in order to be able to compile the
      data required for IFRS
      based reporting. The main changes in our accounting policies affecting our
      accounting principles relating to the determination of our equity and our
      results relate to Goodwill Amortisation (IFRS 3), Employee Benefits (IAS
      19) and Share Based Payment (IFRS 2). IAS relating to financial instruments
      will only be applied as per 1 January 2005.




Recent
      US GAAP Accounting PronouncementsIn
      December 2004, the FASB issued a revised version of SFAS 123 (Share based
      payments). This statement focuses primarily on accounting for transactions
      in which an entity obtains employee services in share-based payment transactions
      and supersedes APB Opinion No. 25, Accounting for Stock Issued to
      Employees. This Statement applies to all awards granted after 15 June
      2005 and has therefore no impact on the 2004 Financial Statements. In
      December 2003, the FASB issued a revised FASB Interpretation No. 46 (FIN
      46), Consolidation of Variable Interest Entities, an Interpretation
      of ARB No. 51. FIN 46 requires certain variable interest entities
      to be consolidated by the primary beneficiary of the entity if the equity
      investors in the entity do not have the characteristics of a controlling
      financial interest or do not have sufficient equity at risk for the entity
      to finance its activities without additional subordinated financial support
      from other parties. FIN 46 must be adopted no later than the end of the
      first interim or annual reporting period ending after 15 March 2004. The
      adoption of this standard has no material impact on our financial statements. In
      December 2003, the FASB issued a revised version of SFAS 132. It does not
      change the measurement or recognition of those plans required by FASB Statements
      No. 87, Employers Accounting for Pensions, No. 88, Employers
      Accounting for Settlements and Curtailments of Defined Benefit Pension Plans
      and for Termination Benefits, and No. 106, Employers Accounting for
      Postretirement Benefits Other Than Pensions. This Statement only retains
      the disclosure requirements contained in FASB Statement No. 132, Employers
      Disclosures about
      Pensions and Other Postretirement Benefits, which it replaces. It requires
      additional disclosures to those in the original Statement 132 about the
      assets, obligations, cash flows, and net periodic benefit cost of defined
      benefit pension plans and other defined benefit postretirement plans. Since
      the other post retirement plans and our pension plans are incorporated in
      one pension plan it cant be separated and therefore this requirement
      is not applicable for TPG.


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QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKWe
      are exposed to market risk from changes in foreign currency exchange rates,
      interest rates and commodity prices. All of these market risks arise in
      the normal course of business. In order to manage the risk arising from
      these exposures, we may utilise a variety of foreign exchange, interest
      rate and commodity forward contracts, options and swaps. The
      following analyses provide quantitative information regarding our exposure
      to foreign currency exchange risk, interest rate risk and commodity price
      risk. There are certain limitations inherent in the analyses presented,
      primarily due to the assumption that exchange rates change in a parallel
      fashion and that interest rates change instantaneously. In addition, the
      analyses are unable to reflect the complex market reactions that normally
      would arise from the market shifts assumed. For
      a discussion of our accounting policies for derivative instruments and further
      disclosures, see chapter 12  Financial statements and other
      information. We
      use derivative financial instruments solely for the purpose of hedging underlying
      exposures. We enter into contracts related to derivative financial instruments
      for periods commensurate with our underlying exposures and do not take positions
      independent of these exposures. None of these financial instruments are
      leveraged or used for trading purposes or to take speculative positions. FOREIGN
      CURRENCY RISKWe
      operate on an international basis generating revenues and expenses in a
      large number of currencies, resulting in exposures due to the risk of changes
      in foreign currency exchange rates relative to the euro, our functional
      and reporting currency. Our treasury department matches and manages the
      intra group and certain external financial exposures. In order to reduce
      the exposures, hedges are applied to our netted positions per currency. Hedging
      of foreign currency cash flows includes transactional hedging of firm commitments
      and anticipated cash flows. We use an internal clearing system to allocate
      the group operational expenses and management charges to our companies.
      The balances arising from the clearing system are included in the intercompany
      account balance with our companies. Additionally, this account is used to
      provide cash management and internal funding. The net exposures on these
      accounts, predominantly denominated in the local currency of each of our
      companies are hedged. The
      main currencies of our external hedges are the Australian dollar, British
      pound and United States dollar. Significant
      acquisitions are usually funded in the currency of the underlying assets. On
      5 December 2001, we entered into a USD-EUR cross currency interest rate
      swap that provided a USD 435 million short position to hedge an inter-company
      loan of USD 256 million and US dollar net investments for the remainder.
      On 13 December 2004 this transaction was replaced by a USD 256




million
      USD-EUR floating/floating interest rate swap as a hedge on an inter-company
      loan. The market value of this instrument at 31 December 2004 was €5
      million. On the portion accounted for as a net investment hedge, hedge effectiveness
      was tested on a quarterly basis and was fully effective. Realised gains
      on the net investment hedge have been recorded in the cumulative translation
      adjustment account within equity. Apart
      from currency contracts described in this section and the next section,
      no other foreign exchange related instruments were outstanding as of 31
      December 2004. As
      of 31 December 2004 and 2003, the net fair values of our foreign currency
      hedging instruments were approximately €15 million and €141 million,
      respectively. The potential loss in fair value for these instruments from
      an adverse 10% change in quoted foreign currency exchange rates would have
      been approximately €69 million and €87 million for 2004 and 2003,
      respectively. At 31 December 2004, a hypothetical uniform 10% strengthening
      in the value of the euro relative to the currencies in which our transactions
      were denominated would have resulted, net of hedging settlements, in a decrease
      in external revenues of approximately €396 million for the year ending
      31 December 2004. The comparable amount in the prior year was €367
      million. This calculation assumes that each exchange rate would change in
      the same direction relative to the euro. INTEREST
      RATE RISKWe
      incur debt to support business operations, including capital expenditures
      and working capital requirements. We may use instruments such as interest
      rate swaps and forward rate agreements to alter the interest rate profile
      of this debt. In
      December 2004, we unwound USD 200 million of outstanding interest rate swaps
      on which we were receiving fixed interest and paying floating interest and
      also unwound a USD 435 million cross currency fixed/fixed interest rate
      swap which created a short position against the euro and that was hedging
      USD assets. This resulted in a net profit of €11 million accounted
      for as interest and similar income. In
      December 2004, we entered into €300 million of interest rate swaps
      whereby we receive fixed interest and pay floating interest. These interest
      rate swaps act as a hedge against the fair value interest rate risk of our
      5.125% December 2008 Eurobond. The market value of these instruments amounted
      to negative €1 million as of 31 December 2004. Our
      debt instruments, including debt associated with capital leases that bear
      interest at fixed rates of interest are exposed to fluctuations in fair
      value resulting from changes in market interest rates. The potential decrease
      in fair value resulting from
      a hypothetical 10% shift in interest rates would have been approximately
      €11 million and €20 million for 2004 and 2003, respectively. This
      analysis assumes a parallel shift in each currencys yield curve of
      interest rates. See
      notes 11, 12 and 13 to our consolidated financial statements for more information
      about our outstanding debt.


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          Annual Report 2004 | 95
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|Chapter
      11 | Other
      financial information on the company
|---------------- | ------------------------------------------------

---

COMMODITY
      RISKWe
      lease and own a fleet of vehicles and aircraft to facilitate domestic and
      international delivery of post, parcel and logistics activities. We are
      exposed to the risk of an increase in the prices of refined fuels, principally
      jet and diesel gasoline, that are used in the transportation of the goods
      we carry. We may enter into derivative financial instruments to hedge our
      expected consumption. Although
      we are of the opinion that increases in price risks should be able to be
      passed on to our customers, we may use a combination of options, swaps and
      futures contracts to provide some protection against rising fuel and energy
      prices. At
      31 December 2004, we had no outstanding fuel contracts but may enter into
      such contracts in the future. CREDIT
      RISKCredit
      risk represents the loss that we would incur if counterparties with whom
      we enter into operational and financial transactions were unable to fulfil
      the terms of the agreements. We attempt to minimise our risk exposures on
      financial transactions discussed above by limiting our counterparties to
      (large) banks and financial institutions that meet established credit guidelines
      and by limiting our exposure to any counterparty. We continually monitor
      the credit standing of operational and financial counterparties and re-assess
      such exposures.


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|12                         |  | 
|-------------------------- |  | 
|                           | 
|Financial
      statements | 
|                           | 



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|Chapter
      12 | Financial
      statements and other information
|---------------- | ------------------------------------------------

---



Index
  to financial statements of TPG N.V.


| | Report
        of Independent Registered Public Accounting Firm                                             | 99  | 
|- | ----------------------------------------------------------------------------------------------------------- | --- | 
|  |                                                                                                             |     | 
| | Consolidated
        balance sheets                                                                         | 100 | 
|  |                                                                                                             |     | 
| | Consolidated
        statements of income                                                                   | 102 | 
|  |                                                                                                             |     | 
| | Consolidated
        cash flow statements                                                                   | 103 | 
|  |                                                                                                             |     | 
| | Consolidated
        statements of changes in shareholders equity                                          | 104 | 
|  |                                                                                                             |     | 
| | Notes
        to the consolidated financial statements                                                      | 105 | 
|  |                                                                                                             |     | 
| | Accounting
        principles for consolidation, valuation, determination of results and
        cash flows | 105 | 
|  |                                                                                                             |     | 
| | Notes
        to the consolidated balance sheets                                                            | 109 | 
|  |                                                                                                             |     | 
| | Notes
        to the consolidated statements of income                                                      | 124 | 
|  |                                                                                                             |     | 
| | Notes
        to the consolidated cash flow statements                                                      | 140 | 
|  |                                                                                                             |     | 
| | Additional
        notes                                                                                    | 143 | 
|  |                                                                                                             |     | 
| | TPG
        N.V. corporate balance sheets                                                                   | 155 | 
|  |                                                                                                             |     | 
| | TPG
        N.V. corporate statements of income                                                             | 156 | 
|  |                                                                                                             |     | 
| | Notes
        to the corporate balance sheets and statements of income                                      | 156 | 
|  |                                                                                                             |     | 
| | Other
        information                                                                                   | 161 | 
|  |                                                                                                             |     | 

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To the General Meeting of Shareholders of
TPG N.V.

Report of Independent Registered Public Accounting Firm

We have
  audited the accompanying consolidated balance sheets of TPG N.V. and its subsidiaries
  as of 31 December 2004 and 2003 and the related consolidated statements of income,
  of cash flows and of changes in shareholders' equity for each of the three years
  in the period ended 31 December 2004, as set out on pages 100 - 160. These consolidated
  financial statements are the responsibility of the Board of Management. Our
  responsibility is to express an opinion on these consolidated financial statements
  based on our audits.

We
  conducted our audits in accordance with the standards of the Public Company
  Accounting Oversight Board (United States). Those standards require that we
  plan and perform the audit to obtain reasonable assurance about whether the
  consolidated financial statements are free of material misstatement. An audit
  includes examining, on a test basis, evidence supporting the amounts and disclosures
  in the consolidated financial statements. An audit also includes assessing the
  accounting principles used and significant estimates made by management, as
  well as evaluating the overall financial statement presentation. We believe
  that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
  fairly, in all material respects, the financial position of TPG N.V. and its
  subsidiaries at 31 December 2004 and 2003, and the results of their operations
  and their cash flows for each of the three years in the period ended 31 December
  2004, in conformity with accounting principles generally accepted in the Netherlands.

Accounting principles generally accepted in the Netherlands vary in certain
  significant respects from accounting principles generally accepted in the United
  States of America. Information relating to the nature and effect of such differences
  is presented in note 29 to the consolidated financial statements.



Amsterdam, 25 February 2005
  PricewaterhouseCoopers Accountants N.V.

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|Chapter
      12 | Financial
      statements and other information
|---------------- | ------------------------------------------------

---



Consolidated
  balance sheetsBefore
  proposed appropriation of net income

|  |                                                 
|- | ------------------------------------------------
|  |                                                 
|  |                                                 
|  |                                                 
|  |                                                 
|  |                                                 
|  | Fixed
      assets                              
|1 | Intangible
      assets                         
|  | Goodwill                                        
|  | Other
      intangible assets                   
|  |                                                 
|  |                                                 
|2 | Property,
      plant and equipment             
|  | Land
      and buildings                        
|  | Plant
      and equipment                       
|  | Other
      property, plant and equipment       
|  | Construction
      in progress                  
|  |                                                 
|  |                                                 
|3 | Financial
      fixed assets                    
|  | Investments
      in affiliated companies       
|  | Loans
      receivable from affiliated companies
|  | Other
      loans receivable                    
|  | Prepayments
      and accrued income            
|  |                                                 
|  |                                                 
|  |                                                 
|  | Total
      fixed assets                        
|  |                                                 
|  | Current
      assets                            
|4 | Inventory                                       
|5 | Accounts
      receivable                       
|6 | Prepayments
      and accrued income            
|7 | Cash
      and cash equivalents                 
|  |                                                 
|  | Total
        current assets                    
|  |                                                 
|  | Total
        assets                            
|  |                                                 

|(in €millions, except percentage)
|---------------------------------
|                                
|                                



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---

|   |                                            |                      |  
|-- | ------------------------------------------ | -------------------- | -
|   |                                            | At
      31 December |  
|   |                                            |                      |  
|   |                                            | 2004                 |  
|   |                                            |                      |  
|   |                                            |                      |  
|8  | Group
        equity                       |                      |  
|   | Capital and reserves                       | 3,219                |  
|   | Minimum pension liability                  | (454                 | )
|   |                                            |                      |  
|   | Shareholders
      equity                 | 2,765                |  
|   | Minority
      interests                   | 19                   |  
|   |                                            |                      |  
|   | Total
      group equity                   | 2,784                |  
|   |                                            |                      |  
|   | Provisions                                 |                      |  
|21 | Deferred
      tax liabilities             | 218                  |  
|9  | Provisions
      for pension liabilities   | 870                  |  
|10 | Other
      provisions                     | 149                  |  
|   |                                            |                      |  
|   | Total
      provisions                     | 1,237                |  
|   |                                            |                      |  
|   | Long-term
      liabilities                |                      |  
|11 | Long
      term debt                       | 1,440                |  
|11 | Accrued
      liabilities                  | 206                  |  
|   |                                            |                      |  
|   | Total
      long-term liabilities          | 1,646                |  
|   |                                            |                      |  
|   | Current
      liabilities                  |                      |  
|   | Trade
      accounts payable               | 670                  |  
|12 | Other
      current liabilities            | 637                  |  
|13 | Accrued
      current liabilities          | 1,308                |  
|   |                                            |                      |  
|   | Total
        current liabilities          | 2,615                |  
|   |                                            |                      |  
|   | Total
        liabilities and group equity | 8,282                |  
|   |                                            |                      |  

|(in
      €millions, except percentage)
|---------------------------------------
|                                      
|                                      



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|Chapter
      12 | Financial
      statements and other information
|---------------- | ------------------------------------------------

---

Consolidated
  statements of income

|   |                                                           |        
|-- | --------------------------------------------------------- | -------
|   |                                                           | 2004   
|   |                                                           |        
|   |                                                           |        
|15 | Net
      sales                                           | 12,585 
|16 | Other
      operating revenues                            | 50     
|   |                                                           |        
|   | Total
      operating revenues                            | 12,635 
|   |                                                           |        
|   | Cost
      of materials                                   | (600   
|   | Work
      contracted out and other external expenses     | (5,262 
|17 | Salaries
      and social security contributions          | (4,305 
|18 | Depreciation,
      amortisation and impairments          | (533   
|19 | Other
      operating expenses                            | (761   
|   |                                                           |        
|   | Total
      operating expenses                            | (11,461
|   |                                                           |        
|   | Operating
      income                                    | 1,174  
|   |                                                           |        
|20 | Interest
      and similar income                         | 37     
|20 | Interest
      and similar expenses                       | (114   
|   | Net
      financial (expense) / income                    | (77    
|   |                                                           |        
|   | Income
      before income taxes                          | 1,097  
|   |                                                           |        
|21 | Income
      taxes                                        | (428   
|   | Results
      from investments in affiliated companies    | (3     
|   |                                                           |        
|   | Net
      income before minority interests                | 666    
|   |                                                           |        
|   | Minority
        interests                                | 1      
|   |                                                           |        
|   | Net
      income                                          | 667    
|   |                                                           |        
|17 | Net
      income per ordinary share (in € cents)1         | 140.9  
|17 | Net
      income per diluted ordinary share (in € cents)2 | 140.7  
|   |                                                           |        

|(in
      € millions, except percentage)
|----------------------------------------
|1.                                      
|2.                                      
|                                        
|                                       
|                                       



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---



Consolidated
  cash flow statementsBefore
  proposed appropriation of net income

|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|-- | --------------------------------------------------------------- |  | ---------------------- | - | -------- | - | ---- | - | -------- | - | ----- | -
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|   |                                                                 | 
|   |                                                                 |  | At
        31 December |  
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|   |                                                                 |  | 2004                   |   | %        |   | 2003 |   | %        |   | 2002  |  
|   |                                                                 |  |                        |   | VARIANCE |   |      |   | VARIANCE |   |       |  
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|   | Net
      income                                                |  | 667                    |   |          |   | 300  |   |          |   | 599   |  
|   | Depreciation,
      amortisation and impairments                |  | 533                    |   |          |   | 711  |   |          |   | 490   |  
|   | Changes
      in provisions:                                    |  |                        |   |          |   |      |   |          |   |       |  
|   | Deferred
      tax liabilities                                  |  | 82                     |   |          |   | 180  |   |          |   | (16   | )
|   | Provisions
      for pension liabilities                        |  | (309                   | ) |          |   | (221 | ) |          |   | (111  | )
|   | Other
      provisions                                          |  | (3)                    |   |          |   | (7)  |   |          |   | (14   | )
|   | Changes
      in working capital:                               |  |                        |   |          |   |      |   |          |   |       |  
|   | Inventory                                                       |  | 3                      |   |          |   | 6    |   |          |   | (1    | )
|   | Accounts
      receivable                                       |  | (65                    | ) |          |   | (37  | ) |          |   | 136   |  
|   | Other
      current assets                                      |  | (11                    | ) |          |   | (10  | ) |          |   | (74   | )
|   | Current
      liabilities (excluding short-term financing)      |  | 103                    |   |          |   | 15   |   |          |   | 23    |  
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|22 | Net
      cash provided by operating activities                 |  | 1,000                  |   | 6.7      |   | 937  |   | (9.2     | ) | 1,032 |  
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|   | Acquisition
      of group companies                            |  | (217                   | ) |          |   | (59  | ) |          |   | (128  | )
|   | Disposal
      of group companies                               |  | (1                     | ) |          |   | 6    |   |          |   | 4     |  
|   | Acquisition
      of affiliated companies                       |  | (11                    | ) |          |   | (16  | ) |          |   | (11   | )
|   | Disposal
      of affiliated companies                          |  | 1                      |   |          |   | 2    |   |          |   | 10    |  
|   | Capital
      expenditure on intangible assets                  |  | (67                    | ) |          |   | (67  | ) |          |   | (74   | )
|   | Disposals
      of intangible assets                            |  | 15                     |   |          |   | 6    |   |          |   | 10    |  
|   | Capital
      expenditure of property, plant and equipment      |  | (290                   | ) |          |   | (287 | ) |          |   | (398  | )
|   | Disposals
      of property, plant and equipment                |  | 32                     |   |          |   | 40   |   |          |   | 53    |  
|   | Changes
      in other financial fixed assets                   |  | 194                    |   |          |   | (2   | ) |          |   | 12    |  
|   | Changes
      in minority interests                             |  | 6                      |   |          |   | 4    |   |          |   | 4     |  
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|23 | Net
      cash used in investing activities                     |  | (338                   | ) | 9.4      |   | (373 | ) | 28.0     |   | (518  | )
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|   | Changes
      in shareholders equity:                          |  |                        |   |          |   |      |   |          |   |       |  
|   | Dividends
      paid                                            |  | (237                   | ) |          |   | (204 | ) |          |   | (185  | )
|   | Other
      changes in shareholders equity                     |  | (148                   | ) |          |   |      |   |          |   | 1     |  
|   | Long-term
      liabilities acquired                            |  | 52                     |   |          |   | 70   |   |          |   | 63    |  
|   | Long-term
      liabilities repaid                              |  | (100                   | ) |          |   | (83  | ) |          |   | (67   | )
|   | Changes
      in short-term bank debt                           |  | (67                    | ) |          |   | (219 | ) |          |   | (410  | )
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|24 | Net
      cash used by financing activities                     |  | (500                   | ) | (14.7    | ) | (436 | ) | 27.1     |   | (598  | )
|   | Changes
      in cash and cash equivalents                      |  | 162                    |   | 26.6     |   | 128  |   | 252.4    |   | (84   | )
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|   | Cash
      and cash equivalents at beginning of financial year  |  | 470                    |   |          |   | 357  |   |          |   | 451   |  
|   | Exchange
      rate differences on cash items                   |  | (5                     | ) |          |   | (14  | ) |          |   | (18   | )
|   | Cash
      and cash equivalents from acquisitions and disposals |  | 6                      |   |          |   | (1   | ) |          |   | 8     |  
|   | Changes
      in cash and cash equivalents                      |  | 162                    |   |          |   | 128  |   |          |   | (84   | )
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  
|   | Cash
        and cash equivalents at end of financial year      |  | 633                    |   | 34.7     |   | 470  |   | 31.7     |   | 357   |  
|   |                                                                 |  |                        |   |          |   |      |   |          |   |       |  

|(in
      €millions, except percentage)
|---------------------------------------
|                                      
|                                      
|                                      



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|Chapter
      12 | Financial
      statements and other information
|---------------- | ------------------------------------------------

---



Consolidated
  statements of changes in shareholders 
  equity from 31 December 2001 to 31 December 2004

|                                                      
|------------------------------------------------------
|                                                      
|                                                      
|Balance
      at 31 December 2001                     
|Net
      income                                      
|                                                      
|Foreign
      exchange effects                        
|Other                                                 
|                                                      
|Total
      recognised income / expense for the period
|Final
      dividend previous year                    
|Appropriation
      of net income                     
|Interim
      dividend current year                   
|                                                      
|Total
      direct changes in equity                  
|                                                      
|Balance
      at 31 December 2002                     
|Net
      income                                      
|                                                      
|Foreign
      exchange effects                        
|Other                                                 
|                                                      
|Total
      recognised income / expense for the period
|Final
      dividend previous year                    
|Appropriation
      of net income                     
|Interim
      dividend current year                   
|Total
      direct changes in equity                  
|                                                      
|Balance
      at 31 December 2003                     
|Net
      income                                      
|Foreign
      exchange effects                        
|                                                      
|Other                                                 
|                                                      
|Total
      recognised income / expense for the period
|Final
      dividend previous year                    
|Appropriation
      of net income                     
|Interim
      dividend current year                   
|Repurchase
      of shares                            
|Minimum
      pension liabilities                     
|Other                                                 
|                                                      
|Total
      direct changes in equity                  
|                                                      
|Balance
      at 31 December 2004                     
|                                                      

|(in € millions)
|---------------
|              
|              



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---

Notes
  to the consolidated financial statements

---

Accounting
  principles for consolidation, valuation, determination of results and cash flow DESCRIPTION
    OF OUR BUSINESSOur operations
    can be divided amongst our three primary business divisions: mail, express
    and logistics. The mail division primarily provides services for collecting,
    sorting, transporting and distributing domestic and international mail. The
    express division provides demand door-to-door express delivery services for
    customers sending documents, parcels and freight worldwide. The logistics
    division provides supply chain management services on a contract-by-contract
    basis to customers worldwide in various business sectors including the automotive,
    publishing, and fast moving consumer goods industries. BASIS
    OF PREPARATION AND SIGNIFICANT ACCOUNTING PRINCIPLESThe financial
    statements have been prepared in accordance with the provisions of Part 9,
    Book 2 of the Dutch civil code and accounting principles as described in the
    Guidelines for Annual Reporting in the Netherlands (Dutch
    GAAP). All amounts
  in the financial statements are stated in euros, unless otherwise indicated. Capital
  is determined on the basis of historical cost. Assets and liabilities are included
  at nominal value unless otherwise indicated. CHANGES
    IN ACCOUNTING POLICIESStarting
    from the financial year 2003 dividend payable amounts have been reclassified
    from Other current liabilities to Shareholders equity,
    (2002: 119; 2001: 114), in accordance with RJ160 of Guidelines for Annual
    Reporting in the Netherlands. CONSOLIDATION
    PRINCIPLESGroup
    companies, which are companies that form an organisational and economic entity
    with our company and in which we have a controlling interest, are fully consolidated.
    The minority participating interests in group equity and in net income are
    disclosed separately. Companies are consolidated from the date the Group has
    control over the company and divested companies are included in the consolidated
    financial statements up to the date the Group ceases to have control over
    the company. These
  accounting principles apply to the balance sheets and the statements of income
  and to the group companies included in the consolidation. All significant intercompany
  balances and transactions have been eliminated on consolidation. The Groups
    share in the results of an affiliated company is computed on the basis of
    TPGs equity portion in that particular affiliated company. In the
    consolidated balance sheet, shares in affiliated companies are reported separately
    under financial fixed assets. The book value of the shareholdings changes
    to reflect TPGs share in




net
    income of the respective companies, reduced by dividends received. If the
    Groups share of any accumulated losses exceeds the acquisition value
    of the shares in the company, the book value is reduced to zero and the reporting
    of losses ceases, unless the Group is bound by guarantees or other undertakings
    in relation to the affiliated company. Joint
    ventures are defined as companies in which TPG, jointly with another partner
    through agreement, has a joint decisive influence over operations. Joint ventures
    are reported in accordance with the proportional consolidation method. In
    applying the proportional consolidation method, the Groups percentage
    share of the balance sheet and statement of income items are included in the
    consolidated financial statements of TPG N.V. The consolidated
  financial statements include the financial statements of TPG N.V. and its consolidated
  companies. A complete list of subsidiaries and affiliated companies included
  in our consolidated financial statements is publicly filed at the office of
  the commercial register of the Chamber of Commerce in Amsterdam. This list has
  been prepared in accordance with the provisions of Article 379, Paragraph 1
  and Article 414, Part 9, Book 2 of the Dutch civil code. FOREIGN
    CURRENCIESRevenues
    and expenses in foreign currencies are included in the statements of income
    at the rate on the date incurred (cash value or at an average exchange rate
    for accounting purposes). If a forward contract has been entered into, the
    forward exchange rate is applied. Accounts
  receivable, liabilities, cash and cash equivalents denominated in foreign currencies
  are translated into euro at the rate of exchange at the balance sheet date or
  at the forward exchange rate if a forward contract has been entered into. Exchange
  rate differences are included in the statements of income under interest and
  similar income or interest and similar expenses. Assets
    and liabilities of foreign companies with functional currencies other than
    euro have been translated into euro at the rate of exchange at the balance
    sheet date. The resulting exchange rate differences are added to or charged
    against the cumulative translation reserve, which forms part of equity. The
    exchange result on loans or other financial instruments used to hedge the
    companys exposure with respect to its net investment in foreign companies
    denominated in foreign currencies is also added to or charged against the
    cumulative translation reserves. Revenues and expenses of foreign companies
    with functional currencies other than euro have been translated at the average
    rate for the year. Exchange differences arising on foreign currency liabilities
    in entities whose functional currency is the euro are added to or charged
    against cumulative translation reserve where the liability has the nature
    of a permanent investment. Goodwill,
    other intangible assets, property, plant and equipment and inventory (non-monetary
    assets) of direct foreign activities are translated at historical exchange
    rates. Accounts receivable,




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liabilities,
    cash and cash equivalents (monetary assets and liabilities) of direct foreign
    activities are translated at the rate of exchange at the balance sheet date.
    The resulting exchange rate difference from these translations is included
    in the statements of income under interest and similar income or under interest
    and similar expenses. USE
    OF ESTIMATESThe preparation
    of financial statements in conformity with generally accepted accounting principles
    requires management to make estimates and assumptions that affect the reported
    amounts of assets and liabilities and the reported amounts of revenue and
    expenses during the period as well as other information disclosed. Actual
    results could differ from those estimates. Accounting
    policies relating to the valuation of assets and liabilities GOODWILLAcquired
    participating interests are stated at net asset value at the acquisition date,
    determined in accordance with TPG N.V.s accounting policies. In determining
    the net asset value, adjustments to fair value are taken into account, net
    of deferred taxation. Goodwill
  represents the excess of the consideration paid over the fair value of the acquired
  net assets. Goodwill arising from acquisitions is valued at historical cost
  less amortisation or at the recoverable amount whenever an impairment took place.
  Amortisation expense is calculated using the straight-line method over the estimated
  useful life of up to 20 years, unless a longer period can be specifically identified
  and supported. SOFTWARE,
    PREPAYMENTS ON INTANGIBLE ASSETS AND OTHER INTANGIBLE ASSETSCosts
    related to the development and installation of software for internal use are
    capitalised at historical costs and amortised over the estimated useful life. Prepayments
  on intangibles assets include mainly assets under construction which are not
  yet used in operating activities. At the moment an intangible asset is used
  in operating activities, the asset is transferred to the respective intangible
  asset category. The amortisation of intangible assets will begin at the moment
  the assets have been transferred. Other
    intangible assets are mainly related to licences and concessions and assets
    which can not be classified as goodwill, software or prepayments on intangible
    assets. The valuation of other assets is at historical costs and amortised
    over the estimated useful life. PROPERTY,
    PLANT AND EQUIPMENTProperty,
    plant and equipment are valued at historical cost less depreciation or at
    the recoverable amount whenever an impairment took place. In addition to costs
    of acquisition, we also include costs of bringing the asset to its working
    condition, handling and installation costs and the non-refundable purchase
    taxes. Depreciation is calculated using the straight-line method




based
  on the estimated useful life, taking into account any residual value. Land is
  not depreciated. System software is capitalised and amortised as a part of the
  tangible fixed asset for which it was acquired to operate, because the estimated
  useful life is inextricably linked to the estimated useful life of the associated
  asset. Property,
  plant and equipment that is no longer used in operating activities is valued
  at the lower of either net book value or the recoverable amount. Upon retirement
  or sale, the related historical cost and accumulated depreciation are removed
  from the accounts and any profit or loss resulting from disposal or sale of
  property, plant and equipment is included in the statements of income as part
  of other operating revenues. AFFILIATED
    COMPANIESAn affiliated
    company is a company in which the Group exercises significant influence without
    the partly owned company being a group company or joint venture. Normally,
    this means that the group owns between 20% and 50% of the votes. Accounting
    for affiliated companies is according to the equity method. Affiliated
  companies identified as held for disposal are valued at the lower of historical
  cost or recoverable amount. INVENTORYInventories
    of raw materials and finished goods are valued at the lower of historical
    cost or net realisable value less any provision required for obsolescence.
    Historical cost is based on weighted average prices. ACCOUNTS
    RECEIVABLETrade
    accounts receivables are stated at face value net of an allowance for doubtful
    receivables. Loans receivable from affiliated companies due within one year
    are included in accounts receivable. CASH
    AND CASH EQUIVALENTSCash
    and cash equivalents include cash at hand, bank account balances, bills of
    exchange and cheques (only those which can be cashed in the short-term). Cash
    and cash equivalents with an original maturity above twelve months are reported
    as financial fixed assets. All highly
  liquid investments with an original maturity of three months or less at date
  of purchase are considered to be cash equivalents. MINORITY
    INTERESTSMinority
    interests in income of consolidated subsidiaries represent the minority shareholders
    share of the income or loss of various consolidated subsidiaries. The minority
    interest in the consolidated balance sheets reflects the original investment
    by these minority shareholders in these consolidated subsidiaries, along with
    their proportional share of earnings or losses of these subsidiaries. DERIVATIVE
    FINANCIAL INSTRUMENTSWe use
    derivative financial instruments as part of an overall risk-management strategy.
    When used, these instruments are applied as a means of hedging exposure to
    foreign currency risk, interest rate risk and commodity risk connected to
    anticipated cash


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flows
  or existing assets and liabilities. We do not hold or issue derivative financial
  instruments for trading purposes. Gains
  and losses from foreign currency forward exchange contracts that are hedging
  anticipated cash flows are deferred in other assets or other liabilities and
  recognised in the statement of income, or as adjustments of carrying amounts,
  when the hedged transaction occurs. If an anticipated cash flow does not occur
  or is expected not to occur, the foreign currency forward exchange contract
  is terminated and any result is recognised in interest and similar income or
  interest and similar expenses. The
    net exposures of derivative financial instruments are re-valued at the prevailing
    spot exchange rate. Realised and unrealised gains and losses resulting from
    hedges of on balance sheet foreign currency exposure are included in interest
    and similar income or in interest and similar expenses offsetting the revaluation
    of the underlying on-balance sheet items. Foreign currency gains and losses
    on derivative financial instruments used to hedge our net investments in foreign
    operations are recorded in equity, net of taxes. Premium
  or discount arising at the inception of foreign currency derivatives are amortised
  over the life of the contract and included in interest and similar income or
  interest and similar expenses. Payments and receipts on interest rate swaps
  are recorded on an accruals basis, if interest rate swaps are terminated early
  the gain or loss on interest is recorded within interest and similar income
  or interest and similar expenses. PROVISIONS
    FOR PENSION LIABILITIESFor defined
    benefit plans, pension provision are accounted for at fair value in accordance
    with SFAS no. 87, "Employers Accounting for Pensions", through which
    pension expenses and related liabilities are based on a specific methodology
    that reflects the concepts of accrual accounting. Amounts are reflected in
    the statements of income systematically over the remaining service lives of
    the employees covered by the plan. Amounts charged to expense are typically
    different from amounts funded. In the
    event that the accumulated benefit obligation, calculated as the present value
    of the benefits attributed to employee service rendered until the balance
    sheet date and based on historical compensation levels, exceeds the fair value
    of the plan assets and/or the existing level of the pension provision, the
    difference is, pursuant to SFAS 87, adopted to provisions by means of recognition
    of an intangible asset for prior service costs with the balance, net of taxes,
    being charged to shareholder's equity. Pension costs for defined
    contribution plans are expensed to the statements of income when incurred. PROVISIONSProvisions
    are recognised when there is a present obligation as a result of a past event,
    it is probable that an outflow of resources embodying economic benefits will
    be required to settle the obligation and a reliable estimate can be made of
    the amount of the obligation. Provisions
    are recorded for restructuring, retirements and other obligations. Provisions
    are recorded at nominal value unless the effect of the time value of money
    is material, in which case the




provision
    is stated at net present value. Certain post-retirement benefits are stated
    at the net present value of future obligations. Provisions
    for onerous contracts are recorded when the unavoidable costs of meeting the
    obligation under the contract exceed the economic benefits expected to arise
    from that contract, taking into account impairment of fixed assets first. DEFERRED
    TAXESDeferred
    tax assets and liabilities, arising from temporary differences between the
    nominal values of assets and liabilities and the
  fiscal valuation of assets and liabilities, are calculated, using the tax rates
  expected to apply when they are realised or settled. Deferred tax assets are
  recognised if it is more likely than not that they will be realised in the foreseeable
  future. Deferred tax assets and liabilities with the same term and the same
  consolidated tax group are presented net in the balance sheet, if we have a
  legally enforceable right to offset the recognised amounts. Accounting
    principles relating to the determination of results REVENUESRevenues
    are recognised when services are rendered, goods are delivered or work is
    completed. Losses are recorded when probable. Revenue is the gross inflow
    of economic benefits during the current year arising in the course of the
    ordinary activities when those inflows result in increases in equity, other
    than increases relating to contributions from equity participants. Revenues
        of delivered goods and services are recognised when:
      we
        have transferred to the buyer the significant risks andrewards
        of ownership of the goods;
      we
        retain neither continuing managerial involvement to thedegree
        usually associated with ownership nor effective controlof
        the goods sold;
      the
        amounts of revenue are measured reliably;
      it
        is probable that the economic benefits associated with thetransaction
        will flow to us;
      the
        costs to be incurred in respect of the transaction can bemeasured
        reliably; and
      the
        stage of completion of the transaction at the balancesheet
        date can be measured reliably. Revenue
  is measured at the fair value of the consideration of received amounts or receivable
  amounts. Amounts
  received in advance are recorded as accrued liabilities until services are rendered
  to customers, goods are delivered or work is completed, using the percentage
  of completion method, based on the stage of completion of the service provided. NET
    SALESNet sales
    represent the revenues from the delivery of goods and services to third parties,
    less discounts and taxes levied on sales. OTHER
    OPERATING REVENUESOther
    operating revenues include revenues that do not arise from our normal trading
    activities and include net gains from the






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sale
    of property, plant and equipment and the rental income from buildings and
    houses. STOCK-BASED
    COMPENSATIONOur employee
    stock option plans and our performance share plan are performance-based. The
    final benefits to be awarded under these plans may vary depending on target
    total shareholder returns for our shares over the respective three-year vesting
    periods. If the exercise price for our options is less than the underlying
    share price on the date of grant, we recognise compensation expense in the
    year of grant equal to the number of options granted multiplied by the difference
    between the underlying share price and the option exercise price. We recognise
    the total compensation expense for our performance share plans in the year
    in which the related shares vest. The total compensation expense to be recognised
    for our performance share plans will be equal to the number of performance
    shares that ultimately vest multiplied by the underlying share price on the
    vesting date. Under
  our bonus-matching scheme, a part of the annual bonus is paid in shares. Should
  the employee retain at least half the shares awarded to him or her under this
  scheme for a period of three years, the company will match those shares on a
  one-to-one basis at no cost to the employee. There are two cost components to
  this scheme. The first cost component relates to the employees annual
  bonus, paid in shares. This component is recognised as compensation expense
  in the year to which the bonus relates. The second cost component relates to
  the shares that will be matched on the third anniversary of the grant date.
  The total compensation cost for this second component is recognised as compensation
  expense evenly over the three-year vesting period. The total compensation cost
  for this second component is equal to the maximum number of bonus shares that
  may be matched, multiplied by the underlying share price on the date of grant. IMPAIRMENTSWe review
    intangible and tangible fixed assets for impairment on an annual basis and
    whenever events or changes in circumstances indicate that the carrying value
    of an asset may not be fully recoverable. For all goodwill amortised for a
    period greater than 20 years and for all tangible and intangible assets for
    which an impairment may have occurred, the carrying value of the related asset
    is reassessed through comparison with the value of the related discounted
    future cash flows. Any impairment arising on this comparison is reflected
    as a charge in the statements of income. RESULTS
    FROM INVESTMENTS IN AFFILIATED COMPANIESThe amount
    included in this account refers to the contribution made to net income by
    companies in which we have a direct or indirect interest using the equity
    method. INCOME
    TAXESThe amount
    of income tax included in the statements of income is based upon income before
    tax in accordance with our interpretation of applicable regulations and rates,
    taking into account permanent differences between the income for book purposes
    and for tax purposes.




ACCOUNTING
    PRINCIPLES RELATING TO THE CONSOLIDATED CASH FLOW STATEMENTThe cash
    flow statement has been prepared using the indirect method. Cash flows in
    foreign currencies have been translated at average exchange rates. Exchange
    rate differences affecting cash items are shown separately in the cash flow
    statement. Receipts and payments with respect to interest and taxation on
    profits are included in the cash flow from operating activities. The cost
    of acquisition of new group companies, affiliated companies and investments,
    insofar as it was paid for in cash, is included in cash flow from investing
    activities. The cash assets of the newly acquired
  group companies are shown separately in the cash flow statement. Cash flows
  from derivatives are recognised in the statement of cash flows in the same category
  as those of the hedged item.




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Notes
  to the consolidated balance sheets

£ 1INTANGIBLE
  ASSETS: 2,503 MILLION (2003: 2,421)

Statement
  of changes in intangible assets

|                                               |                
|---------------------------------------------- | ---------------
|                                               | Goodwill       
|                                               |                
|Amortisation
      percentage                  | 2.5%-
      20%
|                                               |                
|Historical
      cost                          | 3,196          
|Accumulated
      amortisation and impairments | (887           
|                                               |                
|Balance
      at 31 December 2003              | 2,309          
|                                               |                
|Changes
      in 2004                          |                
|Additions                                      | 265            
|Disposals                                      | (22            
|(De-)Consolidation                             |                
|Internal
      transfers / reclassifications   |                
|Amortisation                                   | (146           
|Exchange
      rate differences                | (31            
|                                               |                
|Total
      changes                            | 66             
|Historical
      cost                          | 3,376          
|Accumulated
      amortisation and impairments | (1,001         
|                                               |                
|Balance
      at 31 December 2004              | 2,375          
|                                               |                

(in €millions,
  except percentages)

The estimated
    amortisation expenses for the subsequent five years are 2005: €200 million,
    2006: €182 million, 2007: €186 million, 2008: €155 million,
    2009: €159 million and after 2009: €1,621 million.


GOODWILL

Summary of principal acquisitions in the year

|                                                           |          
|---------------------------------------------------------- | ---------
|Company
      name                                         | Division 
|                                                           |          
|Wilson
      Logistics Holding A.B.                        | Logistics
|Overtrans
      Srl (remaining shares)                     | Logistics
|Cendris
      BSC Customer Contact B.V.                    | Mail     
|Lojistik
      ve Dagitim Hizmetleri AS (remaining shares) | Logistics
|Ventana Cargo S.p.A.                                       | Logistics
|Höfinger
      HaushaltsWerbung GmbH (remaining shares)    | Mail     
|Other
      acquisitions (incl. remaining shares)          |          
|                                                           |          
|Total                                                      |          
|                                                           |          

(in €millions)

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Chapter
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Additions
    in 2004 include €265 million (2003: 58) of goodwill arising from the
    acquisition of interests in newly acquired group companies and from extending
    our interests in group companies acquired in prior years. Our acquisitions
    in 2004 have generally centred around addressing our long-term strategic plans
    by, amongst others, the global freight forwarding operations and obtaining
    full control of some of our successful joint ventures. The acquisition of
    Wilson contributes to this strategy to offer 100% integrated supply chain
    management services. **The acquisition
  of Wilson Logistics Holding A.B., goodwill €236 million, amount paid €190 million.**In August
    2004, we completed the acquisition of the Swedish-based global freight management
    company Wilson from Nordic Capital following approval from the relevant competition
    authorities. The purchase price for Wilson includes €7 million of additional
    acquisition costs. We have financed the acquisition from cash reserves. The
    recognised goodwill of the acquisition of Wilson is €236 million. The opening balance sheet of  Wilson is summarised in the table below: Openings
        balance sheet summary of newly acquired entityCompany
        name
      WilsonTotal
        fixed assets
      19Total
        current assets
      114Total
        assets
      133Shareholders
        equity
      (46
      )Provisions
      5Longterm
        liabilities
      56Current
        liabilities
      118Total
        liabilities and equity
      133 (in €millions) In addition,
    the other acquisitions of €27 million, paid in cash, consist of amounts
    paid in respect of the additional shareholdings in previous acquisitions from
    prior years amounting to €17 million, and a number of smaller acquisitions
    with a combined purchase price of €10 million. Goodwill recognised on
    these transactions amounted to €29 million.




Recognised
    goodwill related to the acquisitions was determined based upon fair value
    of assets and liabilities acquired. The goodwill
    on acquisitions in 2004 will be amortised over their estimated useful lives
    of up to 20 years. Goodwill
  relating to the 1996 acquisition of the TNT and GD Express Worldwide business
  is estimated to have a useful life of 40 years and is amortised over that period.
  The historic cost of this goodwill is €1,313 million with accumulated
  amortisation and impairments of €296 million (2003: 265). The assessment
  of a useful economic life of 40 years is deemed to be appropriate on the basis
  of a substantial market share and extensive network acquired. The barriers to
  enter the market add to the sustainability of the position together with the
  stability and foreseeable life of the industry to which the goodwill relates. Pro-forma
    ResultsThe following
    represents the pro-forma results of TPG for 2004 and 2003 as though the acquisition
    of Wilson had taken place on 1 January 2003. These pro-forma results do not
    necessarily reflect the results that would have arisen had these acquisitions
    actually taken place on 1 January 2003 nor are they necessarily indicative
    of the future performance of TPG.


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This calculation
  also includes the impact of amortisation and an imputed interest cost.

Pro-forma
    results


|                                                |                                    
|----------------------------------------------- | -----------------------------------
|                                                | Year
      ended at 31 December    
|                                                |                                    
|                                                | Pro-forma
      results (unaudited)
|                                                |                                    
|                                                | 2004                               
|                                                |                                    
|Total
      operating revenues                  | 13,105                             
|Net
      income before minority interests      | 664                                
|Net
      income                                | 665                                
|Net
      income (in € cents) per share         | 140.5                              
|Net
      income (in € cents) per diluted share | 140.3                              
|                                                |                                    

(in €millions,
  except per share data)

SOFTWAREInternally
    generated software included in the total software balance had a book value
    of €82 million at 31 December 2004 (2003: 68). All software
    has a definite economic useful life and is amortised over its economic life. PREPAYMENTS
    AND OTHER INTANGIBLE ASSETSPrepayments
    mainly relate to assets under construction (mainly £ 2PROPERTY,
    PLANT AND EQUIPMENT: 1,924 MILLION (2003: 2,009) Statement
    of changes in property, plant and equipment




software)
    which are not yet used in operating activities of €16 million (2003:
    12). The other
    intangible assets are mainly related to licences and concessions of €3
    million (2003: 1). All other intangible assets have a definite economic useful
    life and are amortised over their economic life. We do
    not conduct research and development, in the narrow sense, comparable with
    the normal activities in this area. Therefore research and development costs
    are not capitalised and not amortised.


|                                               |                               
|---------------------------------------------- | ------------------------------
|                                               | Land
      and
      buildings
|                                               |                               
|Depreciation
      percentage                  | 0%-10%                        
|                                               |                               
|Historical
      cost                          | 1,496                         
|Accumulated
      depreciation and impairments | (515                          
|Balance
      at 31 December 2003              | 981                           
|                                               |                               
|Changes
      in 2004                          |                               
|Capital
      expenditure                      | 22                            
|Acquisitions                                   | 2                             
|Disposals                                      | (16                           
|Exchange
      rate differences                | (7                            
|Net
      additions / disposals                | 1                             
|Depreciation
      and impairments             | (71                           
|Transfers
      and other changes              | 49                            
|Total
      changes                            | (21                           
|                                               |                               
|Historical
      cost                          | 1,524                         
|Accumulated
      depreciation and impairments | (564                          
|                                               |                               
|Balance
      at 31 December 2004              | 960                           
|                                               |                               

(in €
  millions, except percentages)

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Chapter
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Included
  in the balance sheet on 31 December 2004 are:

|                                 |                                |  |                                 |  |                                                       |  |       | 
|-------------------------------- | ------------------------------ |  | ------------------------------- |  | ----------------------------------------------------- |  | ----- | 
|                                 |                               
|                                 | Land
      and
      buildings |  | Plant
      and
      equipment |  | Other
      property,
      plant and
      equipment |  | Total
|                                 |                               
|Under
      finance lease        | 49                             |  | 21                              |  | 54                                                    |  | 124   | 
|Mail                             | 9                              |  |                                 |  |                                                       |  | 9     | 
|Express                          | 16                             |  | 7                               |  | 53                                                    |  | 76    | 
|Logistics                        | 24                             |  | 14                              |  | 1                                                     |  | 39    | 
|Pledged
      as security        | 36                             |  |                                 |  | 12                                                    |  | 48    | 
|Express                          | 36                             |  |                                 |  | 12                                                    |  | 48    | 
|Subleased
      to third parties | 9                              |  |                                 |  | 22                                                    |  | 31    | 
|Express                          |                                |  |                                 |  | 22                                                    |  | 22    | 
|Logistics                        | 9                              |  |                                 |  |                                                       |  | 9     | 
|                                 |                               

(in €
  millions)

Historical
  cost refers to, amongst others, the then current value of the property, plant
  and equipment contributed by the former parent Royal PTT Nederland N.V. to our
  company upon incorporation on 1 January 1989. The calculation of the depreciation
  expense on these assets takes into account the useful life that had already
  elapsed at that date. The book value at 31 December 2004 of these assets contributed
  to our company on 1 January 1989 is €103 million (2003: 113), net of accumulated
  depreciation of €287 million (2003: 298). Aircraft
    including spare parts are classified as other property, plant and equipment.
    Aircraft and (spare) engines are depreciated on a straight-line basis over
    their useful lives to estimated residual values of 20%. Depending on the type
    of aircraft, the useful life varies from 10 to 20 years. Spare parts are depreciated
    to their estimated residual value on a straight line basis over the remaining
    estimated useful life of the associated aircraft or engine type.




The
    book value of aircraft including spare parts is €243 million (2003: 271
    million), comprising a historical cost of €371 million (2003: 375) with
    accumulated depreciation €128 million (2003: 104). All 42 aircraft (2003:
    43) are operated by the express division. Lease
    hold rights and ground rent for land and buildings are held in all divisions.
    The book value of the lease hold rights and ground rent in mail is €9
    million (2003: 0), comprising a historical cost of €13 million with accumulated
    depreciation of €4 million. The book value of the lease hold rights and
    ground rent in express is €16 million (2003: 11), comprising a historical
    cost of €19 million with accumulated depreciation of €3 million.
    The book value of the lease hold rights and ground rent in logistics is €24
    million (2003: 19), comprising a historical cost of €31 million with
    accumulated depreciation of €7 million. The expiration of contracts for leasehold and ground rents are:


Expiration
  terms of contracts Leasehold and groundrent for land and buildings

|                             
|-----------------------------
|                             
|                             
|less
      than 1 year       
|between
      1 and 5 years  
|between
      5 and 10 years 
|between
      10 and 20 years
|                             

(in €
  millions)

There
    are no existing contracts for leasehold and ground rents longer then 20 years
    or contracts with indefinite terms. Lease hold rights and ground rent for
    land and buildings are mainly in Belgium for €29 million, in France for
    €9 million, in Spain for €2 million and in the Netherlands for €8
    million. In 2004 the annual amount paid for the lease hold rights and ground
    rent contracts was €2 million (2003: 3). The property,
    plant and equipment of €48 million which are pledged as security to third
    parties are located in France for €14




million
    and in Germany for €34 million. All pledges as security to third parties
    are related to the express division. We do not
  hold freehold office buildings for long term investments and for long term
  rental income purposes. The rental income is based upon incidental rental contracts
  with third parties for buildings which are momentarily not in use by TPG or
  based upon contracts which are supportive to the primary business activities
  of our company.




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There are
  no material capitalised borrowing costs in the capital expenditure of property,
  plant and equipment in 2004. The book
    value of temporarily idle property, plant and equipment is €4 million
    on 31 December 2004. This relates mainly to land and buildings.The
    gross carrying amount of fully depreciated property, plant and equipment that
    is still in use is €261 million of which €232 million is related
    to plant and equipment and €29 million is related to land and buildings.The carrying
    amount of property, plant and equipment retired from active use and held for
    disposal is €9 million. The future
  minimum lease receivable sub-lease payments on non-cancellable operating leases
  to third parties are: Payment
    schedules sublet property, plant and equipment shorter
        than 1 year
      3between
        1 and 5 years
      4over
        5 years
      1Total
        minimum receivable sublet payments
      8(in
        € millions) The impairment
    costs in 2004 are €11 million (2003: 10; 2002: 1). These costs are related
    to buildings of the express division in Australia and Germany (€7 million).
    Further, the mail division has incurred impairment costs of €4 million
    related to buildings (€2 million) and plant and equipment (€2 million). £ 3   FINANCIAL
    FIXED ASSETS: 656 MILLION (2003: 627) Statement
    of changes in financial fixed assets


|                                  |                                                
|--------------------------------- | -----------------------------------------------
|                                  | Investments
      in
      Affiliated Companies
|                                  |                                                
|                                  |                                                
|Balance
      at 31 December 2003 | 79                                             
|                                  |                                                
|Changes
      in 2004             |                                                
|Acquisitions/additions            | 11                                             
|Disposals/decreases               | (7                                             
|(De)consolidation                 | 2                                              
|Withdrawals/repayments            |                                                
|Dividend                          |                                                
|Exchange
      rate differences   |                                                
|Other
      changes               | (3                                             
|                                  |                                                
|Total
      changes               | 3                                              
|                                  |                                                
|Balance
      at 31 December 2004 | 82                                             
|                                  |                                                
|(in
      € millions)             |                                                

The carrying
  values of our loans receivable from affiliated companies, other loans receivable,
  and prepayments and accrued income approximate their fair values.




Included
    in the €551 million prepayments and accrued income at 31 December 2004
    is an amount of €395 million of deferred tax assets (2003: 205). This
    includes an amount of €200 million, relating to the referred tax on the
    minimum pension liability (see


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Chapter
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  statements and other information

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note
    9). The short term deferred tax assets of €40 million (2003: 37) are
    included in accounts receivable. Included
    in the repayments of other loans receivable is the unwinding of a USD 435
    million cross currency interest rate swap on which we received a repayment
    of €172 million, which had a carrying amount in December 2004 of €160
    million before the transaction was unwound. The related interest income of
    €12 million is included in interest and similar income (see note 20). We do not
    have any finance lease agreements where we are the lessor party, that transfers
    the right to use assets and transfers




substantially
    all risks and rewards incidental to ownership of an asset. Under loans receivable
    no material amounts are included for financial lease contracts. Prepayments
    also include an amount of €3 million (2003: 4) prepaid in respect of
    financing costs relating to the €1,000 million Eurobond (see note 11).
    These amounts are released to the income statement over the life of the bond
    using the effective interest method. In 2004, the amount amortised
    in the income statement was €1 million (2003: 1).




£ 4INVENTORY:
  46 MILLION (2003: 49)

|                                 |                      | 
|-------------------------------- | -------------------- | 
|                                 | At
      31 December | 
|                                 |                      | 
|                                 | 2004                 | 
|                                 |                      | 
|Raw
      materials and supplies | 16                   | 
|Finished
      goods             | 30                   | 
|                                 |                      | 
|Total                            | 46                   | 
|                                 |                      | 
|(in
      € millions)            |                      | 
|                                 |                      | 

The total
    inventory of €46 million (2003: 49) is valued at historical cost for
    an amount of €45 million (2003: 47) and valued at net realisable value
    for an amount of €1 million (2003: 2). Inventory isstated net of provisions for obsolete items amounting to €5 million
    (2003: 2).




There are
    no inventories pledged as security for liabilities in 2004. The total
  write down recognised as expenses during 2004 is €3 million.




£ 5ACCOUNTS
  RECEIVABLE: 2,129 MILLION

|                                                    |                      | 
|--------------------------------------------------- | -------------------- | 
|                                                    | At
      31 December | 
|                                                    |                      | 
|                                                    | 2004                 | 
|                                                    |                      | 
|Trade
      accounts receivable                     | 1,671                | 
|Deferred
      tax assets                           | 40                   | 
|Income
      tax receivable                         | 162                  | 
|VAT
      receivable                                | 91                   | 
|Accounts
      receivable from affiliated companies | 6                    | 
|Other                                               | 159                  | 
|                                                    |                      | 
|Total                                               | 2,129                | 
|                                                    |                      | 
|(in
      € millions)                               |                      | 
|                                                    |                      | 

Trade accounts
  receivable for services rendered and delivered goods have been included after
  deduction of a provision for doubtful receivables amounting to €90 million
  at 31 December 2004 (2003: 83). The balance
    of the accounts receivable that is expected to be recovered after 12 months
    is €8 million.




£ 6   PREPAYMENTS
  AND ACCRUED INCOME: 391 MILLION (2003: 362) These
    prepayments and accrued income include amounts paid in advance to cover costs
    that will be charged against income in future years and amounts still to be
    invoiced. At 31 December 2004, prepayments amounted to €85 million (2003:
    90). The balance that is expected to be recovered after 12 months is €3
    million.


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£ 7   CASH
    AND CASH EQUIVALENTS: 633 MILLION (2003: 470) Cash
    and cash equivalents comprise cash at hand of €8 million (2003: 10),
    cash at bank and on deposit of €623 million (2003: 453), outstanding
    cheques of €1 million (2003: 6) and marketable securities, of approximate
    €1 million (2003: 1). Included in cash and cash equivalents is €171
    million (2003: 167) of restricted cash held and partially controlled by consolidated
    joint ventures.




£ 8   GROUP
    EQUITY: 2,784 MILLION (2003: 2,986) Group
    equity consists of shareholders equity of €2,765 million (2003:
    2,969) and minority interest of €19 million (2003: 17). See notes (31)
    to (37) for the explanation of shareholders equity.




£ 9PROVISION
  FOR PENSION LIABILITIES: 870 MILLION (2003: 521)

We operate
  a number of pension plans around the world. Most of our non-Dutch pension plans
  are defined contribution plans. For our non-Dutch employees we also operate
  a limited number of defined benefit plans. The liabilities for these employees
  are separately covered by private insurers and foreign pension funds. Two retirement
  plans are applicable to most Dutch employees. These two plans are the most significant pension plans of TPG: A pension plan and a conditional early retirement
  arrangement. Our main
    Dutch company pension plan, which is externally funded in Stichting
    Pensioenfonds TPG, covers the employees who are subject to our collective
    labour agreement. The majority of all our Dutch employees are subject to the
    collective labour agreement. This pension plan and the corresponding early
    retirement plan have merged into a renewed pension plan from 1 January 2001.
    The plan covers some 90,000 participants including approximately 11,000 pensioners
    and some 26,000 former employees.By Dutch law the plan is carried out by a
    separate legal entity and is managed by an independent board that falls under
    the supervision of the Nederlandsche Bank (DNB). The plan
  is a defined benefit average pay plan and our employees are eligible for a
  retirement pension at the age of 62. Old age
    pension benefits are accrued on an annual basis of 2.25% of the pensionable
    base (pensionable salary minus a deductible). At age 62 part of the old age
    pension can be transferred into spouses pensions. Furthermore, a temporary
    old age pension of 2% of the deductible is accrued to cover the three years
    before the state pension commences. A transitional plan exists for employees
    in service at 31 December 2000 and who were 35 years or older at that date.
    For these employees we guarantee a benefit of at least 70% of the last qualifying
    salary from age 62 to 65. Employees who are 42 years or older at 31 December
    2000 are also entitled to an additional transitional plan. These employees
    will retire at age 65 and are entitled to an early




retirement
    benefit of 80% of the qualifying salary. Furthermore, if the employee served
    25 years or more on 1 April 1996 early retirement starts at age 61 or after
    40 years of service instead of at age 62. In the
    pension plan only the employer contributes to the fund. This level of contribution
    is based upon actuarial recommendations. In addition and subject to our funding
    agreement with the plan we have to pay additional contributions to the pension
    fund in order to satisfy the minimum funding requirements of the DNB. The
    total contribution to the main pension fund amounted to €159 million
    in 2004 (2003: 169) and is estimated to be €170 million in 2005. The
    benefits arising from the transitional plan are directly paid by TPG. These
    payments amounted to €95 million in 2004 (2003: 79 million) and are estimated
    at €104 million for 2005. The pension
    fund runs an actively managed investment portfolio. The pension funds use
    the asset and liability management studies that generate future scenarios
    to determine its optimal asset mix. During 2004, the dynamic weight of equity
    investments increased to 44.9%, the dynamic weight of fixed interest investments
    decreased to 46.5%, the weight of real estate investments (including international)
    went down to 8.6%. For 2004 no rebalancing has taken place and it is expected
    that over time the strategic asset mix will gradually move back to a higher
    percentage of equity at the cost of a lower percentage of fixed income. Based
    on the actual asset mix at 31 December 2004 a tactical spread of -5% and +5%
    is applicable. Investments in equity consist of 25% of a European equity portfolio
    and 75% of a worldwide equity portfolio, half of which is hedged against US
    dollar exposure. The fixed income portfolios consist of 60% government bonds
    for the 12 EMU-countries with the remainder high quality credits.


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Chapter
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Actual
          asset mix 
          at 31 December 2004
        
        Actual
          asset mix at 31 December 2003Equities
        44.9
        %
        43.6
        %Fixed
          interest
        46.5
        %
        46.9
        %Real
          estate
        8.6
        %
        9.4
        %Cash
        
        

      0.1

      %Total
        100.0
        %
        100.0
        %  Historical
          Returns

      2004
        
        10-year
          average
        
        12-year
          averageEquities
        10.6
        %
        10.5
        %
        10.8
        %Fixed
          interest
        7.7
        %
        8.0
        %
        7.8
        %Real
          estate
        6.8
        %
        9.8
        %
        10.0
        %






The assets of our major plan cover approximately 93% of our total pension
    assets and the liabilities described in the section above cover approximately
    95% of our total pension liabilities. PENSIONS
    COSTInherent
    in the valuation of our pensions and the determination of our pension cost
    are key assumptions which include: employee turnover, mortality and retirement
    ages, discount rates, expected long-term returns on plan assets and future
    wage increases which are usually updated on an annual basis at the beginning
    of each fiscal year. Actual circumstances may vary from these assumptions
    giving rise to a different pension liability, which would be reflected as
    an additional profit or expense in our statement of income. Changes
    in the related net periodic pension cost may occur in the future due to changes
    in the assumptions. In 2004, our net periodic pension cost was €128 million
    (2003: 43). This included termination benefit costs of €57 million and
    a pro rata part of the unrecognised settlement losses of €30 million. The total
    cash contributions in 2004 were €437 (2003: 264) of which €200 million
    (2003:185) were regular premiums paid to various pension funds, payments of
    €95 million (2003: 79) were made for pensions which fall under our Dutch
    transitional plan and a cash payment of €142 million relating to the
    Personal Seniors Arrangement in the Netherlands. Total cash contributions
    in 2005 are expected to amount to approximately €296 million.




DISCLOSURE ON PENSIONSThe
    Projected Unit Credit Method was used to determine the Projected Benefit Obligation
    (PBO) and the Current Unit Credit Method was used to determine the Accumulated
    Benefit Obligation (ABO).The measurement date for all liabilities and assets
    is 31 December. Information
    required to be disclosed with respect to the funded status of our main pension
    schemes at 31 December 2004 and 2003 and with respect to the net periodic
    pension costs for 2004 and 2003 are presented in the table on the next page.


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Disclosures

|                                                       |        |   |        |  
|------------------------------------------------------ | ------ | - | ------ | -
|                                                       | 2004   |   | 2003   |  
|                                                       |        |   |        |  
|Change
      in benefit obligation                     |        |   |        |  
|Benefit
      obligation at beginning of year          | (3,727 | ) | (3,306 | )
|Service
      costs                                    | (131   | ) | (116   | )
|Interest
      costs                                   | (211   | ) | (187   | )
|Plan
      participants contributions                 |        |   | (3     | )
|Amendments                                             | (7     | ) | (13    | )
|Termination
      benefit costs                        | (57    | ) | 0      |  
|Amounts
      settled                                  | 142    |   | 0      |  
|Actuarial
      (loss) / gain                          | (1,055 | ) | (236   | )
|Benefits
      paid                                    | 159    |   | 134    |  
|                                                       |        |   |        |  
|Benefit
      obligation at end of year                | (4,887 | ) | (3,727 | )
|                                                       |        |   |        |  
|Change
      in plan assets                            |        |   |        |  
|Fair
      value of plan assets at beginning of year   | 3,277  |   | 2,833  |  
|Actual
      return on plan assets                     | 285    |   | 308    |  
|Employer
      contribution                            | 290    |   | 257    |  
|Plan
      participants contributions                 |        |   | 3      |  
|Amendments                                             |        |   | 10     |  
|Benefits
      paid                                    | (159   | ) | (134   | )
|                                                       |        |   |        |  
|Fair
      value of plan assets at end of year         | 3,693  |   | 3,277  |  
|                                                       |        |   |        |  
|Funded
      status as per 31 December                 |        |   |        |  
|Funded
      status                                    | (1,194 | ) | (450   | )
|Unrecognised
      prior service costs                 | (273   | ) | (313   | )
|Unrecognised
      net actuarial loss /(gain)          | 1,251  |   | 242    |  
|                                                       |        |   |        |  
|Prepaid
      (accrued) benefit costs                  | (216   | ) | (521   | )
|                                                       |        |   |        |  
|Components
      of net periodic benefit cost for      |        |   |        |  
|Service
      costs                                    | (131   | ) | (116   | )
|Interest
      costs                                   | (211   | ) | (187   | )
|Expected
      return on plan assets                   | 272    |   | 234    |  
|Amortisation
      of transition costs                 |        |   | (26    | )
|Amortisation
      of prior service costs              | 40     |   | 40     |  
|Amortisation
      of actuarial (loss) / gain          | (6     | ) | 19     |  
|Termination
      benefit costs and settlement losses  | (87    | ) | 0      |  
|Other
      costs                                      | (5     | ) | (7     | )
|                                                       |        |   |        |  
|Net
      periodic benefit costs                       | (128   | ) | (43    | )
|                                                       |        |   |        |  
|Other
      balance sheet entries as of 31 December    |        |   |        |  
|Prepaid
      (accrued) benefit costs                  | (216   | ) | (521   | )
|Additional
      minimum liability                     | (654   | ) | 0      |  
|                                                       |        |   |        |  
|Provision
      for pension liabilities                | (870   | ) | (521   | )
|Intangible
      assets                                | 0      |   | 0      |  
|Deferred
      tax                                     | 200    |   | 0      |  
|Reduction
      to equity                              | (454   | ) | 0      |  
|                                                       |        |   |        |  
|Accumulated
      benefit obligation as of 31 December |        |   |        |  
|Accumulated
      benefit obligation                   | (4,643 | ) | (3,394 | )
|                                                       |        |   |        |  
|Weighted
      average assumptions as of 31 December   |        |   |        |  
|Discount
      rate                                    | 4.8    | % | 5.5    | %
|Expected
      return on assets                        | 7.9    | % | 7.9    | %
|Rate
      of compensation increase                    | 2.8    | % | 2.8    | %
|Rate
      of benefit increase                         | 2.0    | % | 2.0    | %
|                                                       |        |   |        |  
|(in
      € millions, except percentages)              |        |   |        |  

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Chapter
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As stated
  in the table above, we have reached a situation in which the accumulated benefit obligation exceeds the fair value of the plan assets as per 31 December 2004.
  SFAS 87 than requires to account for an additional minimum liability amounting
  to €654 million (2003: 0). The reason for the increase in the accumulated
  benefit obligation compared to plan assets is mainly caused by the fact that
  the interest rate decreased from 5.5% in 2003 to 4.75% in 2004 (impact approximately
  €560 million) and the adjustment in turnover probabilities within the mail
  division (impact approximately €260 million). This increase could not be
  offset by the increase in our plan assets in 2004. Full
    application of SFAS 87 requires us to recognise an additional minimum liability
    representing a net loss that under SFAS 87 is not yet to be recognised as
    net periodic pension cost, but is reported as a separate component (that is
    a reduction) of equity.We have
    deducted an amount of €454 million from our equity (net of tax). The
    accrued pension costs have increased with the minimum liability of €654
    million and we accounted for a deferred tax asset amounting to €200 million.
    No intangible assets have been recognised (2003: 0).




The table
  below shows the sensitivity of the net periodic pension cost to deviations in
  assumptions. Change
    in assumptions %-change
        in assumptions
      
      change
        in net periodic costs1Net
        periodic pension costs
      
      
      (41
      )Discount
        rate
      +0.5
      %
      19Expected
        return on assets
      +0.5
      %
      17Rate
        of compensation increase
      +0.5
      %
      (16
      )Rate
        of benefit increase
      +0.5
      %
      (48
      )Net
        periodic pension costs
      
      
      (41
      )Discount
        rate
      (0.5
      )%
      (46
      )Expected
        return on assets
      (0.5
      )%
      (17
      )Rate
        of compensation increase
      (0.5
      )%
      15Rate
        of benefit increase
      (0.5
      )%
      261.  
        Excluding one-off termination benefit costs and settlement losses in 2004.(in
        € millions, except percentages) The
    table below shows the expected future benefits per year for pension funds
    related to TPG plans. The benefits include all expected payments by the fund
    to the pensioners and early retirees under the Dutch transitional plan. Year
      
      Expected
        Benefits as per 31 December 20042005
      
      1782006
      
      2042007
      
      2422008
      
      2782009
      
      3532010-2014
      
      1,788


£ 10OTHER
  PROVISIONS: 149 MILLION (2003: 153)

Provisions
  relate to obligations and risks associated with our operations and liabilities
  related to termination of employment contracts.








Statement
  of changes in provisions

|                                  |                          |   |               |   |       |   |       |  
|--------------------------------- | ------------------------ | - | ------------- | - | ----- | - | ----- | -
|                                  | Retirement
      schemes |   | Restructuring |   | Other |   | Total |  
|                                  |                          |   |               |   |       |   |       |  
|Balance
      at 31 December 2003 | 23                       |   | 42            |   | 88    |   | 153   |  
|Additions                         |                          |   | 28            |   | 34    |   | 62    |  
|Withdrawals                       | (9                       | ) | (26           | ) | (12   | ) | (47   | )
|Exchange
      rate differences   |                          |   |               |   | (1    | ) | (1    | )
|(De)consolidation                 |                          |   | 1             |   |       |   | 1     |  
|Interest                          | 1                        |   |               |   |       |   | 1     |  
|Other
      / Releases            |                          |   | (12           | ) | (8    | ) | (20   | )
|Balance
      at 31 December 2004 | 15                       |   | 33            |   | 101   |   | 149   |  
|                                  |                          |   |               |   |       |   |       |  
|(in
      € millions)             |                          |   |               |   |       |   |       |  
|                                  |                          |   |               |   |       |   |       |  

We expect
    to make cash expenditures of approximately €17 million (2003: 27) from
    the restructuring provision, €8 million (2003:13) from the retirement
    schemes provision and €24 million (2003: 9) from other provisions in
    the coming year.


The retirement
    schemes provision relates to the entitlement to retirement payments of employees
    who worked as public servants for the Netherlands Postal and Telecommunications
    Services before 1 January 1989, and who were made redundant before 1 January
    1996. Provisions for retirement pay are carried at their discounted value.


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Provisions
    for restructuring deal primarily with restructuring projects for mail activities
    in the Netherlands, integration and restructuring projects within express
    and logistics. During the year approximately 2,462 (2003: 1,532) employees
    were made redundant through such reorganisations, as result of a combination
    of efficiency improvements and the impact of restructuring of the operations
    of our customers. Of the employees made redundant during the year, paid via
    the restructuring provisions 300 (2003: 358) related to mail, 704 (2003: 271)
    related to employees in express, and 1,458 (2003: 903) related to employees
    in logistics. Of the 2,462 positions




reorganised,
    1,621 (2003: 1,099) related to direct staff and 841 (2003: 433) to overhead
    staff. Other
    provisions (€101 million) mainly relate to dilapidation in connection
    with warehouse contracts and contractual obligations (€31 million), provisions
    for claims (€27 million), provisions for onerous contracts (€8 million)
    and various other provisions held by companies in the group (€35 million).




£11LONG-TERM
  DEBT: 1,440 MILLION (2003: 1,474)

The
    table below sets forth the amounts of the interest-bearing long-term liabilities
    maturing during each of the next five years and thereafter.


|                                               |  |       |  |                 |  |                |  |      
|---------------------------------------------- |  | ----- |  | --------------- |  | -------------- |  | -----
|                                               |  | Bonds |  | Other
    Loans |  | Finance Leases |  | Total
|                                               |  |       |  |                 |  |                |  |      
|2005                                           |  |       |  | 1               |  | 14             |  | 15   
|2006                                           |  |       |  | 326             |  | 16             |  | 342  
|2007                                           |  |       |  | 5               |  | 13             |  | 18   
|2008                                           |  | 1,000 |  | 3               |  | 13             |  | 1,016
|2009                                           |  |       |  | 3               |  | 13             |  | 16   
|Thereafter                                     |  |       |  | 17              |  | 31             |  | 48   
|                                               |  |       |  |                 |  |                |  |      
|Total                                          |  | 1,000 |  | 355             |  | 100            |  | 1,455
|of
      which included in current liabilities |  |       |  | 1               |  | 14             |  | 15   
|Long
      term interest bearing liabilities   |  | 1,000 |  | 354             |  | 86             |  | 1,440
|                                               |  |       |  |                 |  |                |  |      

Long-term
    debt includes a €1 billion Eurobond, a drawing of €186 million on
    a Canadian dollar-denominated syndicate facility, a €129 million bilateral
    loan agreement bearing fixed interest of 2.54%, €86 million of finance
    lease obligations and €39 million of other long-term liabilities at fixed
    and variable rates. On
    5 December 2001, TPG N.V. issued a €1 billion Eurobond with an original
    maturity of seven years. The bond has a coupon of 5.125% and began paying
    interest annually in arrears on 5 December 2002. The bond is listed on the
    Euronext Amsterdam Exchange and is rated A, (stable outlook) by
    Standard & Poors Ratings Services and A1, (stable outlook)
    by Moodys Investor Services Limited. Other
    long-term loans include a €186 million (2003: 187) Canadian dollar denominated,
    syndicated facility that was signed in May 2001, at a rate of interest of
    3 month Canadian LIBOR plus a margin of 0.325%.This facility has an original
    maturity of five years plus one day. At 31 December 2004, the rate of interest
    on this facility was 2.975%. A bilateral
    loan agreement amounting to €129 million (2003: 129) has changed from
    an amortising loan maturing in year 2020 with fixed interest rate of 5.85%
    to a bullet loan maturing in 2006 with a fixed interest rate of 2.54%. Accordingly,
    the current




portion
    of this bilateral facility was reclassified from short-term to long-term. Other
    interest-bearing debt of €125 million (2003: 158) includes €86 million
    (2003: 100) of finance leases and €27 million in loans to finance real
    estate for the German operations (2003: 30) with fixed interest rates ranging
    between 5.5% and 6.5% expiring in 2010. In addition, the company has €12
    million in other loans (2003: 28). Aircraft with a book value of €51
    million (2003: 55) are pledged as collateral on the related lease obligation.
    Assets pledged as collateral on interest-bearing liabilities relate mainly
    to warehouses in Germany (€34 million) and leased aircraft in France
    (€12 million). ACCRUED
    LIABILITIES: 206 MILLION (2003: 187)At
    31 December 2004 we had €171 million (2003: 167) of non-interest-bearing
    accrued liabilities representing leaving indemnity liabilities and €35
    million (2003: 20) of other miscellaneous long-term liabilities.


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£12OTHER
    CURRENT LIABILITIES: 637 MILLION (2003:
    540) At
        31 December2004
      
      2003Short
        term bank debt
      36
      
      45Income
        tax payable
      130
      
      18Taxes
        and social security contributions
      273
      
      280Current
        portion of long-term debts
      15
      
      24Expenses
        to be paid
      44
      
      57Other
        current liabilities
      139
      
      116Total
      637
      
      540(in
        € millions) The
    balance that is expected to be settled after 12 months is €58 million.




£13ACCRUED
    CURRENT LIABILITIES: 1,308 MILLION (2003: 1,224) At
        31 December2004
      
      2003Amounts
        received in advance
      169
      
      148Expenses
        to be paid
      742
      
      724Vacation
        / vacation payments
      210
      
      191Terminal
        dues
      76
      
      45Other
        accrued current liabilities
      111
      
      116Total
      1,308
      
      1,224(in
        € millions) Amounts
    received in advance included €67 million (2003: 66) for stamps which
    were sold but not yet used.The
    balance that is expected to be settled after 12 months is €12 million.


£14COMMITMENTS
    AND CONTINGENCIES(No corresponding
    financial statement number) At
        31 December2004
   
   2003Commitments
        relating to:operating guarantees
      110
      
   9financial guarantees
      240
      
   254rent and operating lease
      1,675
      
   1,679capital expenditure
      33
      
   58rerpurchase shares
      259purchases
      84
      
   100(in
        € millions) Of
    the total commitments indicated above, €593 million are of a short-term
    nature (2003: 631). FINANCIAL
    AND OPERATING GUARANTEESTotal financial and operating guarantees provided by our company amounted
    to €350 million (2003: 263), of which €127 million (2003: 90) related
    to guarantees issued by our company to banks and other institutions and €164
    million (2003: 94) related to corporate guarantees. These guarantees were
    issued in connection with the groups obligations under lease contracts,
    custom duty deferment and local credit lines. The increase of corporate guarantees
    was mainly related to the mail division in the UK. The
    €59 million (2003:17) of remaining guarantees in 2004 relates to bank
    guarantees issued locally by group companies.


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RENT
    AND OPERATING LEASE CONTRACTS In 2004
    operational lease expenses (including rental) in the consolidated statements
    of income amounted to €606 million (2003: 569). Future payments on non-cancellable
    existing lease contracts were as follows: Payable
       in the period`At
        31 December2004
   
      2003less
        than 1 year
      393
      
   356between
        1 and 2 years
      331
      
   307between
        2 and 3 years
      256
      
   242between
        3 and 4 years
      192
      
   181between
        4 and 5 years
      145
      
   154thereafter
      358
      
   439Total
      1,675
   
   1,679Of
        which guaranteed by a third party / customers
   98
   
   105(in €millions) These
    operating lease commitments relate to real estate for €1,459 million
    (2003: 1,436), transport equipment for €165 million (2003: 199) and computer
    equipment and other equipment for €51 million (2003: 44).






CAPITAL EXPENDITURECommitments
    in connection with capital expenditure are €33 million (2003: 58), of
    which € 25 million is related to property, plant and equipment and €8
    million related to intangible assets. These commitments primarily related
    to projects within the operations of the mail division. These projects include
    sequence sorting (€15 million) and tray cart unloading (€9 million). REPURCHASE
    OF SHARESOn 29
    September 2004 we announced that the Dutch State sold a total of 77.7 million
    ordinary shares in our outstanding share capital, representing approximately
    16% in our company. By the sale and transfer the State has reduced its ownership
    in our capital from 34.8% to 18.6%. We repurchased 20.7 million of the total
    amount of shares sold by the State. Transfer of the repurchased ordinary shares
    has taken place in two tranches. The first tranche of 7.6 million shares was
    transferred to us on 4 October 2004. The transfer of the remaining 13.1 million
    shares was completed on 5 January 2005 and repurchased for €259 million. PURCHASE
    COMMITMENTSAt 31
    December 2004 we had unconditional purchase commitments of €84 million
    (2003: 100) which were primarily related to various service and maintenance
    contracts. These contracts for service and maintenance relate primarily to
    information technology, security, salary registration, cleaning and aircrafts.
    A contract is made with our Post Offices joint venture business for specific
    postal services to customers until the end of 2005.




OTHER CONTINGENT LIABILITIESA
    review of our tax position of certain of our subsidiaries relating to prior
    years has identified a limited number of items where our interpretation of
    relevant tax laws and regulations may be open to challenge. If these items
    were successfully challenged, it could result in a total liability between
    0 and €400 million. Following a detailed review of the issues involved
    and legal advice from outside tax counsel, we currently believe that we have
    no liability in this regard. In
    February and March 2004, our audit committee, on behalf of our Supervisory
    Board, conducted an independent investigation regarding representations made
    to the UK Inland Revenue and to our external auditors, PricewaterhouseCoopers,
    with respect to certain UK tax matters originally arising in the late 1990s
    relating to one of our UK subsidiaries. In addition to this investigation,
    our audit committee, with the assistance of independent tax advisors, conducted
    a review of other UK tax matters that arose from the same period. The investigations
    conducted by our audit committee, with the assistance of independent legal
    counsel, concluded that not all relevant details in connection with these
    tax matters were adequately disclosed to the UK Inland Revenue and PricewaterhouseCoopers. In
    August 2004, we submitted a report to the UK Inland Revenue in relation to
    these UK tax issues pursuant to a procedure under UK law designed to ensure
    full disclosure of all relevant information to the UK Inland Revenue. We will
    be providing an addendum to our original report with additional information,
    and are continuing discussions with the UK Inland Revenue in connection with
    their related comprehensive investigation. The outcome of the UK Inland Revenue's
    investigation is not certain, and we do not expect these matters with the
    UK Inland Revenue will be resolved before 2006.


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Chapter
  12    Financial statements and other information

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Additional
    Notes LEGAL
    PROCEEDINGS(no corresponding financial statement number) GENERALOrdinary
    course litigationWe
    are involved in several legal proceedings relating to the normal conduct of
    our business. We do not expect any liability arising from any of these legal
    proceedings to have a material effect on our results of operations, liquidity,
    capital resources or financial position. We believe we have provided for all
    probable liabilities deriving from the normal course of business. MAIL OPTA
    PROCEEDINGSProvision
    of informationPursuant
    to the Dutch Postal Law, OPTA under certain conditions is authorised to make
    inquiries of TPG. In April 2003 OPTA asked us to provide certain documents
    in order to investigate whether we complied with the legal obligations applicable
    to TPGs tariffs for letters in bulk used in separate contracts with
    major customers. We argued that the request for information was unclear and
    OPTA was not authorised to request such information. In a provisional court
    proceeding on 25 July 2003, the court did not decide whether or not OPTA was
    entitled to summon us to provide the information and referred the case to
    the judgement of the court in an action on the substance. On 1 December 2003
    we lodged a formal court appeal against the subsequent administrative decision
    OPTA rendered on 15 October 2003, which appeal has been substantiated on 23
    December 2003. On 23 February 2004 OPTA submitted its written defence. OTHER
    PROCEEDINGSDecision
    on tariff freezeOn
    18 November 2002, the Ministry of Economic Affairs decided that tariffs controlled
    by the current price cap system should be frozen until the end of 2006. The
    Ministry of Economic Affairs indicated that in the event postal services became
    subject to value added tax between 1 January 2003 and 1 January 2007, a change
    of the frozen tariffs corresponding with the resulting tax burden would be
    allowed. On 19 June 2003, when the tariff freeze was discussed in parliament,
    the duration of the freeze was limited to 1 January 2005, awaiting the vision
    of the Minister on the future regulation of the postal sector. The Minister
    proposed in his Postal Vision sent to Parliament on 1 April 2004 that the
    temporary tariff freeze would be extended until year-end 2006. On
    17 November 2003 we lodged an appeal against the administrative decision to
    freeze the tariffs. Following the grant of the formal appeal, the temporary
    tariff freeze decision was declared void in June 2004 and TPG Post remained
    allowed to amend the individual rates for mandatory postal services, subject
    to the provisions of the tariff control system.However,
    in view of the wider importance of the adoption of an integral and balanced
    vision for the postal market as submitted to Parliament, we announced our
    intention not to increase the




price
    of a stamp for consumers from the present level of 39 euro cents for the years
    2004, 2005 and 2006. We are considering an amendment in 2006 to the prices
    for mandatory postal services to business customers that are covered by the
    price control system, but this will be kept below the rate of wage inflation
    for 2004 and 2005. EXPRESS SUBCONTRACTOR
    SUITSThe
    authorities in France have brought several criminal and civil actions relating
    to our express divisions French operations alleging that our subcontractors
    or their employees should be regarded as our own unregistered employees. The
    actions variously seek criminal fines or the payment of social security contributions,
    wage taxes and overtime payments in respect of such employees. Similar actions
    have been brought against our competitors. A ruling
    of the Court of Bordeaux which was in our favour in first instance, ordered
    the release of our French express subsidiaries from all charges, was upheld
    by the Court of Appeal in Bordeaux by judgement of 27 January 2004. In
    another case the Court of Appeal in Paris ruled against TNT Express International
    and its regional operations director and imposed fines on both TNT Express
    International and the regional operations director being sentenced to fines.
    TNT Express International has decided to take the case to the French Supreme
    Court. There
    are also other cases pending in other courts against French Express subsidiaries,
    some of its board members and/or depot managers. The outcome of these cases
    is hard to predict. LIÈGE
    COURT CASEThere
    have been ongoing legal proceedings before the Liège Courts by people
    living around the Liège airport to stop night flights. In June 2004,
    the Liège Court of Appeal rejected all claims. The Court considered
    the obligations of the three defendants (Walloon Government, the Airport Authority
    and TNT) under the various applicable international and national conventions
    and concluded that there was no violation of any of these by the three defendants. The
    plaintiffs have appealed this decision to the Belgian Supreme Court. The defendants
    have until 14 March 2005 to file a response brief with the Supreme Court,
    the final decision of which is not expected before the second half of 2005
    at the earliest. The arguments developed in the appeal are technical, since
    the Supreme Court may only examine pure points of law, and not facts or procedural
    items. These arguments were already extensively developed before the Liège
    Court of Appeal, which rejected each and all of them with a substantiated
    legal reasoning in its decision of June 2004. In any case, the success of
    the appeal would only entail that the matter be sent to another Belgian Court
    of Appeal for new exchange of briefs, pleadings and ruling.


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CREDIT
    FACILITIES(no
    corresponding financial statement number)
    At 31 December 2004, our committed facilities with domestic and international
    banks amounted to €786 million (2003:787), of which €600 million
    remained undrawn. The undrawn committed facilities consisted of a five-year
    €600 million revolving, syndicated facility signed in October 2003, which
    supported our Euro Commercial Paper program. In addition, at 31 December 2004,
    we had €474 million of uncommitted facilities, of which €438 million
    remained undrawn. CONTRACTUAL
    CALL AND PUT OPTIONS(no
    corresponding financial statement number) The
    main call and put options were the following: Essent
    N.V.Put/Call optionsOn
    15 July 2004 Royal TPG Post, a subsidiary of TPG, and Essent established a
    company named Cendris BSC Customer Contact in which the ordinary share capital,
    carrying equal voting rights, is split 51% and 49% respectively. Cendris BSC
    Customer Contact provides call centre activities to TPG, Essent and third
    parties. The terms and conditions of the shareholders agreement provide Royal
    TPG Post with the option to call, as of 15 July 2007, on the shares of Essent
    and for Essent to put, as of 15 July 2007, its shares to Royal TPG Post where
    the price is determined by the fair market value of the shares. TNT
    Logistics Italys call optionOn
    30 June 2003 TNT Logistics Italy, an indirect subsidiary of TPG, and Ecotrans
    Srl acquired a company named TNT Arvil in which the ordinary share capital,
    carrying equal voting rights, is
    split 51% and 49% respectively. TNT Arvil provides inbound logistics services
    to Fiat Automotive in its domestic market.




The
    terms and conditions of the shareholders agreement provide TNT Logistics Italy
    with the option to call on the shares of Ecotrans and for Ecotrans to put
    its shares to TNT Logistics Italy.Between
    1 January 2008 and until 28 February 2008 TNT Logistics Italy may call on
    the shares of Ecotrans where the price is determined by way of an agreed formula.
    The formula prescribes the price of the shares as: •
    the
    sum of 49% of the net equity,•
    plus
        a premium of 2.5% of the annual revenue between 1 June
        2003 and 30 April
        2007 (where the annual amount is updated
        for the three month EURIBOR
    rate),•
    plus
    the average of the last six month revenue multiplied
    by 13. Ecotrans put optionEcotrans
    can exercise its option at anytime. Ecotrans may put its shares to TNT Logistics
    Italy where the price is determined by reference to a formula defined in the
    shareholders agreement. The formula prescribes the price of the shares as: •
    an
        amount equal to the price paid by TNT Arvil for the purchase of 100%
    of the shares of the Arvil companies,•
    plus
    a fixed sum of €1.1 million,•
      plus
        loans or capital increases made by Ecotrans,•
      minus
        profits distributed to Ecotrans,•
    minus
        a pro-rated amount of losses, capped within certain limits, of the fiscal
        year end preceding the year in which the option is exercised.




|FAIR
      VALUE OF INTEREST BEARING DEBT(no
      corresponding financial statement number) |                       |  |                           |  |                 |  |            | 
|-------------------------------------------------------------------------------------------- | --------------------- |  | ------------------------- |  | --------------- |  | ---------- | 
|                                                                                             |                       |  |                           |  |                 |  |            | 
|                                                                                             |                       |  |                           |  |                 |  |            | 
|                                                                                             |                       |  |                           |  |                 |  |            | 
|                                                                                             | At 31 December 2004   |  | At
      31 December 2003 | 
|                                                                                             |                       |  |                           |  |                 |  |            | 
|                                                                                             | Carrying
      Amount |  | Fair
      value          |  | Carrying Amount |  | Fair value | 
|                                                                                             |                       |  |                           |  |                 |  |            | 
|(a) Cash and cash equivalents                                                                | 633                   |  | 633                       |  | 470             |  | 470        | 
|(b) Short - term interest bearing debt                                                       | 36                    |  | 36                        |  | 45              |  | 45         | 
|(c) Long - term interest bearing debt                                                        | 1,455                 |  | 1,528                     |  | 1,498           |  | 1,558      | 
|                                                                                             |                       |  |                           |  |                 |  |            | 
|(in € millions)                                                                              |                       |  |                           |  |                 |  |            | 
|                                                                                             |                       |  |                           |  |                 |  |            | 
|                                                                                             |                       |  |                           |  |                 |  |            | 

(a)
      The carrying value of cash and cash equivalents approximatedits fair value
        because of the short maturity of the instruments held.(b)
      Short-term debt consists only of short-term bank debt andthe
        current element of finance leases and excludes the €15  million
        of the current portion of long-term interest-bearing   debt.
        The fair value of short-term debt approximated its  market
        value because of the short maturity of the relevant instruments(c)
      Long-term debt includes the €15 million current portionof
        long-term interest-bearing debt, which is included in the balance
        sheet under short-term liabilities. The fair value of other
        long-term debt has been estimated by calculating the discounted
        value of the loan portfolio using an estimated yield




curve,
        appropriate to the terms of the contracts, in effect at the
        end of the year. Our €1 billion Eurobond has a higher fairvalue
        than when it was issued. DERIVATIVE
    FINANCIAL INSTRUMENTS(no corresponding
    financial statement number) We do
    not hold or issue financial instruments for trading purposes nor do we allow
    our subsidiaries to do so. The following table sets forth the nominal amounts
    from outstanding forward exchange transactions and their fair values at 31
    December 2004. The fair value is the amount that would be paid or received
    were the contracts to be terminated on the balance sheet date without further
    obligations.


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Chapter
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|                         |                          
|------------------------ | -------------------------
|                         | At
      31 December 2004
|                         |                          
|                         | Carrying
      Amount    
|                         |                          
|Total
      hedges long  | 459                      
|Total
      hedges short | (1,084                   
|                         |                          
|Net                      | (625                     
|                         |                          
|(in
      € millions)    |                          

The above
    table includes, among others, the following transaction: On 5
    December 2001, we entered into a USD-EUR cross currency interest rate swap
    that provides a USD 435 million short position to hedge an inter-company loan
    of USD 256 million and US dollar net investments for the remainder. On 13
    December 2004 this transaction was replaced by a USD 256 million USD-EUR floating/floating
    interest rate swap as a hedge on the intercompany loan. The market value of
    this instrument at 31 December 2004 was€5
    million. On the portion accounted for as a net investment hedge, hedge effectiveness
    was tested on a quarterly basis and was fully effective. Realised gains on
    the net investment hedge have been recorded in the cumulative translation
    adjustment account within equity. Notes
    to the consolidated statements of income




The following
    arrangements are not reflected in the table above: In December
    2004, we unwound USD 200 million of outstanding interest rate swaps on which
    we were receiving fixed interest and paying floating interest. In December
    2004, we entered into€300
    million of interest rate swaps whereby we receive fixed interest and pay floating
    interest. These interest rate swaps act as a hedge against the fair value
    interest rate risk of our 5.125% December 2008 Eurobond. The market value
    of these instruments amounted to negative€1
    million as of 31 December 2004.


£15NET
    SALES: 12,585 MILLION (2003: 11,785; 2002: 11,662) The net
    sales of mail, express and logistics relate to the trading activities of all
    three divisions, arising from rendering services. Net
    sales by division


|                      |                                
|--------------------- | -------------------------------
|                      | Year
      ended at 31 December
|                      |                                
|                      | 2004                           
|                      |                                
|Mail                  | 3,865                          
|Express               | 4,638                          
|Logistics             | 4,058                          
|Other                 | 24                             
|                      |                                
|Total
      net sales | 12,585                         
|                      |                                

|(in
      € millions)                                                                                                      
|---------------------------------------------------------------------------------------------------------------------------
|1.   Figures
      for 2002 have been restated to reflect the transfer of Innight services
      from express to logistics.
|                                                                                                                           

In note
    28 Segment Reporting, the net sales allocated by geographical
    area in the country or region in which the entity records the sales are specified.




£16OTHER
    OPERATING REVENUES:€50
    MILLION 
    (2003: 81; 2002: 120) Other
    operating revenues are related to the sale of goods and rendering services,
    not related to the normal trading activities. Other operating revenues included
    certain revenues from net gains from sale of property, plant and equipment
    (€8
    million; 2003: 33; 2002: 30), the disposal of shares of interest in group
    companies


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(€1
    million; 2003: 9; 2002: 58) and the rent of buildings and houses and other
    revenues (€41
    million; 2003: 39; 2002: 32). £17SALARIES
    AND SOCIAL SECURITYCONTRIBUTIONS:€4,305
    MILLION (2003: 4,163; 2002: 4,027)






|                                      |                                
|------------------------------------- | -------------------------------
|                                      | Year
      ended at 31 December
|                                      |                                
|                                      | 2004                           
|                                      |                                
|Salaries                              | 3,532                          
|Pension
        contributions         | 164                            
|Social
        security contributions | 609                            
|                                      |                                
|Total                                 | 4,305                          
|                                      |                                
|(in
      € millions)                 |                                
|                                      |                                

The net
    periodic pension cost in 2004 in respect of the defined benefit pension plans
    amounted to €128 million (2003: 43; 2002: 6). Included in this amount
    was €87 million termination benefit costs and the pro rata part of the
    unrecognised settlement losses as described in note 9.




The
    expense in respect of defined contribution plans amounted to€38
    million in 2004 (2003: 42; 2002: 51). Included
    in salaries was a positive effect from the settlement for future wage guarantees
    which resulted in a €134 million refund from an insurance company.


|                                                              |        
|------------------------------------------------------------- | -------
|                                                              | 2004   
|                                                              |        
|Employees
      at year end 1                                 | 162,244
|Mail                                                          | 76,730 
|Express
      2                                               | 44,933 
|Logistics
      2                                             | 40,581 
|                                                              |        
|Employees
      of proportionaly consolidated joint ventures3 | 8,979  
|                                                              |        
|Number
      of external agency staff at year end4            | 8,175  
|                                                              |        
|FTEs
      year average1,5                                   | 122,325
|Mail                                                          | 41,183 
|Express
      2                                               | 41,396 
|Logistics
      2                                             | 39,746 
|                                                              |        
|FTEs
      of proportionaly consolidated joint ventures3,5   | 7,580  
|                                                              |        
|Employees
      at year end per geographic region:            |        
|The
      Netherlands                                         | 66,382 
|Rest
      of Europe                                          | 67,286 
|                                                              |        
|Europe
      in total                                         | 133,668
|                                                              |        
|China
      and Taiwan                                        | 2,697  
|Rest
      of Asia                                            | 5,284  
|Australia
      & Pacific                                     | 5,864  
|USA
      and Canada                                          | 7,733  
|Rest
      of the World                                       | 6,998  
|                                                              |        
|Total
      employees                                         | 162,244
|                                                              |        
|                                                              |        

|(in
      € millions) (including temporary employees on our payroll)
|--------------------------------------------------------------------
|1.                                                                  
|2.                                                                  
|3.                                                                  
|4.                                                                  
|5.                                                                  
|                                                                    

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|Chapter
      12 | Financial
      statements and other information
|---------------- | ------------------------------------------------
|                
|                

At the
    end of 2004, 8,979 people (2003: 7,363; 2002: 9,919) were employed by proportionately
    consolidated companies, of whom 4,964 (2003: 4,139; 2002: 5,854) were on the
    payroll of Dutch companies, primarily Postkantoren B.V., and 4,015 (2003:
    3,224; 2002: 4,065) were on the payroll of companies outside the Netherlands. Employees
    in our logistics division increased in 2004 by 1,889 (2003: 5,352) or 4.9%,
    compared to an increase of FTEs of 2,251 (2003: 5,088) or 6.0%. This
    is mainly due to the acquisition of Wilson. In 2004
    the average number of full time equivalent in the mail division was 41,183.
    This was a decrease of 3,145 compared to last year was mainly caused by restructuring
    plans and natural attrition in the Netherlands:




The number
    of external agency staff increased by 2,359 (2003: 1,485). The increase of
    external agency staff was mainly related to flexible work force programs in
    the UK in our logistics division. Remuneration
    Members of the Supervisory BoardOver
    2004, the accrued remuneration of the current members of the Supervisory Board,
    excluding VAT, amounted to€335,227
    (2003: 343,737; 2002: 359,051). The remuneration of the individual members
    of the Supervisory Board is set out in the table below:




Supervisory
  Board compensation

|                                              |                        
|--------------------------------------------- | -----------------------
|                                              | Base
      compensation
|                                              |                        
|R.J.N.
      Abrahamsen                       | 36,302                 
|J.M.T.
      Cochrane                         | 36,302                 
|R.
      Dahan                                | 36,302                 
|V.
      Halberstadt                          | 36,302                 
|J.H.M.
      Hommen                           | 36,302                 
|W.
      Kok                                  | 36,302                 
|R.W.H.
      Stomberg                         | 36,302                 
|M.
      Tabaksblat                           | 45,378                 
|                                              |                        
|Total
      current Supervisory Board members | 299,492                
|F.
      Bernabè                              | 9,076                  
|Total
      former Supervisory Board members  | 9,076                  
|                                              |                        
|Total
      Supervisory Board compensation    | 308,568                
|                                              |                        

|1. | Payments
      relating to number of Supervisory Board committee meetings attended.
|-- | -----------------------------------------------------------------------------------

No options
    or shares were granted to members of the Supervisory Board and none of the
    members of the Supervisory Board accrued any pension rights with our company. Remuneration
    of Members of the Board of ManagementDuring
    2004, the Board of Management consisted of five members. The Board of Management
    remained unchanged during 2004. TOTAL
    REMUNERATIONIn
    2004, the remuneration, including pension and social security contributions,
    of the current and the former members of the Board of Management amounted
    to €7,956,604 (in 2003: €13,923,698; 2002 €7,243,908. Included
    is €334,661 (in 2003: €8,925,560; 2002: €14,266) with respect
    of former members of the Board of Management.




The severance
    payments in 2004 relate to loans granted to the members of the Board for the
    taxation on their option grant in 1999. The loan to former members of the
    Board was waived. The
    pension contribution for the defined benefit pension plan of Dave Kulik is
    on a non-funded pension scheme, meaning that the liability for a future pension
    exists, but the money is not actually transferred to a fund. The 2004 accrual
    for the special incentive for Dave Kulik is included separately.




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The remuneration
    of the individual members of the Board of Management is set out in the table
    below: Compensation
  & Benefits Board of Management


|                                        |                                       
|--------------------------------------- | --------------------------------------
|                                        | Periodic
      paid
      compensation
|                                        |                                       
|Peter
      Bakker                      | 977,867                               
|Jan
      Haars                         | 530,119                               
|Harry
      Koorstra                    | 637,251                               
|Dave
      Kulik                        | 679,550                               
|Marie-Christine
      Lombard           | 709,714                               
|                                        |                                       
|Total
      current Board of Management | 3,534,501                             
|John
      Fellows                      |                                       
|Bert
      van Doorn                    |                                       
|Carel
      Paauwe                      |                                       
|Alan
      Jones                        |                                       
|Roberto
      Rossi                     |                                       
|Total
      former Board of Management  |                                       
|                                        |                                       
|Total
      Board of Management         | 3,534,501                             
|                                        |                                       
|                                        |                                       

|1. | The
      severance payments in 2004 relate to a loan that was granted to the members
      of the Board for the taxation on their option grant in 1999. The current
      members of theBoard
      have repaid their loan to company in full in 2004. The loan to former members
      of the Board was waived.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                  

BASE
  SALARYDetails
  of the base salary and the other periodic paid compensation elements of the
  current Board of Management are set out below: Compensation
    & Benefits Board of Management


|                                        |                  
|--------------------------------------- | -----------------
|                                        | Base
      Salary
|                                        |                  
|Peter
      Bakker                      | 900,000          
|Jan
      Haars                         | 500,000          
|Harry
      Koorstra                    | 600,000          
|Dave
      Kulik                        | 600,000          
|Marie-Christine
      Lombard           | 500,000          
|                                        |                  
|Total
      current Board of Management | 3,100,000        
|                                        |                  
|                                        |                  

|1. | Includes
      company costs related to tax and social security.
|-- | ----------------------------------------------------------------

For 2004
    the Board of Management has not received an increase in base salary. In 2005
    the Board of Management again will not receive an increase in base salary.
    The country of residence component in the base salary for Dave Kulik and Marie-Christine
    Lombard consists of €500,000 for Dave Kulik and €400,000 for Marie-Christine
    Lombard.  SHORT-TERM
    INCENTIVESince
    2002, we account for bonus payments on the basis of the accrued bonuses for
    the performance of the year reported. In 2004, an amount of€191,952
    was paid to the members of the Board of Management for performance over 2003.
    In the table below the amount of€2,288,333
    reflects the accrued bonuses for performance over 2004 and the amount of€142,746




reflects
    the accrued costs for the rights on matching shares that were granted in 2003
    and 2002. The amount of € 170,046 reflects the accrual for the special
    incentive on logistics performance for Dave Kulik. The economic
    profit targets for 2004 were met. The 2004 earnings per share performance
    target was met at stretch. The 2004 accrual for the special incentive for
    Dave Kulik has been included separately.


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|Chapter
      12 | Financial
      statements and other information
|---------------- | ------------------------------------------------
|                



The 2004
    profit share and bonus amounts for the members of the Board of Management
    are accrued as set out below: Compensation
    & Benefits Board of Management


|                                        |                           
|--------------------------------------- | --------------------------
|                                        | Accruedfor 2004performance
|                                        |                           
|Peter
      Bakker                      | 675,000                   
|Jan
      Haars                         | 375,000                   
|Harry
      Koorstra                    | 450,000                   
|Dave
      Kulik                        | 413,333                   
|Marie-Christine
      Lombard           | 375,000                   
|                                        |                           
|Total
      current Board of Management | 2,288,333                 
|                                        |                           

SHARE-MATCHING
    SCHEMEIn
    2004, of the amount of €191,952 paid in relation to company results,
    75% (€143,964) was paid in cash and 25% (€47,988) was paid in shares.
    These bonus-shares are held in a trust by our share administrator. All members
    of the Board of Management participated in the scheme for the bonus earned
    during their Board membership




and none
    of the acquired shares were sold during their Board membership. Marie-Christine
    Lombard will start participating in the share matching scheme of the Board
    of Management as of 2005. Current
  holdings of bonus-related shares (including shares from reinvested dividends)
  and matching entitlement is set out in the following two tables below:


|                             
|-----------------------------
|                             
|                             
|                             
|                             
|                             
|                             
|Peter
      Bakker           
|                             
|                             
|                             
|Jan
      Haars              
|                             
|                             
|                             
|Harry
      Koorstra         
|                             
|                             
|                             
|Dave
      Kulik             
|                             
|                             
|                             
|Marie-Christine
      Lombard
|                             
|                             
|                             
|                             
|Current
      members        
|Former
      members         
|                             
|Total                        
|                             
|                             

|1. | using
      25% of bonus earned before the appointment as member of the Board of Management.
|-- | --------------------------------------------------------------------------------------------

|
|

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---



|                     | Number
      of matching rights on shares
|-------------------- | -----------------------------------------
|                     | Year                                     
|                     |                                          
|Peter
      Bakker   | 2003                                     
|                     | 2004                                     
|Jan
      Haas       | 2003                                     
|                     | 2004                                     
|Harry
      Koorstra | 2003                                     
|                     | 2004                                     
|Dave
      Kulik     | 2003                                     
|                     | 20041                                    
|                     |                                          
|Total                |                                          
|                     |                                          

1.  using
  25% of bonus earned before the appointment as member of the Board of Management.

LONG-TERM
    INCENTIVESThe
    maximum number of options and performance shares that can vest are disclosed
    in this report (150% of base allocation share options and 120% of base allocation
    performance shares).




LONG
    TERM INCENTIVE / SHARE OPTION SCHEMEThe
    table below summarises the status of the number of outstanding options granted
    to the members of the Board of Management1:


|                                             | Year                    |                                           |         |                                           |         |                                           |   |                                               |                        |  |                                                      |  |                                                             |  |  |  |     | 
|-------------------------------------------- | ----------------------- | ----------------------------------------- | ------- | ----------------------------------------- | ------- | ----------------------------------------- | - | --------------------------------------------- | ---------------------- |  | ---------------------------------------------------- |  | ----------------------------------------------------------- |  |  |  | --- | 
|                                             | NUMBER
      OF OPTIONS | AMOUNTS
      IN €                       
|                                             |                        
|Outstanding
        as of 1 Jan
        2004 |                         | Granted
        during the
        year 3 |         | Exercised
        during the
        year |         | Forfeited
        during the
        year |   | Outstanding
        as of 31
        Dec 2004 | Exercise
        price |  | Share
        price on
        exercise
        date |  | Remaining
        years in
        contractual
        life
|                                             |                        
|                                             |                         |                                           |         |                                           |         |                                           |   |                                               |                        |  |                                                      |  |                                                             |  |  |  |     | 
|Peter
      Bakker                           | 1999                    |                                           | 20,000  |                                           | -       |                                           | - |                                               | 20,000                 |  |                                                      |  | 25.26                                                       |  |  |  |     | 
|                                             | 2000                    |                                           | 20,000  |                                           | -       |                                           | - |                                               | -                      |  | 20,000                                               |  | 24.96                                                       |  |  |  | 0.4 | 
|                                             | 2001                    |                                           | 20,000  |                                           | -       |                                           | - |                                               | -                      |  | 20,000                                               |  | 23.66                                                       |  |  |  | 1.2 | 
|                                             | 2002                    |                                           | 60,000  |                                           | -       |                                           | - |                                               | -                      |  | 60,000                                               |  | 22.24                                                       |  |  |  | 2.1 | 
|                                             | 2003                    |                                           | 60,000  |                                           | -       |                                           | - |                                               | -                      |  | 60,000                                               |  | 13.85                                                       |  |  |  | 6.1 | 
|                                             | 2004                    |                                           | -       |                                           | 90,000  |                                           | - |                                               | -                      |  | 90,000                                               |  | 18.44                                                       |  |  |  | 7.3 | 
|Jan
      Haars                              | 2002                    |                                           | 30,000  |                                           | -       |                                           | - |                                               | -                      |  | 30,000                                               |  | 18.41                                                       |  |  |  | 2.6 | 
|                                             | 2003                    |                                           | 30,000  |                                           | -       |                                           | - |                                               | -                      |  | 30,000                                               |  | 13.85                                                       |  |  |  | 6.1 | 
|                                             | 2004                    |                                           | -       |                                           | 45,000  |                                           | - |                                               | -                      |  | 45,000                                               |  | 18.44                                                       |  |  |  | 7.3 | 
|Harry
      Koorstra                         | 2000                    | 2                                         | 9,000   |                                           | -       |                                           | - |                                               | -                      |  | 9,000                                                |  | 24.96                                                       |  |  |  | 0.4 | 
|                                             | 2001                    |                                           | 20,000  |                                           | -       |                                           | - |                                               | -                      |  | 20,000                                               |  | 23.66                                                       |  |  |  | 1.2 | 
|                                             | 2002                    |                                           | 30,000  |                                           | -       |                                           | - |                                               | -                      |  | 30,000                                               |  | 22.24                                                       |  |  |  | 2.1 | 
|                                             | 2003                    |                                           | 30,000  |                                           | -       |                                           | - |                                               | -                      |  | 30,000                                               |  | 13.85                                                       |  |  |  | 6.1 | 
|                                             | 2004                    |                                           | -       |                                           | 45,000  |                                           | - |                                               | -                      |  | 45,000                                               |  | 18.44                                                       |  |  |  | 7.3 | 
|Dave
      Kulik                             | 2003                    | 2                                         | 18,000  |                                           | -       |                                           | - |                                               | -                      |  | 18,000                                               |  | 13.85                                                       |  |  |  | 6.1 | 
|                                             | 2004                    |                                           | -       |                                           | 45,000  |                                           | - |                                               | -                      |  | 45,000                                               |  | 18.44                                                       |  |  |  | 7.3 | 
|Marie-Christine
      Lombard                | 2004                    |                                           | -       |                                           | 45,000  |                                           | - |                                               | -                      |  | 45,000                                               |  | 18.44                                                       |  |  |  | 7.3 | 
|                                             |                         |                                           |         |                                           |         |                                           |   |                                               |                        | 
|Current
      members                        | Total                   |                                           | 347,000 |                                           | 270,000 |                                           |   |                                               | 20,000                 |  | 597,000                                              |  |                                                             |  |  |  |     | 
|Former
      members                         | 1999                    |                                           | 60,000  |                                           | -       |                                           | - |                                               | 60,000                 |  | -                                                    |  | 25.26                                                       |  |  |  |     | 
|                                             | 2000                    |                                           | 40,000  |                                           | -       |                                           | - |                                               | -                      |  | 40,000                                               |  | 24.96                                                       |  |  |  | 0.4 | 
|                                             |                         |                                           |         |                                           |         |                                           |   |                                               |                        | 
|Former
      members                         | Total                   |                                           | 100,000 |                                           | -       |                                           | - |                                               | 60,000                 |  | 40,000                                               |  |                                                             |  |  |  |     | 
|                                             |                         |                                           |         |                                           |         |                                           |   |                                               |                        | 
|Total                                        |                         |                                           | 447,000 |                                           | 270,000 |                                           | - |                                               | 80,000                 |  | 637,000                                              |  |                                                             |  |  |  |     | 
|                                             |                         |                                          

|1 | The options of the (former) members of the Board of Management only include the options granted as of the year of appointment to the Board of Management.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|2 | Granted before the appointment as member of the Board of Management.                                                                                     
|3 | 150%
      of base allocation being the maximum number of options exercisable under
      the performance schedule.                                      

No member
  of the Board of Management has exercised options.

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Chapter
  12     Financial statements and other information

---

LONG
    TERM INCENTIVE / PERFORMANCE SHARE SCHEME

The
    table below summarises the status of the rights awarded under the Performance
    Share Scheme to the members of the Board of Management:

|Board
      of Management     |                                              |                                           |        |                                      |        |                                        |         |                                        |        |                                           |        |                                              |     | 
|----------------------------- | -------------------------------------------- | ----------------------------------------- | ------ | ------------------------------------ | ------ | -------------------------------------- | ------- | -------------------------------------- | ------ | ----------------------------------------- | ------ | -------------------------------------------- | --- | 
|                              | Number
      of rights on performance shares
|                             
|Year                          |                                              | Outstanding
      as of 
      1 Jan 2004 |        | Granted
      during the
      year1 |        | Exercised
      during 
      the year |         | Forfeited
      during the 
      year |        | Outstanding
      as of
      31 Dec 2004 |        | Remaining
      years
      contractual life
|                              |                                             
|Peter
      Bakker            | 2002                                         |                                           | 8,938  |                                      | -      |                                        | (5,586  | )                                      | (3,352 | )                                         |        |                                              | -   | 
|                              | 2003                                         |                                           | 11,795 |                                      |        |                                        |         |                                        |        |                                           | 11,795 |                                              | 1.0 | 
|                              | 2004                                         |                                           |        |                                      | 13,015 |                                        | -       |                                        |        |                                           | 13,015 |                                              | 2.0 | 
|Jan
      Haars               | 2002                                         |                                           | 5,958  |                                      | -      |                                        | (3,724  | )                                      | (2,234 | )                                         |        |                                              | -   | 
|                              | 2003                                         |                                           | 7,863  |                                      |        |                                        |         |                                        |        |                                           | 7,863  |                                              | 1.0 | 
|                              | 2004                                         |                                           |        |                                      | 6,507  |                                        | -       |                                        |        |                                           | 6,507  |                                              | 2.0 | 
|Harry
      Koorstra          | 2002                                         |                                           | 5,958  |                                      | -      |                                        | (3,724  | )                                      | (2,234 | )                                         |        |                                              | -   | 
|                              | 2003                                         |                                           | 7,863  |                                      |        |                                        |         |                                        |        |                                           | 7,863  |                                              | 1.0 | 
|                              | 2004                                         |                                           |        |                                      | 6,507  |                                        | -       |                                        |        |                                           | 6,507  |                                              | 2.0 | 
|Dave
      Kulik              | 2004                                         |                                           |        |                                      | 6,507  |                                        | -       |                                        |        |                                           | 6,507  |                                              | 2.0 | 
|Marie-Christine
      Lombard | 2004                                         |                                           |        |                                      | 6,507  |                                        | -       |                                        |        |                                           | 6,507  |                                              | 2.0 | 
|                              |                                              |                                           |        |                                      |        |                                        |         |                                        |        |                                           |        |                                              |     | 
|Total                         |                                              |                                           | 48,375 |                                      | 39,043 |                                        | (13,034 | )                                      | (7,820 | )                                         | 66,564 |                                              |     | 
|                              |                                              |                                           |        |                                      |        |                                        |         |                                        |        |                                           |        |                                              |     | 

| | 1. | 120% of base allocation being the maximum number of rights on performance
        shares that can vest under the performance schedule.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------

Our
    relative total shareholder return over the period from 1 January 2002 through
    31 December 2004 governs the share option grant and performance share grant
    for 2002. Our relative total shareholder return over the period from 1 January
    2003 through 31 December 2005 governs the share option grant and performance
    share grant for 2003. If the granted share optionsand
    granted rights on performance shares were to vest on 31




December 2004, our total shareholder return performance through 31 December
    2004 would lead to the following vesting percentages for share options and
    granted rights on performance shares:




|Vesting
      percentages as per 31 Dec 2004 according to TSR performance schedules |                     | Vesting
      percentage
      share options |                                                            | Vesting
      percentage
      of performance
      shares |    
|----------------------------------------------------------------------------------- | ------------------- | -------------------------------------------- | ---------------------------------------------------------- | ---------------------------------------------------------- | ---
|                                                                                    |                     |                                              |                                                           
|                                                                                    | Year
      of grant |                                              | Relative
      position when compared
      with peergroup
|                                                                                    |                     |                                              |                                                            |                                                            |    
|                                                                                    |                     |                                              |                                                            |                                                            |    
|AEX
      companies                                                                 | 2002                |                                              | 2nd
      quartile                                         |                                                            | 50 
|Peer
      competitors                                                              | 2002                |                                              | 3rd
      quartile                                         |                                                            | 25 
|                                                                                    |                     |                                              |                                                            |                                                            |    
|Total
      2002                                                                    |                     |                                              |                                                            |                                                            | 75 
|                                                                                    |                     |                                              |                                                            |                                                            |    
|AEX
      companies                                                                 | 2003                |                                              | 2nd
      quartile                                         |                                                            | 50 
|Peer
      competitors                                                              | 2003                |                                              | 3rd
      quartile                                         |                                                            | 25 
|                                                                                    |                     |                                              |                                                            |                                                            |    
|Total
      2003                                                                    |                     |                                              |                                                            |                                                            | 75 
|                                                                                    |                     |                                              |                                                            |                                                            |    
|AEX
      companies                                                                 | 2004                |                                              | 2nd
      quartile                                         |                                                            | 50 
|Peer
      competitors                                                              | 2004                |                                              | 2nd
      quartile                                         |                                                            | 50 
|                                                                                    |                     |                                              |                                                            |                                                            |    
|Total
      2004                                                                    |                     |                                              |                                                            |                                                            | 100
|                                                                                    |                     |                                              |                                                            |                                                            |    

If
    the granted share options were to vest on 31 December 2004, the following
    share options would have vested based on the total




shareholders
    return vesting percentages shown in the previous vesting table above.


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Vesting
  share options as per 31 Dec 2004 according to TSR performance schedules

|                              | Year |  | Outstanding
      share
      options as of 31 Dec
      2004 (max. 150% of
      base allocation) |  | Base
      allocation
      outstanding share
      options as of 31
      Dec 2004 |  | Vesting
        percentage
        relating to TSR
        performance
        schedule |   | Vesting
      as per 31
      Dec 2004 | 
|----------------------------- | ---- |  | -------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- | - | -------------------------------------- | 
|                              |      |  |                                                                                                    |  |                                                                                     |  |                                                                                         |   |                                        | 
|Peter
      Bakker            | 2002 |  | 60,000                                                                                             |  | 40,000                                                                              |  | 75                                                                                      | % | 30,000                                 | 
|                              | 2003 |  | 60,000                                                                                             |  | 40,000                                                                              |  | 75                                                                                      | % | 30,000                                 | 
|                              | 2004 |  | 90,000                                                                                             |  | 60,000                                                                              |  | 100                                                                                     | % | 60,000                                 | 
|Jan
      Haars               | 2002 |  | 30,000                                                                                             |  | 20,000                                                                              |  | 75                                                                                      | % | 15,000                                 | 
|                              | 2003 |  | 30,000                                                                                             |  | 20,000                                                                              |  | 75                                                                                      | % | 15,000                                 | 
|                              | 2004 |  | 45,000                                                                                             |  | 30,000                                                                              |  | 100                                                                                     | % | 30,000                                 | 
|Harry
      Koorstra          | 2002 |  | 30,000                                                                                             |  | 20,000                                                                              |  | 75                                                                                      | % | 15,000                                 | 
|                              | 2003 |  | 30,000                                                                                             |  | 20,000                                                                              |  | 75                                                                                      | % | 15,000                                 | 
|                              | 2004 |  | 45,000                                                                                             |  | 30,000                                                                              |  | 100                                                                                     | % | 30,000                                 | 
|Dave
      Kulik              | 2003 |  | 18,000                                                                                             |  | 12,000                                                                              |  | 75                                                                                      | % | 9,000                                  | 
|                              | 2004 |  | 45,000                                                                                             |  | 30,000                                                                              |  | 100                                                                                     | % | 30,000                                 | 
|Marie-Christine
      Lombard | 2004 |  | 45,000                                                                                             |  | 30,000                                                                              |  | 100                                                                                     | % | 30,000                                 | 
|                              |      |  |                                                                                                    |  |                                                                                     |  |                                                                                         |   |                                        | 
|Total                         |      |  | 528,000                                                                                            |  | 352,000                                                                             |  |                                                                                         |   | 309,000                                | 
|                              |      |  |                                                                                                    |  |                                                                                     |  |                                                                                         |   |                                        | 

| | 
| | 

The table
  below shows the actual vesting of the 2002 performance shares on 31 December
  2004, since the performance period ended then and vesting was after three financial
  years.




For the
  grants after 2002, it shows what would vest if the performance period ended
  on 31 December 2004.




Vesting
  performance shares as per 31 December 2004 according to TSR performance schedules

|                              | Year |  | Outstanding
      rights on
      performance shares
      as of 31 Dec 2004
      (max. 120% of base
      allocation) |  | Base
      allocation
      outstanding rights on
      performance shares
      as of 31 Dec 2004 |  | Vesting
      percentage
      relating to TSR
      performance schedule |   | Vesting
      as
      per 31 Dec 2004 | 
|----------------------------- | ---- |  | ----------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------- | - | -------------------------------------- | 
|                              |      |  |                                                                                                                         |  |                                                                                                    |  |                                                                           |   |                                        | 
|Peter
      Bakker            | 2002 |  | -                                                                                                                       |  | -                                                                                                  |  | 75                                                                        | % | 5,586                                  | 
|                              | 2003 |  | 11,795                                                                                                                  |  | 9,829                                                                                              |  | 75                                                                        | % | 7,372                                  | 
|                              | 2004 |  | 13,015                                                                                                                  |  | 10,846                                                                                             |  | 100                                                                       | % | 10,846                                 | 
|Jan
      Haars               | 2002 |  | -                                                                                                                       |  | -                                                                                                  |  | 75                                                                        | % | 3,724                                  | 
|                              | 2003 |  | 7,863                                                                                                                   |  | 6,553                                                                                              |  | 75                                                                        | % | 4,915                                  | 
|                              | 2004 |  | 6,507                                                                                                                   |  | 5,423                                                                                              |  | 100                                                                       | % | 5,423                                  | 
|Harry
      Koorstra          | 2002 |  | -                                                                                                                       |  | -                                                                                                  |  | 75                                                                        | % | 3,724                                  | 
|                              | 2003 |  | 7,863                                                                                                                   |  | 6,553                                                                                              |  | 75                                                                        | % | 4,915                                  | 
|                              | 2004 |  | 6,507                                                                                                                   |  | 5,423                                                                                              |  | 100                                                                       | % | 5,423                                  | 
|Dave
      Kulik              | 2003 |  | -                                                                                                                       |  | -                                                                                                  |  | -                                                                         |   | -                                      | 
|                              | 2004 |  | 6,507                                                                                                                   |  | 5,423                                                                                              |  | 100                                                                       | % | 5,423                                  | 
|Marie-Christine
      Lombard | 2004 |  | 6,507                                                                                                                   |  | 5,423                                                                                              |  | 100                                                                       | % | 5,423                                  | 
|                              |      |  |                                                                                                                         |  |                                                                                                    |  |                                                                           |   |                                        | 
|Total                         |      |  | 66,564                                                                                                                  |  | 55,470                                                                                             |  |                                                                           |   | 62,774                                 | 
|                              |      |  |                                                                                                                         |  |                                                                                                    |  |                                                                           |   |                                        | 

VARIABLE
  COMPENSATION   In the
  table below the total variable compensation granted in 2004 to the members of
  the Board of Management is expressed as a percentage of base salary. For this
  purpose the value of the rights on matching shares, share options and rights
  on performance shares were calculated using the Black-Scholes




formula and a weighted probability analysis provided by Towers Perrin. The
    2004 accrual for the special incentive for Dave Kulik is included separately.




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Chapter
  12     Financial statements and other information

---



|Compensation
      & Benefits
      Board of Management |                                        |  |                                                     |  |                                           |  |                                                                      |  |                                             |  |                                         |  |                  
|------------------------------------------------------- | -------------------------------------- |  | --------------------------------------------------- |  | ----------------------------------------- |  | -------------------------------------------------------------------- |  | ------------------------------------------- |  | --------------------------------------- |  | -----------------
|                                                        | Bonus
      for 2004
      performance |  | Rights
      on
      matching shares
      accrued |  | Share
      options
      granted in 2004 |  | Rights
      on
      performance
      shares granted
      in 2004 |  | Other
      bonus/accrued special incentive |  | Total
      variable
      compensation |  | Base
      salary
|                                                        |                                        |  |                                                     |  |                                           |  |                                                                      |  |                                             |  |                                         |  |                  
|Peter
      Bakker                                      | 675,000                                |  | 42,805                                              |  | 229,800                                   |  | 133,404                                                              |  |                                             |  | 1,081,009                               |  | 900,000          
|Jan
      Haars                                         | 375,000                                |  | 24,691                                              |  | 114,900                                   |  | 66,697                                                               |  |                                             |  | 581,288                                 |  | 500,000          
|Harry
      Koorstra                                    | 450,000                                |  | 44,116                                              |  | 114,900                                   |  | 66,697                                                               |  |                                             |  | 675,713                                 |  | 600,000          
|Dave
      Kulik                                        | 413.333                                |  | 31,134                                              |  | 114,900                                   |  | 66,697                                                               |  | 170,046                                     |  | 796,110                                 |  | 600,000          
|Marie-Christine
        Lombard                         | 375,000                                |  |                                                     |  | 114,900                                   |  | 66,697                                                               |  |                                             |  | 556,597                                 |  | 500,000          
|                                                        |                                        |  |                                                     |  |                                           |  |                                                                      |  |                                             |  |                                         |  |                  
|Total                                                   | 2,288,333                              |  | 142,746                                             |  | 689,400                                   |  | 400,192                                                              |  | 170,046                                     |  | 3,690,717                               |  | 3,100,000        
|                                                        |                                        |  |                                                     |  |                                           |  |                                                                      |  |                                             |  |                                         |  |                  

SEVERANCETermination
    arrangements for the members of the Board of Management are as follows:






|                              | Notice
      period asBoard
      member |  | Compensation
      related to the
      change in controle clause |  | Other
      severance arrangements                                     | 
|----------------------------- | ---------------------------------------- |  | ----------------------------------------------------------------- |  | ---------------------------------------------------------------------- | 
|                              |                                          |  |                                                                   |  |                                                                        | 
|Peter
      Bakker            | Six
      months                         |  | Two
      years compensation                                     |  | None                                                                   | 
|                              |                                          |  |                                                                   |  |                                                                        | 
|Jan
      Haars               | Six
      months                         |  | Two
      years compensation1                                    |  | Two
      years compensation                                          | 
|                              |                                          |  |                                                                   |  |                                                                        | 
|Harry
      Koorstra          | Six
      months                         |  | Two
      years compensation                                     |  | None                                                                   | 
|                              |                                          |  |                                                                   |  |                                                                        | 
|Dave
      Kulik              | Six
      months                         |  | Two
      years compensation                                     |  | Local
      practice for US based salary + one year of Dutch salary    | 
|                              |                                          |  |                                                                   |  |                                                                        | 
|Marie-Christine
      Lombard | Six
      months                         |  | Two
      years compensation                                     |  | Local
      practice for France based salary+ one year of Dutch salary | 
|                              |                                          |  |                                                                   |  |                                                                        | 

1. Double
  trigger (both employer and employee have the right to claim).

Compensation
    is defined as the base compensation, the average bonus over the last three
    years and pension contribution. For members of the Board of Management who
    are not resident PENSIONSPeter
    Bakker, Jan Haars and Harry Koorstra are participants in a defined benefit
    scheme, which provides an annual benefit of 70% of pensionable salary, assuming
    35 years of service. Dave Kulik participates in a defined benefit scheme with
    a normal retirement benefit accrual of 1.75% per year and a 401(k) scheme
    (defined contribution). Marie-Christine Lombard participates in a defined




in the
    Netherlands, we have followed local practice for the severance on what is
    regarded as the country of residence component of their base salary. contribution
    pension scheme. The pensionable age of Peter Bakker and Harry Koorstra is
    65; the pensionable age of Jan Haars is 60 years of age. The foreseen pensionable
    age of Dave Kulik is 60. The accrued benefits and the transfer values (for
    participants in a defined benefit scheme) of the members of the Board of Management
    are as follows:


|                     |                 |  |               |  | Transfer
      / fund |  | Transfer
      / fund |  |                      |  |                      |  |                      |  |                       | 
|-------------------- | --------------- |  | ------------- |  | --------------------- |  | --------------------- |  | -------------------- |  | -------------------- |  | -------------------- |  | --------------------- | 
|                     |                 |  |               |  | value
      of        |  | value
      of        |  |                      |  |                      |  |                      |  | Changes
      in      | 
|                     |                 |  | Type
      of |  | accrued               |  | accrued               |  | Changes
      in     |  | Accrued              |  | Accrued              |  | accrued               | 
|                     | Age
      at 31 |  | pension       |  | benefits
      at 31  |  | benefits
      at 31  |  | transfer
      value |  | benefits
      at 31 |  | benefits
      at 31 |  | benefits
      during | 
|                     | Dec
      2004  |  | scheme1       |  | Dec
      20032       |  | Dec
      20042       |  | during
      2004    |  | Dec
      2003       |  | Dec
      2004       |  | 2004                  | 
|                     |                 |  |               |  |                       |  |                       |  |                      |  |                      |  |                      |  |                       | 
|Peter
      Bakker   | 43              |  | DB            |  | 1,339,456             |  | 1,503,243             |  | 163,787              |  | 216,609              |  | 234,207              |  | 17,598                | 
|Jan
      Haars      | 53              |  | DB            |  | 2,163,517             |  | 2,374,951             |  | 211,434              |  | 173,530              |  | 183,092              |  | 9,562                 | 
|Harry
      Koorstra | 53              |  | DB            |  | 2,631,497             |  | 2,845,674             |  | 214,177              |  | 287,191              |  | 298,711              |  | 11,520                | 
|Dave
      Kulik 3   | 56              |  | DB            |  | 2,338,239             |  | 3,096,986             |  | 758,747              |  | 241,752              |  | 299,628              |  | 57,876                | 
|                     |                 |  |               |  |                       |  |                       |  |                      |  |                      |  |                      |  |                       | 

|1. | DB
      = defined benefit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Transfer value is disclosed in case of defined benefit pension scheme                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3. | In
      2003 the transfer value of accrued benefits at 31 December 2003 should have
      assumed a retirement age of 60 and a joint and survivor form of annuity.
      Also it should have included in the calculation of final average pay a long-term
      incentive accrual in 2003, associated with a plan acquired from the acquisition
      of CSX. The combined impact is an increase in value of €610,465 versus
      the amount of €1,727,774 shown in the annual report of 2003. In addition,
      the transfer value 2004 is impacted by a decrease in the discount rate (6.25%
      to 5.75%) used to calculate the transfer value.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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The
    difference between the transfer values of the accrued benefits of our Dutch
    members of the Board of Management have been calculated on the basis of actuarial
    advice in accordance with the regulations from the Dutch Ministry of Social
    Affairs and Employment. For
    Dave Kulik, the change in transfer valueis
    included in the total remunerationas
    a pension contribution for future payments. The pension contribution for Dave
    Kulik is to a non-funded pension scheme, meaning that the liability for a
    future pension exists, but the money is not actually transferred to a fund. In
    addition, we contributed €12,267 for Dave Kulik and€150,000
    for Marie-Christine Lombard under a defined contribution scheme. Personnel
    and management option plans PERSONNEL OPTION PLANOur
    Board of Management decided, with the approval of our Supervisory Board, to
    offer our employees working in the Netherlands under the collective labour
    agreement a one-time opportunity to participate in a personnel option plan
    on 4 January 1999. In total 23,716 employees accepted the plan. The
        most important aspects of the plan were:
      The
        employee was granted an option right for 100 of ourcompany shares.
      Options
        were granted at the opening price (€27.70) as tradedon the Euronext Amsterdam on the date the grant is made.
   The
       option is exercisable between the third and fifthanniversary
       of the day of grant, after five years the outstandingoptions are forfeited.
      The
        option holder retains the right to exercise his/heroption when he/she leaves the company for certain reasons(retirement, certain reorganisations, disability or death).
   The option holder loses the right to exercise his/her optionwhen he or she leaves the company for reasons other thanthose mentioned above. At
    the time of grant of the personnel options tax was levied on the grant of
    option rights in the Netherlands. Although our personnel options were granted
    in the most tax efficient way at the time, participation resulted in a net
    after tax cost to a large number of participants. Given
    that the personnel options have never been in the money since they became
    exercisable on 4 January 2002, we decided to compensate the remaining participants
    in the personnel option plan for their loss when their options expired on
    4 January 2004. MANAGEMENT
    OPTION PLANSenior
    managers, excluding members of the Board of Management and former members
    of the Board of Management, were granted company stock options in 2004 (€3,390,304),
    2003 (€3,214,500), and in 2002 (€2,499,750). These grants are part
    of the policy of granting options each year to eligible members of senior
    management up to and including 2004.




We see
    the option plan as part of our remuneration package for managers, and it is
    particularly aimed at rewarding managers based on the long-term growth of
    our company. The growth of our company, which is expressed in the share price,
    is in the interest of both staff and shareholders of our company. In consultation
    with the Supervisory Board, objective criteria were developed to determine
    the amount of options to be granted to the management. As from the 2002 option
    grant, company performance is incorporated in the management option plan.
    The number of options granted under the 2002, 2003 and 2004 option plans that
    will ultimately be eligible for exercise, is dependant on our total shareholder
    return relative to a peer group of direct competitors and a peer group of
    AEX companies. The
    Board of Management granted senior managers in our company share options after
    the approval of the Supervisory Board. Our company share options are granted
    to senior managers on an individual basis. The principles behind these grants
    are the performance of the individual concerned and the opportunities for
    him or her to contribute to our success. Option
    rights are granted in accordance with the management option plan, which is
    approved by the Supervisory Board. This plan sets out the procedures for share
    option grants in more than 40 countries around the world. The most important aspects of the plan are:
   Options are granted at the average market price as traded onthe Euronext Amsterdam on the date the grant is made (2004:€18.44
    / share).
   For options granted in 2003 and 2004 the option isexercisable between the third and eighth anniversary of theday of grant, after eight years the outstanding options areforfeited.
   For options granted before 2003 the option is exercisablebetween
       the third and fifth anniversary of the day of grant,after
       five years the outstanding options are forfeited.
      The
        option holder retains the right to exercise his/heroption
        when he/she leaves the company for certain reasons(retirement, certain reorganisations, disability or death).
      The
        option holder loses the right to exercise his/her optionwhen he or she leaves the company for reasons other thanthose mentioned above. Option
    rights are granted in accordance with tax procedures and regulations that
    apply in the country concerned. In the Netherlands in 1999, tax was levied
    at the time of the grant of option rights and loans were offered to our employees
    in the Netherlands in order to pay this tax. The company decided not to request
    repayment of the loans that were associated with the tax paid on the grant
    of the 1999 management options, that expired in 2004. Approximately€1,3
    million was reported in 2004 as costs in the statements of income in this
    respect. At 31 December 2004 there were no loans receivable (2003:€625,069).


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Chapter
  12    Financial statements and other information

---

The exercise of options is subject to the TPG rules governing inside information. The
    table below summarises the status of the number of outstanding options granted
    to personnel and management: STATEMENTS
    OF CHANGES OF OUTSTANDING OPTIONS


|           |                        
|---------- | -----------------------
|           | Number
      of options
|           |                        
|           | Year                   
|           |                        
|Personnel  | 1999                   
|           |                        
|Management | 1999                   
|           | 1999                   
|           | 2000                   
|           | 2000                   
|           | 2001                   
|           | 2002                   
|           | 2003                   
|           | 2003                   
|           | 2004                   
|           |                        
|Total      |                        
|           |                        

1. 150%
    of base allocation being the maximum number of options exercisable under
the performance schedule.

Statement
of changes of outstanding options

|                                                                  |                        
|----------------------------------------------------------------- | -----------------------
|                                                                  | 2004                   
|                                                                  |                        
|                                                                  | Number
      of options
|                                                                  |                        
|Balance
      at beginning of year                                | 10,310,610             
|Granted                                                           | 3,660,304              
|Exercised                                                         | (51,375                
|Forfeited                                                         | (3,201,549             
|                                                                  |                        
|Balance
      at end of year                                      | 10,717,990             
|Exercisable
      at 31 December                                  | 2,075,200              
|Weighted
      average fair value of options at grant date (in €) |                        
|                                                                  |                        
|                                                                  |                        

The
    table above also includes the outstanding options of the members of the Board
    of Management and former members of the Board of Management. All options granted
    entitle the holder to the allotment of ordinary shares when they are exercised. BONUS/MATCHING
    PLAN FOR SENIOR MANAGEMENTMembers
    of a select group of senior managers were paid 75% of their 2002 and 2003
    bonus in cash and 25% as a grant of TPG shares with an associated matching
    right in 2004 (107,710)




and
    in 2003 (54,405) if at least 50% of the shares are kept for three years. We
    see the bonus/matching plan as part of our remuneration package for the members
    of our top management, and it is particularly aimed at further aligning their
    interests with the interests of the shareholders. The rights on bonus and
    matching shares are granted in accordance with the bonus/matching plan, which
    has been approved by the Supervisory Board.


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The
    most important aspects of the plan are:
   The
       grant of the right on bonus shares is in lieu of 25% of an individuals
      annual bonus payment, and bonus shares are delivered shortly after the
       right is granted.
      The
        number of bonus shares is calculated by dividing 25% of an individuals
        gross annual bonus relating to the preceding financial year by the weighted
        average share price on the Euronext Amsterdam on the date the grant is
        made (2004: €18.44/share).
   The
       rights on matching shares are granted for zero costs and the number of
      shares is equal to the number of bonus shares.
      The
        matching shares are delivered three years after the delivery of the bonus
        shares. One matching share is delivered for each bonus share that has
        been retained for three years.
      For
        each bonus share that is sold within three years, the associated right
        to one matching share lapses. If more than




50%
        of the bonus shares are sold within three years, the entire right to matching
        shares lapses with immediate effect.
    Where
        a participant leaves the company for certain reasons (retirement,
        certain reorganisations, disability or death) the right
        to matching shares will vest immediately and he / she can exercise
        his / her right pro rata.
    A
        participant loses the right to exercise his/her right on matching
        shares when he/she leaves the company for reasons other
        than those mentioned above. The exercise of the rights on matching shares is subject to the rules governing insider trading that apply to our company. The
    table below summarises the status of the number of outstanding rights on matching
    shares granted to senior managers:




|           | Number
      of rights on matching shares |                                  
|---------- | ----------------------------------------- | ---------------------------------
|           |                                           |                                  
|           | Year                                      | Oustanding
      as of 1 Jan 2004
|           |                                           |                                  
|Management | 2003                                      |                                  
|           | 2004                                      |                                  
|           |                                           |                                  

The
    number of matching rights on shares granted have been accrued as part of the
    salary costs of 2004 on a linear pro rata basis. HEDGING
    OF SHARESWe
    manage our risk in connection with the obligations we have under the existing
    share and option plans by purchasing shares in the market. In 2004 and 2003
    we purchased no sharesfor hedging purposes.




At
    31 December 2004 we held a total of 12,579,942 shares of which 4,979,942 shares
    were held to cover share plans (2003: 5,148,850, 2002: 5,235,260), purchased
    at a weighted average price per share of €21.92 (2003: €25.24).
    At 31 December 2004, we held a total of 5,738,048 (2003: 5,561,760, 2002:
    2,853,650) unhedged options. The
    following table shows how the net earnings per share would be diluted if share
    options granted were exercised.




|                                                                                    |                                
|----------------------------------------------------------------------------------- | -------------------------------
|                                                                                    | Year
      ended at 31 December
|                                                                                    |                                
|                                                                                    | 2004                           
|                                                                                    |                                
|Number
      of issued and outstanding ordinary shares                              | 480,259,522                    
|Number
      of share held by the company to cover shareplans                       | 4,979,942                      
|Number
      of share held by the company for annulation                            | 7,600,000                      
|Average
      number of ordinary shares per year                                    | 473,387,568                    
|Diluted
      number of ordinary shares per year                                    | 592,581                        
|                                                                                    |                                
|Average
      number of ordinary shares per year on fully diluted basis in the year | 473,980,149                    
|Net
      income ( in € cents) per ordinary share                                   | 140.9                          
|Net
      income ( in € cents) per diluted ordinary share                           | 140.7                          
|                                                                                    |                                
|                                                                                    |                                

On
    29 September 2004 we announced that the Dutch State sold a total of 77.7 million
    ordinary shares in our outstanding share capital, representing approximately
    16% in our company. With the sale and transfer the State has reduced its ownership
    in our capital from 34.8% to 18.6%. We repurchased 20.7 million of the total
    amount of shares sold by the State. Transfer of the repurchased ordinary shares
    has taken place in two tranches. The first tranche of 7.6 million shares was
    transferred to us on




4 October
    2004. The transfer of the remaining 13.1 million shares was completed on 5
    January 2005. The
    diluted number of ordinary shares in the year is calculated based on the number
    of options issued which have an exercise price lower than the average market
    price over 2004 (and so are assumed to be exercised).


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Chapter
  12    Financial statements and other information

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As all options
    were granted at an exercise price that equals the average price on the Amsterdam
    Stock Exchange on the day of grant, no charges would have been recorded in
    the 2002, 2003 and/or 2004 income statements. If the company had elected




to recognise
    compensation expense based on the fair value at the grant dates in accordance
    with FAS 123, the companys net income and net income per share would
    have decreased to the pro forma amounts indicated below:


|                                                        |                                
|------------------------------------------------------- | -------------------------------
|                                                        | Year
      ended at 31 December
|                                                        |                                
|                                                        | 2004                           
|                                                        |                                
|Net
      income                                        |                                
|As
      reported                                       | 667                            
|As
      adjusted (unaudited)                           | 659                            
|Net
      income per ordinary share and per ADS         |                                
|As
      reported (in € cents)                          | 140.9                          
|As
      adjusted (in € cents) (unaudited)              | 139.2                          
|Net
      income per diluted ordinary share and per ADS |                                
|As
      reported (in € cents)                          | 140,7                          
|As
      adjusted (in € cents) (unaudited)              | 139,0                          
|                                                        |                                

(in €millions,
except per share data)



These
    pro forma results are not an indicator of future performance. Prior to 1 January
    2002, we calculated the fair value of options granted to senior managers and
    Board members using the binomial method, American-style with dividend. From
    1 January 2002, we calculated the fair value of these options using the Black
    Scholes model. The use of the Black Scholes model, rather than the binomial
    pricing model, did not have a material effect on the compensation expense
    or on the pro forma net income or per share amounts disclosed. The
    main assumptions are summarised in the table below:









|                                                  |                                
|------------------------------------------------- | -------------------------------
|                                                  | Year
      ended at 31 December
|                                                  |                                
|                                                  | 2004                           
|                                                  |                                
|Riskfree
      interest rate (%)                  | 3.07                           
|Dividend
      ( in € cents per share)            | 57.00                          
|Volatility
      (%)                              | 21.7                           
|Vesting
      period as from 2003 onwards (years) | 8                              
|                                                  |                                

O18DEPRECIATION,
  AMORTISATION AND
  IMPAIRMENTS: 533 MILLION (2003: 711; 2002: 490)

|                                                               |                                
|-------------------------------------------------------------- | -------------------------------
|                                                               | Year
      ended at 31 December
|                                                               |                                
|                                                               | 2004                           
|                                                               |                                
|Goodwill
      amortisation and impairment                     | 146                            
|Amortisation
      of other intangibles                        | 52                             
|Depreciation
      and impairment property,plant and equipment | 335                            
|                                                               |                                
|Total                                                          | 533                            
|                                                               |                                
|(in
      €millions)                                           |                                



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Depreciation
    and impairments of property, plant and equipment are detailed as follows:




|                                                                      |                                
|--------------------------------------------------------------------- | -------------------------------
|                                                                      | Year
      ended at 31 December
|                                                                      |                                
|                                                                      | 2004                           
|                                                                      |                                
|By
      classification:                                              |                                
|Land
      and buildings                                              | 71                             
|Plant
      and equipment                                             | 136                            
|Other
      property, plant and equipment                             | 128                            
|                                                                      |                                
|Total                                                                 | 335                            
|                                                                      |                                
|By
      cause:                                                       |                                
|Regular
      depreciation                                            | 324                            
|Impairment
      and restoration of previously recognised impairments | 11                             
|                                                                      |                                
|Total                                                                 | 335                            
|                                                                      |                                
|(in
      €millions)                                                  |                                
|                                                                      |                                

In
    2004, the allocation of the amount of depreciation and impairments to the
    divisions mail, express and logistics was respectively €162 million,
    €209 million and €158 million, (2003: 176, 198 and 335; 2002: 137,
    191 and 159). In addition, depreciation in respect of non-allocated business
    amounted to €4 million (2003: 2; 2002: 3). £19OTHER
    OPERATING EXPENSES: 761 MILLION (2003: 759; 2002: 843) Total
    advertising expenses incurred in the year amounted to €45 million (2003:
    56; 2002: 72), respectively in mail €21 million, express €21 million
    and logistics €3 million. The
    other operating expenses in mail in 2004 were €261 million (2003: 265;
    2002: 315), in express €236 million (2003: 215; 2002: 223) and in logistics
    €239 million (2003: 253; 2002: 269).




The
    incurred impairment costs in 2004 are €11 million (2003: 10; 2002: 1).
    These costs are related to buildings of the express division in Australia
    and Germany (€7 million). Further, the mail division has incurred impairment
    costs of €4 million which is related to buildings (€2 million) and
    plant and equipment (€2 million). TPG
    does not conduct research and development, in the narrow sense, comparable
    with the normal operating activities in this area. Therefore, TPG does not
    incur research and development costs, in the narrow sense. Included
    within other operating expenses are costs incurred with respect of services
    provided by our group statutory auditors, PricewaterhouseCoopers Accountants
    N.V. The fees for their services can be divided amongst the following categories:




|                             |                                
|---------------------------- | -------------------------------
|                             | Year
      ended at 31 December
|                             |                                
|                             | 2004                           
|                             |                                
|Audit
      services         | 12                             
|Audit
      related services | 3                              
|Tax
      advisory fees      | 0                              
|Other
      services         | 1                              
|                             |                                
|Total                        | 16                             
|                             |                                
|(in
      €millions)         |                                
|                             |                                

Fees
    for audit services include the audit of TPGs annual financial statements,
    the review of interim financial statements, statutory audits, services associated
    with issuing an audit opinion on the postal concession reporting and services
    that only the external auditor can reasonably provide. Fees for audit related
    services include employee benefit plan audits, due diligence related to mergers
    and acquisitions, internal control reviews, consultation on Sarbanes-Oxley
    requirements, IFRS training and consultation




concerning
    financial accounting and reporting matters not classified as audit. Fees for
    tax services include tax compliance, tax advise and tax planning, including
    all services performed by the external auditors professional staff in
    its tax division, except those rendered in connection with the audit. Fees
    for other services include financial risk management reviews and training
    support for accounting, risk management projects, internal audit methodology
    and systems.




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Chapter
  12    Financial statements and other information

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£20INTEREST
    AND SIMILAR INCOME AND EXPENSES INTEREST
    AND SIMILAR INCOME: 37 MILLION (2003: 18; 2002: 20)Interest
    and similar income in 2004 increased by €19 million compared to 2003,
    primarily due to the favourable result on realisation of market-to-market
    positions following the unwinding of interest rate hedges (€11 million)
    and higher average cash balances. INTEREST
    AND SIMILAR EXPENSES: 114 MILLION (2003: 110; 2002: 128)






|                                         |                                
|---------------------------------------- | -------------------------------
|                                         | Year
      ended at 31 December
|                                         |                                
|                                         | 2004                           
|                                         |                                
|Interest
      on long-term liabilities  | 86                             
|Interest
      added to provisions       | 1                              
|Interest
      on short-term liabilities | 8                              
|Other
      financial expenses           | 19                             
|                                         |                                
|Total                                    | 114                            
|                                         |                                
|(in
      € millions)                    |                                

Interest
    and similar expenses increased by €4 million (3.6%) compared to 2003.
    Interest and similar expenses were favourably impacted through a reduction
    in average gross debt which was offset by one off interest charges incurred
    on taxes (€6 million). The interest and similar expenses was adversely
    affected by interest rate movements (€3 million), particularly as UK
    rates £21INCOME
    TAXES: 428 MILLION (2003: 368; 2002: 341) Income
    taxes in the statements of income of 2004 amount to €428 million (2003:
    368; 2002: 341), or 39.0% (2003: 54.5%; 2002: 35.9%) of income before income
    taxes, €105 million of our total income taxes relates to tax authorities
    outside the Netherlands (2003: 104; 2002: 88).




increased,
    and higher expenses as a result of foreign exchange losses (€ 3 million).
    The interest charge benefited from the strengthening euro exchange rate in
    relation to US dollar (€2 million). Other financial expenses comprise
    hedge costs of 14 million (2003: 8; 2002: 7) and foreign exchange losses of
    €3 million (2003: 0; 2002: 3).


|                                                                      |                                
|--------------------------------------------------------------------- | -------------------------------
|                                                                      | Year
      ended at 31 December
|                                                                      |                                
|                                                                      | 2004                           
|                                                                      |                                
|Dutch
      statutory income tax-rate:                                | 34.5                           
|                                                                      |                                
|Adjustment
      regarding effective income tax rates other countries | (1.3                           
|                                                                      |                                
|Permanent
      differences:                                          |                                
|                                                                      |                                
|Non
      and partly deductible costs                                 | 0.8                            
|                                                                      |                                
|Amortisation
      of goodwill                                        | 3.4                            
|                                                                      |                                
|Exempt
      income                                                   | -                              
|                                                                      |                                
|Other                                                                 | 1.6                            
|                                                                      |                                
|Effective
      income tax rate (excluding goodwill impairment)       | 39.0                           
|                                                                      |                                
|Impact
      goodwill impairment                                      | -                              
|                                                                      |                                
|Effective
      income tax rate (including goodwill impairment)       | 39.0                           
|                                                                      |                                
|(in
      percentages)                                                |                                



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---

Income
    taxes differ from the amount calculated by multiplying the Dutch statutory
    corporate income tax rate with the income before income taxes. In 2004, the
    effective income tax rate was 39.0% (2003: 54.5%; 2002: 35.9%), which is higher
    than the statutory corporate income tax rate of 34.5% in The Netherlands (2003:
    34.5%; 2002: 34.5%). The decline on the effective tax rate is predominantly
    the result of the impact of the non-tax deductible goodwill impairments in
    the third quarter of 2003




(9.9%)
    and the effect in 2003 of the €59 million to cover our estimate of liability
    to the UK Inland Revenue. The item Other in 2004 included an increase
    of the tax rate by 3.9 % in relation to an settlement with tax authorities
    regarding the past and future treatment of a transfer pricing issue. This
    was partially offset (1.6 %) by an improvement in our deferred tax position
    resulting from a decrease in the statutory Dutch corporate income tax rate.


Income
  tax expense consists of the following:

|                                                                                    |                                   |     
|----------------------------------------------------------------------------------- | --------------------------------- | ----
|                                                                                    |                                  
|                                                                                    | Year
        ended at 31 December |     
|                                                                                    |                                  
|                                                                                    | 2004                              | 2003
|                                                                                    |                                  
|Current
      tax expense                                                           | 347                               |     
|Changes
      in deferred taxes (excluding acquisitions / foreign exchange effects) | 81                                |     
|                                                                                    |                                   |     
|Total
      income taxes                                                            | 428                               |     
|                                                                                    |                                  
|(in
      € millions)                                                               |                                  
|                                                                                    |                                  

In the
  year 2004, the current tax expense amounted to €347 million (2003: 188;
  2002: 357). The difference between the total income taxes in the statements
  of income and the current tax expense is due to timing differences. These differences
  are recognised as deferred tax assets or deferred tax liabilities.




The following
  table shows the movements in deferred tax assets in 2004: Deferred
        tax assets at 31 December 2003
      242Changes
      (9
      )Minimum
        pension liabilities
      200(De)consolidation
        / foreign exchange effects
      2Deferred
        tax assets at 31 December 2004
      435


Deferred
  tax assets arise because of the following differences:

|                                                                  |                                
|----------------------------------------------------------------- | -------------------------------
|                                                                  | Year
      ended at 31 December
|                                                                  |                                
|                                                                  | 2004                           
|                                                                  |                                
|Differences
      between valuation for book and tax purposes of: |                                
|Provisions                                                        | 28                             
|Property,
      plant and equipment                               | 5                              
|Losses
      carried forward                                      | 98                             
|Minimum
      pension liabilities                                 | 200                            
|Other                                                             | 104                            
|                                                                  |                                
|Total
      deferred tax assets                                   | 435                            
|                                                                  |                                
|(in
      € millions)                                             |                                
|                                                                  |                                

Deferred
    tax assets and liabilities with the same term and the same consolidated tax
    group are presented net in the balance sheet if we have a legally enforceable
    right to offset the recognised amounts. At
    31 December 2004, deferred tax assets amounting to €395 million (2003:
    205) have been accounted for as financial fixed assets and €40 million
    (2003: 37) within accounts receivable. Included financial fixed assets is
    an amount of €200 million relating to the deferred tax on the minimum
    pension liability (see note 9). The total
    accumulated losses that are available for carry forward at 31 December 2004
    amounted to €793 million (2003: 750).




With these
    losses carried forward, future tax benefits of €260 million could be
    recognised (2003: 248). Tax deductible losses give rise to deferred tax assets
    at the statutory rate in the relevant country. Deferred tax assets are recognised
    if it is more likely than not that they will be realised in the foreseeable
    future. As a result of that we recorded deferred tax assets of €98 million
    at the end of 2004 (2003: 110). We established valuation allowances and have
    therefore effectively not recognised €162 million (2003: 138) of the
    potential future tax benefits. This is mainly due to the uncertainty regarding
    the realisation of such benefits, for example as a result of the expiry of
    tax losses carried forward and legislative changes.




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Chapter
  12    Financial statements and other information

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The expiration of total accumulated losses is presented in the table below: 20042005
      82006
      72007
      102008
      222009
        and thereafter
      147Indefinite
      599Total
      793(in
        € millions) Of the total
  deferred tax liabilities €10 million is of a short-term nature (2003: 7).
  Deferred tax liabilities arise because of the following differences:




The following
  table shows the movements in deferred tax liabilities in 2004: Deferred
        tax liabilities at 31 December 2003
      143Changes
      72(De)consolidation
        / foreign exchange effects
      3Deferred
        tax liabilities at 31 December 2004
      218(in
        € millions)


|                                                                  |                                
|----------------------------------------------------------------- | -------------------------------
|                                                                  | Year
      ended at 31 December
|                                                                  |                                
|                                                                  | 2004                           
|                                                                  |                                
|Differences
      between valuation for book and tax purposes of: |                                
|Provisions                                                        | 115                            
|Property,
      plant and equipment                               | 73                             
|Other                                                             | 30                             
|                                                                  |                                
|Total
      deferred tax liabilities                              | 218                            
|                                                                  |                                
|(in
      € millions)                                             |                                
|                                                                  |                                

A multinational
  group the size of TPG will always be exposed to varying degrees of uncertainty
  related to tax initiatives and regulatory reviews and audits. Whenever such
  uncertainties arise, potential unfavourable consequences are assessed and accrued
  for accordingly in our financial statements.






Notes to the consolidated cash flow statements

---

£22NET
    CASH PROVIDED BY OPERATING 
    ACTIVITIES: 1,000 MILLION (2003: 937; 2002: 1,032)


Net cash provided by operating activities was €1,000 million, which is
    7% above last year (€937 million). Net income contributed €667 million
    or €1,200 million if corrected for the non-cash impact of depreciation,
    amortisation and impairments an increase of €189 million or 19% to last
    year (€1,011 million). The change
    in deferred taxes of €82 million is a non-cash item that is primarily
    attributable to tax deductible pension payments in 2004 and utilisation of
    tax losses carried forward, partly offset by an adjustment to the net deferred
    tax position, due to the decrease of the Dutch statutory tax rate from 34.5%
    in 2004 to 31.5%, 30.5% and 30.0% in respectively 2005, 2006 and 2007 and
    further. This resulted into a reduction of our current income tax payable
    position included in working capital.




The negative non-cash impact of €3 million (2003: 7) from other provisions was primarily the result of releases and withdrawals, which were partly offset by additions. The changes
    in pension liabilities of €309 million reflects the total non-cash cost
    for the defined benefit pension schemes of €41 million (2003:43), the
    non-cash costs related to the Personal Seniors Arrangement of €87 million
    and total cash payments of €437 million. Cash contributions to various
    pension funds, the majority of which for our Dutch employees who fall under
    our collective labour agreement, totalled €200 million (2003:185), of
    these payments €91 million (2003:100) was contributed as prescribed by
    the minimum funding requirements of the DNB.




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---

Our cash
    payments for pensions, which fall under the transitional plan of our Dutch
    collective labour agreement and are directly paid by TPG (see note 9 to our
    financial statements), amounted to €95 million (2003: 79). The remaining
    cash contribution of €142 million related to the Personal Seniors Arrangement. Working
    capital decreased by €30 million in 2004 versus an increase of €26
    million in 2003. Most of the decrease in 2004 relates to the trade receivable
    position that moved favourably by €77 million (2003:4). The net income
    tax receivable position of €32 million (2003, tax payable: 18) reflects
    total income tax payments in 2004 of €396 million compared to €288
    million in 2003. Net Interest paid in 2004 amounted to €64 million compared
    to €84 million in 2003. Trade payables decreased the cash flow by €66
    million and compared unfavourably with a decrease of €19 million in 2003.
    In 2004 both debtor days and creditors days decreased. The decrease in debtor
    days contributed to the decrease in working capital, whereas the decrease
    in creditor days slightly increased working capital. Other current assets
    moved unfavourable by €11 million (2003: 10) caused by an increase of
    prepayments and accrued income. £23NET
    CASH USED IN INVESTING ACTIVITIES: (338) 
    MILLION (2003: (373); 2002: (518))In
    2004 the total payments for acquisitions of group and affiliated companies
    amounted to €228 million (2003: 75), which was primarily attributable
    to the acquisition of Wilson (€190 million) in the logistics division.
    The payments of €190 million included the total acquisition price of
    €183 million and transaction costs of €7 million. We also made several
    smaller acquisitions, our mail division for an amount of €14 million
    (2003: 34), including the remaining shares of Höfinger and the establishment
    of the joint venture Cendris BSC Customer Contact and our express division,
    an amount of €2 million (2003: 4). In our logistics division, other acquisitions
    included Ventana and the remaining 60% shares of Overtrans in Italy and the
    remaining 50% of the shares of TNT Lojistik ve Dagitim Hizmetleri in Turkey
    for a total amount of €11 million (2003: 21). The funds we used for acquisitions
    of affiliated companies amounted to €11 million (2003: 16), primarily
    related to additional capital contributions to our affiliate Logispring of
    €10 million. During 2004, we also disposed of some interests in group and affiliated companies with a rounded net book value of zero (2003: 8), the largest of which was TNT-DFDS Transport Logistics. In 2004,
    capital expenditures on property, plant and equipment amounted to €290
    million (2003: 287). Of this amount €75 million (2003: 82) related to
    mail, €140 million (2003: 124) to express, €69 million (2003: 77)
    to logistics and €6 million (2003: 4) to corporate. The capital expenditures
    on intangible assets of €67 million (2003: 67) mainly related to software
    (€62 million) and the remainder related to prepayments on intangible
    assets (€4 million), mostly relating to software, and licenses and concessions
    (€1 million). In mail,
    the major capital expenditures related mostly to sorting equipment and information
    technology, needed among other reasons to support the introduction of sequence
    sorting. In express, capital expenditures included investments in depots,
    hubs and warehouses, and replacements and operational equipment including
    automated sorting systems. In logistics




the
    majority of capital expenditures related to warehouses and equipment (e.g.
    forklifts, racking systems, trailers and trucks) dedicated to the operation
    of contracts and offices. Disposals
    of property plant and equipment in 2004 totalled €32 million in 2004
    (2003: 40) related to the sale of buildings at Belgische Distributie Dienst
    (€5 million) and Postkantoren (€2 million) in the mail division
    and at TNT Express Properties (München) B.V. in Germany (€3 million)
    in the express division and to various smaller disposals of property plant
    and equipment throughout the company. The disposal of intangible assets of
    €15 million (2003: 6) is a combination of disposed goodwill for €13
    million, mainly related to TNT-DFDS Transport Logistics and software for €2
    million. In 2004,
    non-cash investing activities totalled €11 million (2003: 26), related
    to additional finance leases. Capital expenditure on property, plant and equipment and other intangible assets by our mail division totalled €98 million in 2004, which was a decrease of 8.4% compared to 2003 (€107 million). This decrease reflected large 2003 spending within European Mail Networks on seal machines (VSP) and a decrease in housing expenditures within Real Estate compared to the previous year. The main capital expenditures in 2004 related to machinery €22 million (2003: 23), software €19 million (2003: 25), hardware €12 million (2003: 6) and housing €11 million (2003: 21). The remaining €34 million (2003: 32) of capital expenditure related to various smaller projects, most of which were individually less than €1 million and including building refurbishments mainly in the Netherlands, replacement of IT equipment and various other capital expenditures. Significant
    investments were made in the sorting process, with a total amount of €23
    million invested in sequence sorting machines and sequence sorting software
    and €6 million invested in tray cart unloaders. By the end of 2004, 151
    sequence sorting machines have been placed. In total, 286 sequence sorting
    machines are expected to be operational before the end of 2005. Capital expenditure on property plant and equipment and other intangible assets by our express division totalled €171 million in 2004, which was an increase of 6.9% compared to 2003 (€160 million). Some of the larger express capital expenditures in 2004 related to depots, hubs and warehouses €76 million (2003: 55), depot equipment used in operations, including fleet expansions and replacements €23 million (2003: 30), and information technology, communication and other operational equipment, including automated sorting systems for €41 million (2003: 52). Of the total €140 million (2003: 124) capital expenditure on property, plant and equipment, €126 million (2003: 84), or 90% was spent in Europe. During
    2004, capital expenditures on other intangible assets totalled €31 million
    (2003: 36) and related primarily to the development of financial systems (e-back
    office) software and further enhancements to our international shared systems. Some of
    the larger express capital expenditures in 2004 included the investments for
    warehouse and IT related to our pan-government archiving contract in the UK
    (€10 million), a new




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Chapter
  12    Financial statements and other information

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head office
    for France in Lyon (€10 million), the replacement of trailers and tractor
    units in the UK (€7 million), depots in Stockholm (€6 million),
    Birmingham (€3 million) and Enfield (€3 million) and the first investments
    in the expansion of the Air hub in Liège (€4 million). Capital expenditure on property, plant and equipment and other intangible assets by our logistics division totalled €82 million in 2004, which is comparable to the capital expenditures in 2003 (€83 million). The majority of the expenditures in property, plant and equipment relate to new business acquired and to other equipment dedicated to operate logistics contracts throughout the world. The largest capital expenditures on property plant and equipment and other intangibles in the logistics division were concentrated in the United Kingdom (€18 million), followed by Central and Eastern Europe (€12 million), North America (€10 million), Italy (€13 million), Asia (€5 million) and South America (€4 million). The €18
    million invested in the United Kingdom was mainly spent on warehouses and
    equipment. In Central and Eastern Europe, €6 million was invested in
    warehouses and equipment to service the DaimlerChrysler contract in Germany.
    In the remainder of continental Europe, €33 million was invested in warehouses,
    new depots and automated warehouse racking, information technology and systems
    security engineering. In Italy, €13m was invested in warehouse equipment,
    information technology and systems security engineering. In Australia, €5
    million was invested in warehouses and equipment for new and existing contracts,
    and in North America €10 million was spent on warehouses, information
    technology and equipment for renewals and new contracts. In Asia, €5
    million was invested in warehouses and information technology. An amount of
    €4 million was spent on warehouses and equipment for new and existing
    contracts in South America. During
    2004, capital expenditures on other intangible assets totalled €13 million
    (2003: 6), primarily attributable to the acquisition and implementation of
    a JD Edwards system and warehouse management software in the United Kingdom
    and Italy Automotive and South America. The net cash generated by other investing activities totalled to €200 million (2003: 2), which is an increase compared to 2003. This increase was for an amount of €160 million attributable to the settlement of a USD 435 million cross currency interest rate swap, which provided a hedge against USD denominated assets. The remaining €40 million, partly adjustments of non-cash movements in the net cash provided by operating activities, was the result of the combined effect of a decrease in long term prepayments and accrued income €25 million, changes relating to affiliated companies €8 million, changes in other securities for €1 million and the effect of minority interests for €6 million (2003: 4).




£24NET
    CASH USED IN FINANCING ACTIVITIES: 
    (500) MILLION (2003: (436); 2002:( 598) The final
    cash dividend for 2003 amounting to €142 million (2002:119) and a cash
    interim dividend for 2004 of €95 million were paid in 2004. The proposed
    final dividend for 2004 is estimated to result in a cash payment of €168
    million to be made in April 2005. In 2003, the final dividend for the previous
    year amounted to €119 million with a €85 million interim cash dividend
    over 2004. In 2004,
    €151 million has been paid as consideration for the repurchase of 7.6
    million shares from the state of the Netherlands. Further, an amount of €3
    million has been booked as a result of the exercise of options and share grants. Movements
    in long-term liabilities resulted in a cash outflow of €48 million (2003:
    13). The acquired long-term liabilities totalling €52 million included
    €11 million of finance leases, a €5 million increase in local bank
    loans, and €36 million in non-interest bearing liabilities. A total of
    €100 million in repayments of long-term liabilities related, amongst
    others, to the repayment of the bank loan granted to Wilson (€53 million),
    scheduled repayments on aircraft leases and other leases (€15 million,
    2003: 13), other loans (€3 million, 2003: 19), €1 million due to
    foreign currency movement and movements in non-interest-bearing liabilities
    of €20 million (2003: 25). Changes
    in short-term financing in 2004 resulted in a cash outflow of €67 million
    (2003: 219). Short term financing decreased due the repayment of short term
    debts with our Italian logistics business (€19 million), repayment of
    loans existing within the Wilson (€20 million (and various other repayments
    of loans within our express and mail divisions. In 2004, non-cash-financing activities totalled €11 million (2003: 26), this amount relates to additional finance leases.




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---

Additional
  notes

---

£25PRO
  RATA CONSOLIDATION(No
  corresponding financial statement number)

We account
    for joint ventures in which we and another party have equal control according
    to the pro rata consolidation




method.
    Key pro rata information regarding those joint ventures in which we have joint
    decisive influence over operations is set forth below:




|                                                |                                
|----------------------------------------------- | -------------------------------
|                                                | Year
      ended at 31 December
|                                                |                                
|                                                | 2004                           
|                                                |                                
|Total
      fixed assets                        | 72                             
|Total
      current assets                      | 155                            
|                                                |                                
|Group
      equity                              | 87                             
|Provisions                                      | 7                              
|Long-term
      liabilities                     | 27                             
|Current
      liabilities                       | 106                            
|                                                |                                
|Net
      sales                                 | 492                            
|Operating
      income                          | 20                             
|Net
      income                                | 13                             
|                                                |                                
|Net
      cash provided by operating activities | 13                             
|Net
      cash used in investing activities     | (13                            
|Net
      cash used in financing activities     | (14                            
|Changes
      in cash and cash equivalents      | (14                            
|                                                |                                
|(in
      € millions)                           |                                
|                                                |                                

£26RELATED
    PARTY WITH THE STATE OF THE NETHERLANDS(No corresponding
    financial statement number) THE STATE
    AS SHAREHOLDEROn
    29 September 2004, we announced that the Dutch State sold a total of 77,7
    million ordinary shares in our outstanding share capital, representing approximately
    16% in our company. By the sale and transfer the State has reduced its ownership
    in our capital from 34.8% to 18.6%. We repurchased 20,7 million of the total
    amount of shares sold by the State. Transfer of the repurchased ordinary shares
    has taken place in two tranches. The first tranche of 7,6 million shares was
    transferred to us on 4 October 2004. The transfer of the remaining 13,1 million
    shares was completed on 5 January 2005. SPECIAL
    SHAREThe
    State holds a special share, that gives it the right to approve decisions
    that lead to fundamental changes in our group structure. The State has committed
    itself to exercising the rights attached to the special share only to safeguard
    the general interest in having an efficiently operating postal system in
    the Netherlands and also to protect its financial interest as a shareholder.
    The State may not exercise its special share to protect us from unwanted shareholder
    influence. The State may not transfer or encumber the special share without
    the approval of our Board of Management and Supervisory Board. Ownership




of the special
share gives the State the right to approve certain actions, including: 
      issuing
        shares in our capital;
      restrictions
        on or exclusions of the pre-emptive rights ofholders
        of our ordinary shares;
      mergers,
        demergers and dissolutions with respect to us andRoyal
        TPG Post B.V.;
      certain
        capital expenditures;
      certain
        dividends and distributions; and
      certain
        amendments to our articles of association and thearticles
        of association of Royal TPG Post B.V., including anyamendment
        to the articles of association with respect to-
      a modification of the objects clause that relates toperformance
        of the concession obligations,-
      the
        creation of new classes of shares, profit sharingcertificates or other securities entitling the holderthereof
        to the earnings and/or shareholders equity of thecompany,-
      the
        cancellation of the special share,-
      the
        cancellation of the preference shares B,-
      the
        transfer of the special share, and-
      the
        amendment of the rights attached to the special share. No change is currently proposed to the status of the States special share. However, as part of its intention to reduce its involvement in our affairs, the State is considering the possibility




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Chapter
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of limiting
    the applicability of rights attached to the special share to apply only to
    our subsidiary for postal activities. LONG-TERM
    EQUITY INTERESTAt
    31 December 2004, the State holds approximately 21% of the ordinary shares.
    As per the date of this Annual Report, the state further reduced its shareholding
    to approximately 18.6%. THE
    STATE AS CUSTOMERThe
    State is a large customer of ours, purchasing services from us on an arms-length
    basis. In addition, the State may by law require us to provide certain services
    to the State in connection with national security and the detection of crime.
    These activities are subject to strict legal scrutiny by the Dutch authorities. THE
    STATE AS REGULATORThe
    postal system in the Netherlands is regulated by the State. See note 41 of
    our financial statements. £27OTHER
    RELATED PARTY TRANSACTIONS AND BALANCES(No
    corresponding financial statement number) The TPG
    Group companies have trading relationships with a number of its partially
    or fully consolidated joint ventures as well as with unconsolidated companies
    in which TPG only holds minority shares. In some cases there are contractual
    arrangements in place under which TPG companies source supplies from such
    undertakings, or such undertakings source




supplies
    from TPG. In the year ended 31 December 2004, sales made by TPG companies
    to its joint ventures amounted to €125 million (2003: 136). Purchases
    from joint ventures amounted to €24 million (2003: 24).The net amounts
    due from joint venture entities amounted to €49 million (2003: 35). As
    at 31 December 2004 loans receivable from affiliated companies as disclosed
    in notes 3 and 5, amounted to €8 million (2003: 35). All transactions
    with joint ventures and affiliated companies are conducted in the normal course
    of business and under normal terms and conditions. £28SEGMENTAL INFORMATION(No
    corresponding financial statement number) We report
       our operations in three primary segments: mail division, express division
      and
  logistics division. The mail division provides services for collecting, sorting,
       transporting and distributing domestic and international mail. The express
      division
  provides demand door-to-door express delivery services for customers sending
       documents, parcels and freight. The logistics division provides supply
      chain
  management services. The segments have been determined based primarily on how
       management views and evaluates our operations. The operating information
      for
  the segments identified are as follows:


|                                                              |        |   |         |   |           |   |               |   |               |   |         |  
|------------------------------------------------------------- | ------ | - | ------- | - | --------- | - | ------------- | - | ------------- | - | ------- | -
|2004                                                          |        |   |         |   |           |   |               |   |               |   |         |  
|                                                              |        |   |         |   |           |   |               |   |               |   |         |  
|                                                              | Mail   |   | Express |   | Logistics |   | Inter-company |   | Non-Allocated |   | Total  
|                                                              |        |   |         |   |           |   |               |   |               |   |         |  
|Net
      sales                                               | 3,865  |   | 4,638   |   | 4,058     |   |               |   | 24            |   | 12,585  |  
|Intercompany
      sales                                      | 22     |   | 34      |   | 10        |   | (66           | ) |               |   |         |  
|Other
      operating revenues                                | 13     |   | 24      |   | 13        |   |               |   |               |   | 50      |  
|                                                              |        |   |         |   |           |   |               |   |               |   |         |  
|Total
      operating revenues                                | 3,900  |   | 4,696   |   | 4,081     |   | (66           | ) | 24            |   | 12,635  |  
|Depreciation
      / impairment property, plant and equipment | (112   | ) | (132    | ) | (88       | ) |               |   | (3            | ) | (335    | )
|Amortisation
      / impairment other intangibles             | (18    | ) | (26     | ) | (8        | ) |               |   |               |   | (52     | )
|Earnings
      from operations                                | 865    |   | 373     |   | 153       |   |               |   | (71           | ) | 1,320   |  
|Amoritisation
      / impairment goodwill                     | (32    | ) | (51     | ) | (63       | ) |               |   |               |   | (146    | )
|Total
      operating income                                  | 833    |   | 322     |   | 90        |   |               |   | (71           | ) | 1,174   |  
|Net
      financial income / (expense)                        |        |   |         |   |           |   |               |   |               |   | (77     | )
|Income
      tax                                              |        |   |         |   |           |   |               |   |               |   | (428    | )
|Results
      from investments in aff. companies              |        |   |         |   |           |   |               |   |               |   | (3      | )
|Minority
      interests                                      |        |   |         |   |           |   |               |   |               |   | 1       |  
|Net
      income                                              |        |   |         |   |           |   |               |   |               |   | 667     |  
|Goodwill
      paid in the year                               | 12     |   | 2       |   | 251       |   |               |   |               |   | 265     |  
|Intangible
      fixed assets                                 | 205    |   | 1,231   |   | 1,067     |   |               |   |               |   | 2,503   |  
|Capital
      expenditure on property, plant and equipment    | 75     |   | 140     |   | 69        |   |               |   | 6             |   | 290     |  
|Property,
      plant and equipment                           | 744    |   | 812     |   | 357       |   |               |   | 11            |   | 1,924   |  
|Investments
      in affiliated companies                     | 5      |   | 2       |   | 43        |   |               |   | 32            |   | 82      |  
|Accounts
      receivable                                     | 347    |   | 764     |   | 789       |   |               |   | 229           |   | 2,129   |  
|Total
      assets 1                                          | 2,343  |   | 3,179   |   | 2,760     |   |               |   |               |   | 8,282   |  
|Total
      liabilities                                       | 822    |   | 984     |   | 1,308     |   |               |   | 1,147         |   | 4,261   |  
|Number
      of employees                                     | 76,730 |   | 44,933  |   | 40,581    |   |               |   |               |   | 162,244 |  
|                                                              |        |   |         |   |           |   |               |   |               |   |         |  

|(in
      € millions, except employees)                                                                                  
|-------------------------------------------------------------------------------------------------------------------------
|1.
         Identifiable assets also used jointly for the segments have been allocated

      on basis of estimate usage.

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---

Net sales
  per geographic region

|                               |                                 |      |        |      |        | 
|------------------------------ | ------------------------------- | ---- | ------ | ---- | ------ | 
|                               | Year
      ended at 31 December |     
|                               |                                 |      |        |      |        | 
|                               | 2004                            | 2003 |        | 2002 |       
|                               |                                 |      |        |      |        | 
|Europe                         |                                 |      |        |      |        | 
|The
      Netherlands          | 3,768                           |      | 3,733  |      | 3,759  | 
|United
      Kingdom           | 1,925                           |      | 1,775  |      | 1,862  | 
|Italy                          | 1,611                           |      | 1,550  |      | 1,426  | 
|France                         | 911                             |      | 904    |      | 873    | 
|Germany                        | 943                             |      | 859    |      | 792    | 
|Rest
      of Europe           | 1,340                           |      | 1,124  |      | 1,109  | 
|Americas                       |                                 |      |        |      |        | 
|USA
      and Canada           | 716                             |      | 726    |      | 800    | 
|South
      & Middle America   | 156                             |      | 128    |      | 128    | 
|Africa
      & the Middle East | 70                              |      | 70     |      | 68     | 
|Australia
      & Pacific      | 543                             |      | 481    |      | 446    | 
|Asia                           |                                 |      |        |      |        | 
|Rest
      of Asia             | 267                             |      | 195    |      | 205    | 
|China
      and Taiwan         | 335                             |      | 240    |      | 194    | 
|                               |                                 |      |        |      |        | 
|Total
      net sales          | 12,585                          |      | 11,785 |      | 11,662 | 
|                               |                                 |      |        |      |        | 
|(in
      € millions)          |                                 |      |        |      |        | 
|                               |                                 |      |        |      |        | 

The basis
  of allocation of net sales by geographical areas is the country or region in
  which the entity recording the sales is located. Total assets
  of our company at 31 December 2004 were located as follows: Location
  of total assets at 31 December 2004


|                                                                                      |                         |  |                                     |  |                              |  |                      |  |       | 
|------------------------------------------------------------------------------------- | ----------------------- |  | ----------------------------------- |  | ---------------------------- |  | -------------------- |  | ----- | 
|                                                                                      |                         |  |                                     |  |                              |  |                      |  |       | 
|                                                                                      | Intangible
      assets |  | Property,
      plant and equipment |  | Financial
      fixed assets |  | Current
      assets |  | Total
|                                                                                      |                         |  |                                     |  |                              |  |                      |  |       | 
|Europe                                                                                |                         |  |                                     |  |                              |  |                      |  |       | 
|The
      Netherlands 1                                                               | 965                     |  | 793                                 |  | 332                          |  | 886                  |  | 2,976 | 
|United
      Kingdom                                                                  | 226                     |  | 512                                 |  | 8                            |  | 402                  |  | 1,148 | 
|Italy                                                                                 | 216                     |  | 81                                  |  | 157                          |  | 640                  |  | 1,094 | 
|France                                                                                | 273                     |  | 95                                  |  | 37                           |  | 256                  |  | 661   | 
|Germany                                                                               | 132                     |  | 80                                  |  | 64                           |  | 168                  |  | 444   | 
|Rest
      of Europe                                                                  | 289                     |  | 184                                 |  | 25                           |  | 394                  |  | 892   | 
|Americas                                                                              |                         |  |                                     |  |                              |  |                      |  |       | 
|USA
      and Canada                                                                  | 370                     |  | 57                                  |  | 4                            |  | 135                  |  | 566   | 
|South
      & Middle America                                                          | 9                       |  | 7                                   |  | 2                            |  | 46                   |  | 64    | 
|Africa
      & the Middle East                                                        |                         |  | 3                                   |  |                              |  | 26                   |  | 29    | 
|Australia
      & Pacific                                                             | 19                      |  | 90                                  |  | 21                           |  | 80                   |  | 210   | 
|Asia                                                                                  |                         |  |                                     |  |                              |  |                      |  |       | 
|Rest
      of Asia                                                                    | 2                       |  | 16                                  |  | 6                            |  | 73                   |  | 97    | 
|China
      and Taiwan                                                                | 2                       |  | 6                                   |  |                              |  | 93                   |  | 101   | 
|                                                                                      |                         |  |                                     |  |                              |  |                      |  |       | 
|Total                                                                                 | 2,503                   |  | 1,924                               |  | 656                          |  | 3,199                |  | 8,282 | 
|                                                                                      |                         |  |                                     |  |                              |  |                      |  |       | 
|(in
      €millions)                                                                  |                         |  |                                     |  |                              |  |                      |  |       | 
|1.
      Including TNT goodwill which is not allocated to other countries or regions. |                        

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Chapter
  12     Financial
  statements and other information

---

The property,
  plant and equipment of each of our divisions is as follows:

|                                                  |       |  |         |  |           |  |                      |  |        | 
|------------------------------------------------- | ----- |  | ------- |  | --------- |  | -------------------- |  | ------ | 
|                                                  | Mail  |  | Express |  | Logistics |  | Non-
      Allocated |  | Total 
|                                                  |       |  |         |  |           |  |                      |  |        | 
|Land
      and buildings                          | 501   |  | 309     |  | 146       |  | 4                    |  | 960    | 
|Plant
      and equipment                         | 182   |  | 132     |  | 149       |  | 1                    |  | 464    | 
|Other
      property, plant and equipment         | 47    |  | 339     |  | 61        |  | 6                    |  | 453    | 
|Construction
      in progress                    | 14    |  | 32      |  | 1         |  |                      |  | 47     | 
|                                                  |       |  |         |  |           |  |                      |  |        | 
|Total                                             | 744   |  | 812     |  | 357       |  | 11                   |  | 1,924  | 
|as
      % of total property, plant and equipment | 38.7% |  | 42.2%   |  | 18.6%     |  | 0.6%                 |  | 100.0% | 
|                                                  |       |  |         |  |           |  |                      |  |        | 
|( in
      € millions, except for percentages)    |       |  |         |  |           |  |                      |  |        | 

Location
  of property, plant and equipment at 31 December 2004

|                               |      |  |         |  |           |  |                      |  |      
|------------------------------ | ---- |  | ------- |  | --------- |  | -------------------- |  | -----
|                               | Mail |  | Express |  | Logistics |  | Non-
      Allocated |  | Total
|                               |      |  |         |  |           |  |                      |  |      
|Europe                         |      |  |         |  |           |  |                      |  |      
|The
      Netherlands          | 696  |  | 80      |  | 9         |  | 8                    |  | 793  
|United
      Kingdom           | 10   |  | 398     |  | 104       |  |                      |  | 512  
|Italy                          | 4    |  | 30      |  | 47        |  |                      |  | 81   
|France                         |      |  | 61      |  | 34        |  |                      |  | 95   
|Germany                        | 2    |  | 57      |  | 21        |  |                      |  | 80   
|Rest
      of Europe           | 28   |  | 98      |  | 56        |  | 2                    |  | 184  
|Americas                       |      |  |         |  |           |  |                      |  |      
|USA
      and Canada           |      |  | 2       |  | 55        |  |                      |  | 57   
|South
      & Middle America   |      |  | 2       |  | 5         |  |                      |  | 7    
|Africa
      & the Middle East |      |  | 3       |  |           |  |                      |  | 3    
|Australia
      & Pacific      |      |  | 69      |  | 21        |  |                      |  | 90   
|Asia                           |      |  |         |  |           |  |                      |  |      
|Rest
      of Asia             | 4    |  | 7       |  | 5         |  |                      |  | 16   
|China
      and Taiwan         |      |  | 5       |  |           |  | 1                    |  | 6    
|                               |      |  |         |  |           |  |                      |  |      
|Total                          | 744  |  | 812     |  | 357       |  | 11                   |  | 1,924
|                               |      |  |         |  |           |  |                      |  |      
|(
      in € millions)         |      |  |         |  |           |  |                      |  |      

Non-allocated
  operating income

|                           |                                 |      |     |      |    |  
|-------------------------- | ------------------------------- | ---- | --- | ---- | -- | -
|                           | Year
      ended at 31 December |     
|                           |                                 |      |     |     
|                           | 2004                            | 2003 |     | 2002 |   
|                           |                                 |      |     |      |    |  
|Non-core
      disposals   |                                 |      |     |      | 14 |  
|Business
      initiatives | (38                             | )    | (5  | )    | (4 | )
|World
      Food Programme | (9                              | )    | (5  | )    |    |  
|Other
      costs          | (24                             | )    | (9  | )    | (5 | )
|                           |                                 |      |     |      |    |  
|Total                      | (71                             | )    | (19 | )    | 5  |  
|                           |                                 |      |     |      |    |  
|(in
      € millions)      |                                 |      |     |      |    |  



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In 2004,
    non allocated operating income amounted to a loss of €71 million (2003:
    19). Included in these costs is € 38 million (2003:5) for business initiatives
    of which €20 million was used to build a corporate structure in China
    to support the business development in this region. During 2004 we opened
    a new head office in Shanghai, incorporated TNT (China) Holdings Co. Ltd.,
    set up a new data centre and launched TNT China University. The average number
    of full time equivalents employed for this initiative was 139 at year-end
    2004. The remaining €18 million of the business initiatives was used
    for several other strategic projects, the aim to build alliances with other
    organisations and postal operators and a cost efficiency project for lean
    warehousing. Costs made to support the World Food




Programme
  were €9 million (2003:5), including our contribution to relieve the victims
  of the tsunami disaster in Asia. The other costs were €24 million (2003:9),
  which is excluded for the €9 million release of an insurance provision
  in 2003, an increase of €6 million. This increase was mainly due to strengthening
  the corporate head office functions as a result of remedial actions, including
  higher costs for advisors.


|2003                                                          |        |   |         |   |           |   |         |   |           |   |         |  
|------------------------------------------------------------- | ------ | - | ------- | - | --------- | - | ------- | - | --------- | - | ------- | -
|                                                              |        |   |         |   |           |   |         |   |           |   |         |  
|                                                              |        |   |         |   |           |   | Inter-  |   | Non-      |   | Total  
|                                                              | Mail   |   | Express |   | Logistics |   | company |   | Allocated |  
|                                                              |        |   |         |   |           |   |         |   |           |   |         |  
|Net
      sales                                               | 3,852  |   | 4,201   |   | 3,714     |   |         |   | 18        |   | 11,785  |  
|Intercompany
      sales                                      | 19     |   | 29      |   | 4         |   | (52     | ) |           |   |         |  
|Other
      operating revenues                                | 44     |   | 21      |   | 17        |   |         |   | (1        | ) | 81      |  
|                                                              |        |   |         |   |           |   |         |   |           |   |         |  
|Total
      operating revenues                                | 3,915  |   | 4,251   |   | 3,735     |   | (52     | ) | 17        |   | 11,866  |  
|Depreciation
      / impairment property, plant and equipment | (104   | ) | (123    | ) | (104      | ) |         |   | (2        | ) | (333    | )
|Depreciation
      / impairment other intangibles             | (16    | ) | (23     | ) | (5        | ) |         |   |           |   | (44     | )
|Earnings
      from operations                                | 820    |   | 276     |   | 24        |   |         |   | (19       | ) | 1,101   |  
|Amoritisation
      / impairment 1goodwill                    | (54    | ) | (53     | ) | (227      | ) |         |   |           |   | (334    | )
|Total
      operating income                                  | 766    |   | 223     |   | (203      | ) |         |   | (19       | ) | 767     |  
|Net
      financial income / (expense)                        |        |   |         |   |           |   |         |   |           |   | (92     | )
|Income
      tax                                              |        |   |         |   |           |   |         |   |           |   | (368    | )
|Results
      from investments in aff. companies              |        |   |         |   |           |   |         |   |           |   | (6      | )
|Minority
      interests                                      |        |   |         |   |           |   |         |   |           |   | (1      | )
|Net
      income                                              |        |   |         |   |           |   |         |   |           |   | 300     |  
|Goodwill
      paid in the year                               | 35     |   | 4       |   | 19        |   |         |   |           |   | 58      |  
|Intangible
      fixed assets                                 | 230    |   | 1,276   |   | 914       |   |         |   | 1         |   | 2,421   |  
|Capital
      expenditure on property, plant and equipment    | 82     |   | 124     |   | 77        |   |         |   | 4         |   | 287     |  
|Property,
      plant and equipment                           | 786    |   | 820     |   | 394       |   |         |   | 9         |   | 2,009   |  
|Investments
      in affiliated companies                     | 11     |   | 1       |   | 42        |   |         |   | 25        |   | 79      |  
|Accounts
      receivable                                     | 378    |   | 728     |   | 842       |   |         |   | 29        |   | 1,977   |  
|Total
      assets 2                                          | 2,078  |   | 3,192   |   | 2,645     |   |         |   |           |   | 7,915   |  
|Total
      liabilities                                       | 948    |   | 866     |   | 1,234     |   |         |   | 1,064     |   | 4,112   |  
|Number
      of employees                                     | 80,613 |   | 43,723  |   | 38,692    |   |         |   |           |   | 163,028 |  
|                                                              |        |   |         |   |           |   |         |   |           |   |         |  

|(in
      € millions, except employees)                                                                                               
|--------------------------------------------------------------------------------------------------------------------------------------
|1.A
         goodwill impairment was recorded of €163 million in our logistics
         division  and €20 million in our mail division
|2.Identifiable
        assets also used jointly for the segments have been allocated on basis
    of estimate usage                   

In 2003,
  non allocated operating income amounted to a loss of €19 million. These
  costs include costs for business initiatives of €5 million, our costs of
  €5 million to the World Food Programme and other cost of €9 million.
  Included in other cost is a release of an insurance provision of €9 million.






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Chapter
  12     Financial
  statements and other information

---



|2002                                                          |        |   |                 |   |                   |   |         |   |           |   |         |  
|------------------------------------------------------------- | ------ | - | --------------- | - | ----------------- | - | ------- | - | --------- | - | ------- | -
|                                                              |        |   |                 |   |                   |   |         |   |           |   |         |  
|                                                              |        |   |                 |   |                   |   | Inter-  |   | Non-      |   | Total  
|                                                              | Mail   |   | Express
      1 |   | Logistics
      1 |   | company |   | Allocated |  
|                                                              |        |   |                 |   |                   |   |         |   |           |   |         |  
|Net
      sales                                               | 3,949  |   | 4,119           |   | 3,577             |   |         |   | 17        |   | 11,662  |  
|Intercompany
      sales                                      | 9      |   | 30              |   | 4                 |   | (43     | ) |           |   |         |  
|Other
      operating revenues                                | 47     |   | 26              |   | 29                |   |         |   | 18        |   | 120     |  
|                                                              |        |   |                 |   |                   |   |         |   |           |   |         |  
|Total
      operating revenues                                | 4,005  |   | 4,175           |   | 3,610             |   | (43     | ) | 35        |   | 11,782  |  
|Depreciation
      / impairment property, plant and equipment | (102   | ) | (122            | ) | (88               | ) |         |   | (3        | ) | (315    | )
|Depreciation
      / impairment other intangibles             | (6     | ) | (15             | ) |                   |   |         |   |           |   | (21     | )
|Earnings
      from operations                                | 804    |   | 246             |   | 157               |   |         |   | 5         |   | 1,212   |  
|Amoritisation
      / impairment goodwill                     | (30    | ) | (54             | ) | (70               | ) |         |   |           |   | (154    | )
|Total
      operating income                                  | 774    |   | 192             |   | 87                |   |         |   | 5         |   | 1,058   |  
|Net
      financial income / (expense)                        |        |   |                 |   |                   |   |         |   |           |   | (108    | )
|Income
      tax                                              |        |   |                 |   |                   |   |         |   |           |   | (341    | )
|Results
      from investments in aff. companies              |        |   |                 |   |                   |   |         |   |           |   | (5      | )
|Minority
      interests                                      |        |   |                 |   |                   |   |         |   |           |   | (5      | )
|Net
      income                                              |        |   |                 |   |                   |   |         |   |           |   | 599     |  
|Goodwill
      paid in the year                               | 39     |   | 19              |   | 69                |   |         |   |           |   | 127     |  
|Intangible
      fixed assets                                 | 247    |   | 1,312           |   | 1,206             |   |         |   | 1         |   | 2,766   |  
|Capital
      expenditure on property, plant and equipment    | 106    |   | 138             |   | 151               |   |         |   | 3         |   | 398     |  
|Property,
      plant and equipment                           | 822    |   | 850             |   | 440               |   |         |   | 18        |   | 2,130   |  
|Investments
      in affiliated companies                     | 16     |   | 2               |   | 42                |   |         |   | 35        |   | 95      |  
|Accounts
      receivable                                     | 373    |   | 727             |   | 795               |   |         |   | 27        |   | 1,922   |  
|Total
      assets 2                                          | 2,181  |   | 3,250           |   | 2,835             |   |         |   |           |   | 8,266   |  
|Total
      liabilities                                       | 1,036  |   | 897             |   | 1,189             |   |         |   | 1,129     |   | 4,251   |  
|Number
      of employees                                     | 75,424 |   | 41,601          |   | 33,340            |   |         |   |           |   | 150,365 |  
|                                                              |        |   |                 |   |                   |   |         |   |           |   |         |  

|(
        in
      € millions, except employees)                                                                         
|-------------------------------------------------------------------------------------------------------------------------
|1.
      Figures for 2002 have been restated to reflect the transfer of Innight
      services from express to logistics.
|2.
         Identifiable assets also used jointly for the segments have been allocated

      on basis of estimate usage.
|3.
      Presented before the appropriation of net income due to an accounting change
      in The Netherlands.          

£29DIFFERENCES
    BETWEEN DUTCH GAAP AND US GAAP(No
    corresponding financial statement number) Our consolidated
     financial statements are prepared in accordance with generally accepted
    accounting
  principles in the Netherlands (Dutch GAAP), which differ in certain respects
     from generally accepted accounting principles in the United States (US GAAP).

  The following is a summary of the significant differences in the case of our
     company. EMPLOYMENT
    SCHEMESUp
    to 2001 we recognised a liability for future wage guarantees, which did not
    qualify as a liability under US GAAP. This difference resulted in a reconciliation
    to US GAAP shareholders equity. As per 1 January 2001 we transferred
    the liability to an insurance company, after approval of our labour unions
    and works council. As a result, for Dutch GAAP the obligation for future wage
    guarantees was settled in full in December 2001. For US GAAP we recognised
    the transfer payment to the insurance company as a deposit asset that was
    charged to our statement of income based on the wage guarantees paid by the
    insurance company of €11 million (2003; 11; 2002: 12).




Following
    the outcome of an unfavourable court decision with regard to the timing of
    the deductibility of the settlement amount paid for fiscal filing purposes
    in October 2004, we have decided to unwind the contract in accordance with
    the resolutive condition in the contract as per 23 December 2004. For Dutch
    GAAP purposes the termination of the contract led to a repayment by the insurance
    company (for an amount of €134 million), which was accounted for as a
    reduction in our salary costs. For US GAAP purposes however, we have unwounded
    the deposit asset with a remaining balance of €130 million at the moment
    of termination of the contract. Due to the cancellation of the contract the
    reconciling item relating employee schemes no longer exists as per 31 December
    2004.


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BUSINESS
    COMBINATIONS AND IMPAIRMENT OF GOODWILL AND OTHER LONG-LIVED INTANGIBLE ASSETSAccounting
    policies for business combinations and impairment of goodwill and other long
    lived intangible assets differ between Dutch GAAP and US GAAP. Under
    US  GAAP, we evaluate our goodwill for impairment at least annually and more
    frequently
  if specific events indicate that an impairment in value may have occurred.
     The impairment exercise is performed in accordance with SFAS No 142 Goodwill
      and other intangible assets and SFAS 144 Accounting for the
      Impairment  of Long Lived Assets. The amount
    of goodwill that arose in 1996 from the acquisitions of TNT and GD express
    Worldwide N.V. under US GAAP differed from the goodwill under Dutch GAAP due
    to differences in the fair values. Higher goodwill under Dutch GAAP was also
    recognised in 1999 when we acquired Jet Services, Nuova Tecno SpA (Tecnologistica)
    and the Ansett Air Freight business due to reorganisation provisions. In 2000€43
    million lower goodwill was recognised due to a reassessment and write-down
    of these provisions. This difference between Dutch GAAP and US GAAP in the
    calculation of initial goodwill has resulted in an adjustment when reconciling
    Dutch GAAP and US GAAP equity. The difference is amortised over up to 40 years. At 31
    December 2004, the goodwill balance as determined under US GAAP is€22
    million lower (2003:€70
    million higher) than under Dutch GAAP. This difference arises from the situation
    mentioned in the previous paragraph, from the fact that other long lived intangible
    assets are separated under US GAAP as well as the fact that goodwill is no
    longer amortised for US GAAP purposes and the US GAAP goodwill impairment
    recognised




during
    the third quarter of 2003 was€159
    million higher than for Dutch GAAP purposes. In 2004
    we acquired Wilson, see also note 1. For Dutch GAAP purposes we have recognised
    an amount of€236
    million as goodwill relating to the Wilson acquisition (out of a total goodwill
    paid in 2004 of€265
    million). For US GAAP purposes we have identified an amount of€85
    million for Wilson acquisition (out of a total of€96
    million) as other long lived intangible assets, mainly related to customer
    lists. In total, the addition of goodwill in 2004 under US GAAP amounted to€169
    million. In 2004 we have also reclassified the amount from goodwill to other
    long lived intangibles assets recognised relating prior years acquisitions
    (amounting to€26
    million). The changes
  in the carrying amount of goodwill for the year ended 31 December 2004, are
  as follows:


|                                           | Mail |   | Express |   | Logistics |   | Total
|------------------------------------------ | ---- | - | ------- | - | --------- | - | -----
|                                           |     
|Balance
      as of 1 January 2004         | 277  |   | 1,280   |   | 822       |   | 2,379
|Additions                                  | 12   |   | 2       |   | 155       |   | 169  
|Disposals                                  | (11  | ) |         |   | (7        | ) | (18  
|Internal
      transfers/reclassifications | (16  | ) | (2      | ) | (8        | ) | (26  
|Exchange
      rate differences            | (29  | ) | (2      | ) | (120      | ) | (151 
|                                           |      |   |         |   |           |   |      
|Balance
      as of 31 December 2004       | 233  |   | 1,278   |   | 842       |   | 2,353
|                                           |     
|( in
      € millions)                     |      |   |         |   |           |   |      
|                                           |      |   |         |   |           |   |      

OTHER
    LONG LIVED INTANGIBLE ASSETSUS
    GAAP requires that intangible assets acquired after 30 June 2001 that are
    contractual or separable must be separately recognised from goodwill and amortised
    over their estimated useful lives. Since 2002 it has been determined that
    certain other long lived intangible assets acquired in recent acquisitions
    required separate recognition from the related goodwill for US GAAP purposes.
    These other long lived intangible assets are amortised over a shorter useful
    life than the related Dutch GAAP goodwill, resulting in a higher intangible
    asset amortisation charge for US GAAP purposes. At 31 December 2004, other
    long lived intangible assets under US GAAP were€103
    million higher (2003: 26 million higher) than under Dutch GAAP, which




considers
    these intangibles to be part of goodwill. In 2004, a€19
    million (2003: 3) additional amortisation charge for these intangibles was
    required for US GAAP purposes.


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|Chapter
      12 | Financial
      statements and other information
|---------------- | ------------------------------------------------
|                
|                

The following
  other intangible asset disclosures have been prepared on a US GAAP basis:






|                                                     | As
      of 31 December 2004 | 
|---------------------------------------------------- | ---------------------------- | 
|                                                     |                              | 
|                                                     | Gross
      carrying amount  | 
|                                                     |                              | 
|Subject
      to amortisation:                       |                              | 
|Software                                             | 282                          | 
|Prepayments
      on intangibles / Other intangibles | 24                           | 
|US
      GAAP other intangibles                      | 127                          | 
|                                                     |                              | 
|Total                                                | 433                          | 
|                                                     |                              | 
|( in
      € millions)                               |                              | 

The increase
    of the carrying amount of the US GAAP other intangibles from€31
    million as per 31 December 2003 to€127
    million as per 31 December 2004 mainly relate to the intangible assets (€85
    million) identified in relation to the acquisition of the Wilson. The remaining€11
    million intangible assets come from other acquisitions mainly in the logistics
    division (Overtrans and Ventana).




At 31
       December 2004, we had no acquired intangible assets with indefinite useful

    lives. The aggregate
    amortisation expense for the year ended 31 December 2004 was€96
    million (2003: 47). The following table summarises the estimated amortisation
    expense for the coming five years:


|                          |          |  | Prepayments
        on                          |  |                                   |  |       | 
|------------------------- | -------- |  | ----------------------------------------------- |  | --------------------------------- |  | ----- | 
|                          | Software |  | intangibles
        / Other
        intangibles |  | US
        GAAP other intangibles |  | Total
|                          |          |  |                                                 |  |                                   |  |       | 
|For
      the year ended: |          |  |                                                 |  |                                   |  |       | 
|31
      December 2005    | 41       |  | 13                                              |  | 18                                |  | 72    | 
|31
      December 2006    | 32       |  | 3                                               |  | 15                                |  | 50    | 
|31
      December 2007    | 20       |  | 3                                               |  | 14                                |  | 37    | 
|31
      December 2008    | 9        |  |                                                 |  | 13                                |  | 22    | 
|31
      December 2009    | 7        |  |                                                 |  | 11                                |  | 18    | 
|>
      31 December 2009  |          |  |                                                 |  | 32                                |  | 32    | 
|                          |          | 
|Total                     | 109      |  | 29                                              |  | 103                               |  | 231   | 
|                          |          | 
|(in
      € millions)     |          |  |                                                 |  |                                   |  |       | 



FINANCIAL
  INSTRUMENTSUnder
   US GAAP, derivatives must be held on balance sheet at fair value and changes

  therein recognised either in current earnings or through other comprehensive
   income, depending on specific criteria, that in some cases differ from Dutch

  GAAP. Cash flow hedges and changes in the fair value of the effective portion
   of derivative instruments are recognised in other comprehensive income. We
  defer
  changes in the fair value in other assets or other liabilities. At 31 December
   2004, adjustments were required to revalue our foreign exchange forward contracts,

  cross currency swap and interest rate swaps for US GAAP purposes. REPURCHASE
  OF SHARES JANUARY 2005 TRANCHEOn
    29 September 2004 we announced that the Dutch State sold a total of 77.7 million
    ordinary shares in our outstanding share capital. We repurchased 20.7 million
    shares for a share price of€19.74
    of the total amount of shares sold by the State. Transfer of the repurchased
    ordinary shares has taken place in two tranches. The first tranche of 7.6
    million shares was transferred to us on 4 October 2004. The transfer of the
    remaining 13.1




million
    shares was completed on 5 January 2005 and repurchased for€259
    million. Under
    Dutch GAAP, the first tranche of 7.6 million shares representing an amount
    of€150
    million, have been accounted for in the balance sheet as a debit against equity.
    Any related transaction costs (€1
    million) have been debited against equity both under Dutch GAAP and under
    US GAAP. The transfer of the legal ownership for the second tranche took place
    on 5 January 2005. Under Dutch GAAP the second tranche is presented as a commitment
    not appearing in the Balance sheet. Under US GAAP (SFAS 150), the second tranche
    (of 13.1 million shares) classifies as a financial instrument that should
    be accounted for as a liability rather than as equity. Therefore, we have
    reclassified an amount of€259
    million (including€1
    million interest costs) from equity to liabilities in our balance sheet as
    per 31 December 2004. REAL
  ESTATE SALESDue
  to timing differences when to account for gains on sale of real estate between
  Dutch GAAP and US GAAP, there is a


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difference
    in the statement of income in 2004 of€20
    million caused by the fact that for certain real estate transactions in earlier
    years, the legal ownership has not been transferred until 2004, resulting
    in a book profit under US GAAP (already accounted for in prior years under
    Dutch GAAP at the moment the economic risk was transferred). As per 31 December
    2004 there are no real estate transactions treated differently under Dutch
    and US GAAP and no reconciling item in equity exists anymore. SALE
  AND LEASEBACK TRANSACTIONSUnder
    Dutch GAAP, the gain on a sale and leaseback transaction may be recognised
    if the leaseback qualifies as an operating lease. Under US GAAP, such a gain
    is deferred and amortised to the statements of income over the period of the
    operating lease. This difference resulted in an immaterial adjustment to the
    US GAAP net income and a cumulative effect of€5
    million on shareholders equity to defer the gains on sale of the property
    and to realise these gains over the respective lease terms. LONG-TERM
  CONTRACT INCENTIVESUnder
    Dutch GAAP, the expense related to long-term contract incentive payments made
    to induce customers to enter or renew long-term service contracts may be deferred
    and realised in income over the contract period. For US GAAP such payments
    may not qualify for deferral, in which case they must be recognised fully
    in income in the initial period that the cost is incurred. During 2002, we
    paid long-term contract incentives totalling€6
    million that did not qualify for deferral under US GAAP. As a result, these
    payments were recognised immediately in the income statement in 2002 for US
    GAAP. This difference resulted in an adjustment to the US GAAP net income
    and shareholders equity in the current year to reflect the reversal
    of the related annual charge to the income statement recorded under Dutch
    GAAP. STOCK-BASED
  COMPENSATIONStatement
  of Financial Accounting Standards no. 123, Accounting for Stock-based Compensation
  (SFAS 123) encourages, but does not require, companies to record
  compensation cost for stock-based compensation plans at fair value. TPG has
  chosen to continue to account for stock-based compensation using the intrinsic
  value method prescribed in Accounting Principles Board Opinion no. 25, Accounting
  for Stock Issued to Employees (APB 25), and related interpretations. As at 31
  December 2004, we had three stock-based compensation plans: a performance-based
  employee stock option plan, a performance share plan applicable to our Board
  of Management and a bonus-matching scheme applicable to both our senior management
  and Board of Management. Our 2002,
     2003 and 2004 employee stock option plans and our 2003 and 2004 performance

  share plan are performance-based. The final benefits to be awarded under these
     plans may vary depending on target total shareholder returns for our shares

  over the respective three-year vesting periods as determined by the Supervisory
     Board of TPG. If we do not meet these targets, in the worst case, no options

  or performance shares may vest under the terms of these plans. As a result,
     for US GAAP, no compensation expense will be recognised for these plans
    until
  the third anniversary of the respective plans when the number




or vested
  options or performance shares is known. Similarly for Dutch GAAP purposes, we
  will recognise the total compensation expense for our performance share plan
  in the years in which the shares vest. Under
    our  2003 and 2004 bonus-matching scheme, 25% of an employees annual
    bonus  is paid in shares of TPG. Should the employee retain at least 50%
    of the shares
  awarded to him or her under the short term incentive for a period of three
    years,  the company will match those shares on a one-to-one basis at no cost
    to the
  employee. For Dutch GAAP purposes, there are two cost components to this scheme.
     The first cost component relates to 25% of the employees annual bonus.
      This component is recognised as compensation expense in the year to which
     bonus
  relates. The second cost component relates to the shares that will be matched
      on the third anniversary of the grant date. The total compensation cost
     for
  this second component is recognised as compensation expense evenly over the
      three year vesting period. The total compensation cost for this second
     component
  is equal to the maximum number of bonus shares that may be matched, multiplied
      by the underlying share price on the date of grant. For US GAAP purposes,
     since
  the final number and cost of the bonus shares to be matched is not known,
     the  compensation expense to be recognised for this plan differs from that
     recognised
  under Dutch GAAP and is therefore included in Other. At 31
    December  2004, the impact of the above-mentioned accounting difference was
    not significant enough to cause a material compensation expense reconciling
    adjustment
  for US GAAP purposes. GUARANTEESWe have provided
  guarantees in 2004, none of which are within the scope of FASB Interpretation
  No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees,
  Including Indirect Guarantees of Indebtedness of Others. These guarantees
  are outside the scope of FIN 45 because they are guarantees of our own performance.
  Guarantees issued prior to 31 December 2002 that fall within the scope of FIN
  45 have been disclosed in Note 14. OTHER
  DIFFERENCESUnder
    Dutch GAAP, a curtailment gain on a suspended retirement plan is recognised
    as the difference between the curtailment gain and the estimated additional
    liability to terminate the plan. Under US GAAP, an estimated liability to
    terminate a plan is not recorded until the plan is formally terminated. This
    accounting difference resulted in a€2
    million adjustment to our reconciliation of Dutch GAAP shareholders
    equity to that under US GAAP in order to reverse the recognition of the estimated
    liability to terminate the plan that was made in 2002. Under
    Dutch GAAP, provisions were made for constructive obligations for early retirement
    to some part-time employees in one of our group companies. Under US GAAP these
    provisions were not permitted as we were not legally obligated to make these
    payments at year-end 2004. This difference resulted in a€1
    million reconciling adjustment between our net income and shareholders
    equity under Dutch GAAP to those under US GAAP as at year-end 2004.






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|Chapter
      12 | Financial
      statements and other information
|---------------- | ------------------------------------------------
|                
|                

Under
    Dutch GAAP, restoration of previously recognised impairments is required when
    the reason for the impairment is no longer valid. Under US GAAP, restoration
    of previously recognised impairments is prohibited. In addition, in 2004 an
    amount of€6
    million has been accounted for on this line due to the sale of our share in
    a joint venture. In 2003 a different amount of goodwill impairment was recorded
    under Dutch GAAP and therefore the result of this sale was different under
    US GAAP. Property,
  plant and equipment transferred to our company in connection with the incorporation
  of the postal and telecommunications business as of 1 January 1989, were valued
  at the then current value. This method is prescribed under Dutch law and acceptable
  under Dutch GAAP. US GAAP requires that property, plant and equipment be valued
  at historical cost. No adjustment to the Dutch GAAP accounts is made in the
  US GAAP reconciliation in relation to this difference, as the original historical
  cost cannot be determined. Under Dutch
  GAAP, investments in joint ventures may be proportionately consolidated. In
  general, the proportionate consolidation method is prohibited under US GAAP.
  However, as allowed under the United States Securities and Exchange Commissions
  (SEC) rules applicable to Form 20-F, no adjustment




has been
     made for this difference as the joint ventures, in which we hold an investment,

  are operating entities for which we have joint control over the financial operating
     policies with all other parties holding an interest in the respective joint

  venture. We prepare
     our statement of cash flows in accordance with Dutch GAAP, which is consistent

  with International Financial Reporting Standards (IAS 7). As allowed under
    the  SECs rules applicable to Form 20-F, no adjustment has been made
    for this  difference. No goodwill
     arose on investments accounted for by the net asset value method (equity
    method)
  in 2004 (2003: 0). Under Dutch GAAP, this is shown separately on the balance
     sheet. Under US GAAP, this goodwill would be classified as an equity investment.

  This difference does not result in a reconciliation to US GAAP net income. NET
  INCOME AND SHAREHOLDERS EQUITY RECONCILIATION STATEMENTSThe
  following statements summarise the principal adjustments, gross of their tax
  effects, which reconcile net income and total shareholders equity under
  Dutch GAAP to the amounts that would have been reported had US GAAP been applied:




|                                                                                  |                                 |      |      |      |       |  
|--------------------------------------------------------------------------------- | ------------------------------- | ---- | ---- | ---- | ----- | -
|Net
      income                                                                  |                                 |      |      |      |       |  
|                                                                                  |                                
|                                                                                  | Year
      ended at 31 December |     
|                                                                                  |                                
|                                                                                  | 2004                            | 2003 |      | 2002 |      
|                                                                                  |                                
|Net
      income under Dutch GAAP                                                 | 667                             |      | 300  |      | 599   |  
|Adjustments
      for:                                                            |                                 |      |      |      |       |  
|Employment
      schemes: cancellation contract                                   | (130                            | )    |      |      |       |  
|Employment
      schemes and group reorganisation                                 | (11                             | )    | (11  | )    | (12   | )
|Amortisation
      goodwill                                                       | 146                             |      | (9   | )    | 154   |  
|Other
      intangible assets amortisation                                        | (19                             | )    | (3   | )    | (2    | )
|Financial
      instruments                                                       | (7                              | )    | 13   |      | (11   | )
|Real
      estate sale                                                            | 20                              |      | (4   | )    | (16   | )
|Sale(lease-back
      transaction                                                 |                                 |      | (1   | )    | (4    | )
|Repurchase
      of shares                                                        | (1                              | )    |      |      |       |  
|Amortisation
      on restoration of previously recognised impairments            | 10                              |      | 4    |      | 4     |  
|Amortisation
      of capitalised software                                        |                                 |      |      |      | (10   | )
|Long
      term contract incentive payment                                        | 1                               |      | 1    |      | (6    | )
|Provisions                                                                        | 1                               |      | 1    |      |       |  
|Pensions
      curtailment                                                        |                                 |      |      |      | 2     |  
|Other                                                                             | (1                              | )    |      |      |       |  
|Tax
      effect of adjustments                                                   | 38                              |      | 41   |      | 19    |  
|                                                                                  |                                 |      |      |      |       |  
|Net
      income under US GAAP                                                    | 714                             |      | 332  |      | 717   |  
|Net
      income (in€cents) per ordinary share and per ADS under US GAAP1         | 151.9                           |      | 69.9 |      | 150.9 |  
|Net
      income (in€cents) per diluted ordinary share and per ADS under US GAAP2 | 151.7                           |      | 69.8 |      | 150.9 |  
|                                                                                  |                                

|(in
      € millions, except per share data)
|--------------------------------------------
|1.                                          
|2.                                          

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|Shareholders
      equity                                                  |                      |      |       |       |       |  
|--------------------------------------------------------------------------- | -------------------- | ---- | ----- | ----- | ----- | -
|                                                                            |                     
|                                                                            | At
      31 December |     
|                                                                            |                     
|                                                                            | 2004                 | 2003 |       | 20021 |      
|                                                                            |                     
|Shareholders
      equity under Dutch GAAP                                 | 2,765                |      | 2,969 |       | 2,961 |  
|Adjustments
      for:                                                      |                      |      |       |       |       |  
|Employment
      schemes and group reorganisation                           |                      |      | 141   |       | 152   |  
|Goodwill
      and other long-lived intangible assets                       | 100                  |      | 69    |       | 91    |  
|Other
      intangible assets amortisation                                  | (24                  | )    | (5    | )     | (2    | )
|Financial
      instruments                                                 | 1                    |      | 2     |       | (20   | )
|Repurchase
      of shares                                                  | (259                 | )    |       |       |       |  
|Real
      estate sale                                                      |                      |      | (20   | )     | (16   | )
|Sale-and-lease-back
      transaction                                       | (5                   | )    | (5    | )     | (4    | )
|Restoration
      of previously recognised impairments, net of amortisation | 3                    |      | (7    | )     | (11   | )
|Long
      term contract incentive payment                                  | (4                   | )    | (5    | )     | (6    | )
|Provisions                                                                  | 2                    |      | 1     |       |       |  
|Pensions
      curtailment                                                  | 2                    |      | 2     |       | 2     |  
|Other                                                                       | (1                   | )    |       |       |       |  
|Deferred
      taxes on adjustments                                         | 42                   |      | 4     |       | (37   | )
|                                                                            |                      |      |       |       |       |  
|Shareholders
      equity under US GAAP                                    | 2,622                |      | 3,146 |       | 3,110 |  
|                                                                            |                     
|                                                                           
|                                                                           
|                                                                           

|(in
      € millions)
|---------------------
|1.                   



|                                                             |                                 
|------------------------------------------------------------ | --------------------------------
|                                                             | Total
      shareholders equity
|                                                             |                                 
|Shareholders
      equity under US GAAP at 31 December 2002 | 3,110                           
|Net
      income 2003 under US GAAP                          | 332                             
|Final
      dividend 2002 and interim dividend 2003          | (204                            
|Translation
      adjustment Dutch GAAP                      | (68                             
|Translation
      adjustment on US GAAP reconciling items    | (12                             
|Revaluation
      of derivatives                             | 9                               
|Other                                                        | (21                             
|Shareholders
      equity under US GAAP at 31 December 2003 | 3,146                           
|Net
      income 2004 under US GAAP                          | 714                             
|Final
      dividend 2003 and interim dividend 2004          | (237                            
|Translation
      adjustment Dutch GAAP                      | (29                             
|Translation
      adjustment on US GAAP reconciling items    | (113                            
|Stock
      options exercised                                | 3                               
|Repurchase
      of shares October 2004 tranche              | (151                            
|Repurchase
      of shares January 2005 tranche              | (258                            
|Minimum
      liability for defined benefit plans            | (454                            
|Other                                                        | 1                               
|                                                             |                                 
|Shareholders
      equity under US GAAP at 31 December 2004 | 2,622                           
|                                                             |                                 
|(in
      € millions)                                        |                                 



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|Chapter
      12 | Financial
      statements and other information
|---------------- | ------------------------------------------------
|                
|                

Comprehensive
  income under US GAAP

|                                                                  |                                
|----------------------------------------------------------------- | -------------------------------
|                                                                  | Year
      ended at 31 December
|                                                                  |                                
|                                                                  | 2004                           
|                                                                  |                                
|Net
      income under US GAAP                                    | 714                            
|Unrealised
      forex gains and losses Dutch GAAP                | (29                            
|Unrealised
      forex gains and losses US GAAP reconciling items | (113                           
|Minimum
      liability for defined benefit plans                 | (454                           
|Gains
      and losses on foreign currency hedges                 | 1                              
|Other                                                             | 1                              
|                                                                  |                                
|Comprehensive
      income under US GAAP                          | 120                            
|                                                                  |                                
|(in
      €millions)                                              |                                

Accumulated
other comprehensive income, net of related income taxes (under US GAAP)

|                                                                    |                                
|------------------------------------------------------------------- | -------------------------------
|                                                                    | Year
      ended at 31 December
|                                                                    |                                
|                                                                    | 2004                           
|                                                                    |                                
|Opening
      accumulated comprehensive income                      | (189                           
|Unrealised
      forex gains and losses Dutch GAAP                  | (29                            
|Unrealised
      forex gains and losses US GAAP reconciling items   | (113                           
|Minimum
      liability for defined benefit plans                   | (454                           
|Gains
      and losses on foreign currency hedges                   | 1                              
|Other                                                               | 1                              
|                                                                    |                                
|Total
      acc. other comprehensive income, net of taxes (US GAAP) | (783                           
|                                                                    |                                
|(in
      €millions)                                                |                                



RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS The
    Financial Accounting Standards Board in the United States (FASB) has issued
    certain Statements of Financial Accounting Standards (SFAS), each of which,
    when adopted, could affect our consolidated financial statements for US GAAP
    reporting. In
    December 2004, the FASB issued a revised version of SFAS 123 (Share based
    payments). This statement focuses primarily on accounting for transactions
    in which an entity obtains employee services in share-based payment transactions
    and supersedes APB Opinion No. 25, accounting for Stock issued to Employees.
    This Statement applies to all awards granted after 15 June 2005 and has therefore
    no impact on the 2004 Financial Statements. In
    December 2003, the FASB issued a revised FASB Interpretation No. 46 (FIN
    46), Consolidation of Variable Interest Entities, an Interpretation
    of ARB No. 51. FIN 46 requires certain variable interest entities to
    be consolidated by the primary beneficiary of the entity if the equity investors
    in the entity do not have the characteristics of a controlling financial interest
    or do not have sufficient equity at risk for the entity to finance its activities
    without additional subordinated financial support from other parties. FIN
    46 must be adopted no later than the end of the first interim or annual reporting
    period ending after 15 March 2004. The adoption of this standard had no material
    impact on our financial statements.




In
    December 2003, the FASB issued a revised version of SFAS 132R. It does not
    change the measurement or recognition of those plans required by FASB Statements
    No. 87, Employers Accounting for Pensions, No. 88, Employers Accounting
    for Settlements and Curtailments of Defined Benefit Pension Plans and for
    Termination Benefits, and No. 106, Employers Accounting for Postretirement
    Benefits Other Than Pensions. This Statement only retains the disclosure requirements
    contained in FASB Statement No. 132, Employers Disclosures about Pensions
    and Other Postretirement Benefits, which it replaces. It requires additional
    disclosures to those in the original Statement 132 about the assets, obligations,
    cash flows, and net periodic benefit cost of defined benefit pension plans
    and other defined benefit post retirement plans. Since the other post retirement
    plans and our pension plans are incorporated in one pension plan it cant
    be separated and therefore this requirement is not applicable for TPG N.V.






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TPG
  N.V. corporate balance sheetsBefore
  proposed appropriation of net income

---

|    |                                                |                                 |   |          |      |       |  
|--- | ---------------------------------------------- | ------------------------------- | - | -------- | ---- | ----- | -
|    |                                                |                                
|    |                                                | Year
      ended at 31 December |  
|    |                                               
|    |                                                | 2004                            | % |          | 2003 |      
|    |                                                |                                 |   |          |      |       |  
|    |                                                |                                 |   | VARIANCE |      |       |  
|    |                                                |                                 |   |          |      |       |  
|    | Assets                                         |                                 |   |          |      |       |  
|£30 | Fixed
      assets                             |                                 |   |          |      |       |  
|    | Investments
      in group companies           | 3,612                           |   |          |      | 3,405 |  
|    | Investments
      in affiliated companies      | 32                              |   |          |      | 25    |  
|    | Other
      loans receivable                   |                                 |   |          |      |       |  
|    | Prepayments
      and acrued income            | 3                               |   |          |      | 7     |  
|    |                                                |                                 |   |          |      |       |  
|    | Total
      fixed assets                       | 3,647                           |   | 6.1      |      | 3,437 |  
|    |                                                |                                 |   |          |      |       |  
|    | Current
      assets                           |                                 |   |          |      |       |  
|    | Accounts
      receivable from group companies | 228                             |   |          |      | 680   |  
|    | Other
      accounts receivable                | 18                              |   |          |      | 11    |  
|    | Prepayments
      and accrued income           | 1                               |   |          |      | 1     |  
|    | Cash                                           | 5                               |   |          |      | 3     |  
|    |                                                |                                 |   |          |      |       |  
|    | Total
      current assets                     | 252                             |   | (63.7    | )    | 695   |  
|    |                                                |                                 |   |          |      |       |  
|    | Total
      assets                             | 3,899                           |   | (5.6     | )    | 4,132 |  
|    |                                                |                                 |   |          |      |       |  
|    | Liabilities
      and group equity             |                                 |   |          |      |       |  
|£31 | Shareholders
      equity                     |                                 |   |          |      |       |  
|£32 | Issued
      share capital                     | 230                             |   |          |      | 230   |  
|£33 | Additional
      paid-in capital               | 1,421                           |   |          |      | 1,421 |  
|£34 | Cumulative
      translation reserve           | (168                            | ) |          |      | (130  | )
|£35 | Other
      reserves                           | 1,164                           |   |          |      | 1,233 |  
|£36 | Unappropriated
      net income                | 572                             |   |          |      | 215   |  
|    |                                                |                                 |   |          |      |       |  
|    | Capital
      and reserves                     | 3,219                           |   |          |      | 2,969 |  
|£37 | Minimum pension liabilities                    | (454                            | ) |          |      |       |  
|    |                                                |                                 |   |          |      |       |  
|    |                                                | 2,765                           |   | (6.9     | )    | 2,969 |  
|    | Provisions                                     |                                 |   |          |      |       |  
|    | Other                                          |                                 |   |          |      | 10    |  
|    |                                                |                                 |   |          |      |       |  
|    | Total
      provisions                         |                                 |   | (100.0   | )    | 10    |  
|    |                                                |                                 |   |          |      |       |  
|    | Long-term
      liabilities                    |                                 |   |          |      |       |  
|£11 | Bond                                           | 1,000                           |   |          |      | 1,000 |  
|    | Other
      long-term liabilities              | 129                             |   |          |      | 129   |  
|    |                                                |                                 |   |          |      |       |  
|    |                                                | 1,129                           |   | -        |      | 1,129 |  
|    | Current
      liabilities                      |                                 |   |          |      |       |  
|    | Other
      current liabilities                |                                 |   |          |      | 19    |  
|    | Accrued
      liabilities                      | 5                               |   |          |      | 5     |  
|    |                                                |                                 |   |          |      |       |  
|    | Total
      current liabilities                | 5                               |   | (79.2    | )    | 24    |  
|    |                                                |                                 |   |          |      |       |  
|    | Total
      liabilities and group equity       | 3,899                           |   | (5.6     | )    | 4,132 |  
|    |                                                |                                 |   |          |      |       |  
|    | (in
      € millions, except percentage)       |                                 |   |          |      |       |  

| |  | The
      figures #£in
      the line items of these financial statements refer to the notes to the financial
      statements.
| | - | -------------------------------------------------------------------------------------------------------------------------------
| |  | The accompanying notes form an integral part of the financial statements.                                                      



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Chapter
  12    Financial statements and other information

---

TPG
  N.V. corporate statements of income

|                                                              |                                
|------------------------------------------------------------- | -------------------------------
|                                                              | Year
      ended at 31 December
|                                                              |                                
|                                                              | 2004                           
|                                                              |                                
|Results
      from investments in group companies after taxes | 694                            
|Other
      income and expenses after taxes                   | (27                            
|                                                              |                                
|Net
      income                                              | 667                            
|                                                              |                                
|(in
      €millions)                                          |                                



As the financial statements of TPG N.V. are included in the consolidated financial statements, the corporate statements of income are presented in an abridged form (Article 402, Title 9, Book 2 of the Dutch Civil Code).








Notes
  to the corporate balance sheets and statements of income

---

ACCOUNTING
    POLICIES FOR VALUATION AND DETERMINATION OF RESULT TPG N.V. The
    principles of valuation and determination of result for corporate financial
    statements and the consolidated financial statements are the same.









£30FIXED
  ASSETS: €3,647 (2003: 3,437)

|                                  |                                           
|--------------------------------- | ------------------------------------------
|                                  | Investments
      in group
      companies
|                                  |                                           
|Balance
      at 31 December 2002 | 3,166                                     
|Changes
      in 2003:            |                                           
|Results                           | 329                                       
|Acquisitions/additions            |                                           
|Disposals/decreases               |                                           
|Withdrawals/repayments            |                                           
|Exchange
      rate differences   | (68                                       
|Other
      changes               | (22                                       
|Total
      changes               | 239                                       
|                                  |                                           
|Balance
      at 31 December 2003 | 3,405                                     
|Changes
      in 2004:            |                                           
|Results                           | 694                                       
|Acquisitions/additions            |                                           
|Disposals/decreases               |                                           
|Withdrawals/repayments            |                                           
|Exchange
      rate differences   | (32                                       
|Minimum
      pension liabilities | (454                                      
|Other
      changes               | (1                                        
|Total
      changes               | 207                                       
|                                  |                                           
|Balance
      at 31 December 2004 | 3,612                                     
|                                  |                                           
|(in
      €millions)              |                                           

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£ 31SHAREHOLDERS
  EQUITY : €2,765 MILLION (2003: 2,969)

|                                                      
|------------------------------------------------------
|                                                      
|                                                      
|Balance
      at 31 December 2001                     
|Net
      income                                      
|Foreign
      exchange effects                        
|Other                                                 
|                                                      
|Total
      recognised income / expense for the period
|Final
      dividend previous year                    
|Appropriation
      of net income                     
|Interim
      dividend current year                   
|                                                      
|Total
      direct changes in equity                  
|                                                      
|Balance
      at 31 December 2002                     
|Net
      income                                      
|Foreign
      exchange effects                        
|Other                                                 
|                                                      
|Total
      recognised income / expense for the period
|Final
      dividend previous year                    
|Appropriation
      of net income                     
|Interim
      dividend current year                   
|                                                      
|Total
      direct changes in equity                  
|                                                      
|Balance
      at 31 December 2003                     
|Net
      income                                      
|Foreign
      exchange effects                        
|Other                                                 
|                                                      
|Total
      recognised income / expense for the period
|Final
      dividend previous year                    
|Appropriation
      of net income                     
|Interim
      dividend current year                   
|Repurchase
      of shares                            
|Minimum
      pension liabilities                     
|Other                                                 
|                                                      
|Total
      direct changes in equity                  
|                                                      
|Balance
      at 31 December 2004                     
|                                                      
|                                                      

|(in
      € millions)
|---------------------
|                    
|                    

£32ISSUED
  SHARE CAPITAL: €230 MILLION (2003: 230)

Issued
  share capital amounted to €230 million at 31 December 2004 (2003: 230).
  The number of authorised, issued and




outstanding
    shares by class of share at 31 December 2004, 31 December 2003 and 31 December
    2002 is as follows:


|                                                       |              
|------------------------------------------------------ | -------------
|                                                       | Ordinary     
|                                                       |              
|Authorised                                             | 1,200,000,000
|                                                       |              
|Issued
      and outstanding                           | 480,259,522  
|of
      which held by the company to cover shareplans | 4,979,942    
|of
      which held by the company for annulation      | 7,600,000    
|                                                       |              

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Chapter
  12    Financial statements and other information

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We have
    ordinary shares in bearer form or in registered form. Ordinary shares in bearer
    form are represented by a global note held by the Dutch clearing system Euroclear
    Netherlands (formerly known as NECIGEF) and are transferable through Euroclear
    Netherlands book entry system. Ordinary shares in registered form are
    transferred by means of a deed of transfer and the companys written
    acknowledgement of the transfer. We do not have share certificates for ordinary
    shares represented by the global note. ADSs represent ordinary shares in bearer
    form represented by the note held by Euroclear Netherlands. The special share
    and the B preference shares are registered. We purchased ordinary shares as
    part of our management and personnel share option plan (none in 2003 and 2002)
    and we therefore owned 4,979,942 ordinary shares at 31 December 2004. The
    State of the Netherlands is the holder of the special share. At 31 December
    2004, the State holds approximately 21.3% of the ordinary shares. We may not
    vote on shares in our own capital. The TPG Protection Foundation was formed
    to care for our interests, the enterprises connected with us and all interested
    parties, such as shareholders and employees, by, among other things, preventing
    as much as possible influences which would threaten our continuity, independence
    and identity contrary to such interests. The Foundation is an independent
    legal entity and is not owned or controlled by any other legal person. Agreements
    have been concluded between us and the Foundation for the placement or acquisition
    of preference shares B.




£33ADDITIONAL
    PAID IN CAPITAL: €1,421 (2003: 1,421) Additional
    paid-in capital is exempt for Dutch tax purposes. £34CUMULATIVE
    TRANSLATION RESERVE: €-168 (2003: -130) Currency
    translation gains and losses on foreign subsidiaries of TPG N.V. are charged
    or credited to the cumulative translation reserve, net of taxation. £35OTHER
    RESERVES: €1,164 (2003:1,233) Foreign
    exchange results on hedges amounted to €9 million in 2004. The tax effect
    on these hedges amounted to €3 million and is presented under other
    within total income / expense recognised in the period. On
    29 September 2004 we announced that the Dutch State sold a total of 77,7 million
    ordinary shares in our outstanding share capital, representing approximately
    16% in our company. By the sale and transfer the State has reduced its ownership
    in our capital from 34.8% to 18.6%. We repurchased 20,7 million of the total
    amount of shares sold by the State. Transfer of the repurchased ordinary shares
    has taken place in two tranches. The first tranche of 7,6 million shares was
    transferred to us on 4 October 2004 as shown in the table below. The first
    tranche was repurchased against €151 million (including transaction costs)
    and is deducted from other reserves.


|               |                                                                                                    |  |                                      |  |                                                         |  |                                                                                                  
|-------------- | -------------------------------------------------------------------------------------------------- |  | ------------------------------------ |  | ------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------
|               | Number
        of shares purchased as part of the publicly announced repurchase plan
        share |  | Price
        paid per
        share |  | Total
        number of shares
        purchase in 2004 |  | Remaining number of shares to purchase as part of the publicity announced
        repurchase plan
|               |                                                                                                    |  |                                      |  |                                                         |  |                                                                                                  
|4 October,2004 | 7,600,000                                                                                          |  | 19.74                                |  | 7,600,000.0                                             |  | 13,100,000                                                                                       
|               |                                                                                                    |  |                                      |  |                                                         |  |                                                                                                  

The
    other movement of €3 million includes the share grants of 2004 and exercise
    rights of options plans of prior years. £36UNAPPROPRIATED
    NET INCOME: €572 (2003: 215) The
    profit for 2004 has been calculated as the net income for 2004 of TPG N.V.
    and all its subsidiaries. The 2004 unappropriated component is €572 million
    (2003: 215), containing the net income of €667 million (2003: 300) and
    the paid interim dividend 2004 of €95 million (2003: 85). Subject to
    the approval of the general meeting of shareholders, the Board of Management
    proposes to add €404 million ( 2003: 73) to other reserves and to pay
    €168 million (2003:142) as final dividend. £37MINIMUM
    PENSION LIABILITIES: €-454 million (2003: 0) Full
    application of SFAS 87 requires us to recognise an additional minimum liability
    representing a net loss that under SFAS 87 is not yet to be recognised as
    net periodic pension cost, but to be reported as a separate component (that
    is a reduction) of equity (see note 9). We have deducted an amount of€454
    million from our equity (net of tax).




£38WAGES
    AND SALARIES (No
    corresponding financial statement number) TPG
    N.V. does not have any employees. Hence no salary, social security and pension
    costs were incurred. £39COMMITMENTS
    NOT INCLUDED IN THE BALANCE SHEET (No
    corresponding financial statement number) REPURCHASE
    OF SHARES JANUARY 2005 TRANCHEAs announced
    by us on 29 September 2004, we decided to repurchase 20,7 million ordinary
    shares from the State. This transaction has been divided into two tranches
    of which the first one took place on 4 October 2004. The transfer to the legal
    ownership for the second tranche of 13,1 million shares was set on 5 January
    2005. On 5 January, the second tranche was repurchased against €259 million.


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DECLARATION
    OF JOINT AND SEVERAL LIABILITYTPG N.V.
    has issued a declaration of joint and several liability for some of its group
    companies in compliance with article 403, Part 9, Book 2 of the Netherlands
    Civil Code. Those group companies are: 
   Royal TPG Post B.V.
   TNT Holdings B.V.
   TNT Logistics Holdings B.V
   TNT Express Holdings B.V.
   TPG Headoffice B.V. FISCAL
    UNITY IN THE NETHERLANDSThe company
    forms a fiscal entity with the several Dutch entities for corporation tax
    purposes. The full list of Dutch entities which are part of the fiscal unity
    is included in the list containing the information referred to in article
    379 and article 414, part 9, book 2 of the Dutch civil code, which is filed
    at the office of the Chamber of Commerce in Amsterdam. In accordance with
    the standard conditions the company and the subsidiary that is part of the
    fiscal entity are severally liable for taxation payable by the entity. GUARANTEES
  Parental
  support in the form of a guarantee or a letter of support has been provided
  by TPG N.V. to its subsidiary TPG Finance B.V. for a syndicated loan (€600
  million), various loan facilities including a€1,000
  million commercial paper program and
  various international swaps and derivatives association (isda) agreements. In
  addition, TPG N.V. has issued a guarantee for the syndicated loan entered into
  by its indirect subsidiary TNT Canada Inc. (€186 million). Parental support in the form of a letter of guarantee has
    been provided by TPG N.V. to its indirect subsidiary TNT Holdings (UK) Ltd.
    and its subsidiaries in relation to the acquisition of TNT Ltd. in 1996 and
    the subsequent restructuring of the group in 1997. £40SUBSIDIARIES
    AND AFFILIATED COMPANIES AT 31 DECEMBER 2004(No corresponding
    financial statement number) The full list containing the information referred to in Article 379 and Article 414, Part 9, Book 2 of the Dutch civil code is filed at the office of the Chamber of Commerce in Amsterdam. £41MAIL
    REGULATION AND CONCESSIONS(No corresponding
    financial statement number) Because
    of the importance of postal services to society, regulation is a significant
    factor in our mail business. The mandatory undertaking of certain postal activities
    in the Netherlands, some of which are exclusive, have been assigned to us
    in the Dutch Postal Act. In the Netherlands the key legislation regulating our mail
    activities is the Postal Act. The Postal Act requires TPG to perform the mandatory
    postal services in the Netherlands, and it confers to us exclusive rights
    for some of these services, the reserved postal services.




The
    postal concession MANDATORY
    POSTAL SERVICESThe domestic
    mandatory postal services mainly consist of the conveyance against payment
    of standard single rates of the following postal items: 
      items
        of correspondence (including reply items) and printed matter with a maximum
        weight of two kilograms,
      postal
        parcels with a maximum individual weight of 10 kilogrammes, and
      registered,
        registered insured and registered value declared items. In addition,
    bulk mail of items of correspondence up to an individual weight of 100 grammes,
    which are conveyed against separately agreed rates, are part of the mandatory
    postal services. Mandatory postal services also cover post office boxes. For international
    inbound and outbound mail, in accordance with the rules of the UPU, mandatory
    postal services comprise conveyance against payment of both postal items at
    standard single rates and of bulk mail items at separately agreed rates with
    a maximum individual weight of two kilogrammes and of postal parcels with
    a maximum individual weight of 20 kilogrammes. We are not required to provide
    the delivery of bulk printed matter such as advertising, magazines and newspapers,
    the delivery of bulk letters of correspondence with an individual weight above
    100 grammes and unaddressed mail items. In addition, mandatory postal services cover the postal services regulated by the UPU. RESERVED
    POSTAL SERVICESUnder the
    Postal Act and the Postal Decree, the reserved postal services include the
    following exclusive rights: 
      The
        conveyance of domestic and inbound international items of correspondence
        with a maximum weight of 100 grammes at a rate of less than three times
        the standard single rate for the lowest weight class of 20 grammes (currently
        three times €0.39 = €1.17). The exclusive right for the conveyance
        of outbound international items of correspondence has been abolished;
      The
        exclusive right to place letterboxes intended for the public alongside
        or on public roads;
      The
        exclusive right to issue postal stamps and imprinted stamps bearing the
        effigy of the monarch and/or the word Nederland. These
    exclusive rights do not extend to courier services or services where the letters
    are delivered at the rate of more than three times the basic rate of €0.39.
    The exclusive rights also do not extend to the conveyance of parcels, letters
    weighing in excess of 100 grammes and printed materials such as advertising,
    newspapers and magazines. In addition, the exclusive rights do not extend
    to the conveyance of letters by a business to its own customers. REGULATORY
    CONDITIONS FOR THE PROVISION OF MANDATORY POSTAL SERVICESThe Ministry
    of Economic Affairs has overall responsibility for postal regulation and policy.




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Chapter
  12     Financial statements and other information

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Regarding
    mandatory postal services the General Postal Regulations Decree imposes various
    regulatory conditions on us with respect to service provision, tariffs, cost
    and revenue accounting, financial administration and reporting. Other than
    the mandatory postal services, none of our postal services is subject to governmental
    control. With
    respect to service levels, the General Postal Regulations Decree requires
    us to provide a level of service that complies with modern standards, to provide
    nationwide services and to perform a delivery round every day, except for
    Sundays and public holidays. We are required to deliver not less than 95%
    of all domestic items of correspondence the day after the day of posting,
    not including Sundays and public holidays. We are required to maintain a network
    of service points (post offices and agents) for the access of the general
    public mail services. With respect to rates, we are required to set rates
    that are transparent, non-discriminatory and uniform. However, we may grant
    volume discounts for items of correspondence and negotiate specific prices
    and conditions with high-volume users. We are required to submit proposed
    rate changes to OPTA, which has to evaluate whether the proposed changes are
    in accordance with the price cap system. The
    price cap system measures tariff developments in two different baskets of
    services, a total basket and a small users basket.
    The total basket comprises domestic mandatory postal services
    provided to all customers. The small users basket comprises a selection of
    the total basket of domestic mandatory postal services that is representative
    for consumers and small business users. The price
    cap system uses a weighing factor for each service in both baskets. The levels
    of the indices for both baskets are not to exceed the official national index
    of wages for employees in the market sector. The
    price cap system was evaluated in 2002. On 18 November 2002, the Ministry
    of Economic Affairs decided that tariffs controlled by the current price cap
    system should be frozen until the end of 2006. The Ministry of Economic Affairs
    indicated that in the event postal services became subject to value added
    tax between 1 January 2003 and 1 January 2007, a change of the frozen tariffs
    corresponding with the resulting tax burden would be allowed. On 19 June 2003,
    when the tariff freeze was discussed in parliament, the duration of the freeze
    was limited to 1 January 2005, awaiting the vision of the Minister on the
    future regulation of the postal sector. The Minister proposed in his Postal
    Vision sent to Parliament on 1 April 2004 that the temporary tariff freeze
    would be extended until year-end 2006. On 17 November 2003 we lodged an appeal
    against the administrative decision to freeze the tariffs. Following the grant
    of the formal appeal, the temporary tariff freeze decision was declared void
    in June 2004 and TPG Post remained allowed to amend the individual rates for
    mandatory postal services, subject to the provisions of the tariff control
    system. However,
    in view of the wider importance of the adoption of an integral and balanced
    vision for the postal market as submitted to Parliament, we announced our
    intention not to increase the price of a stamp for consumers from the present
    level of 39 euro cents for the years 2004, 2005 and 2006. We are considering
    an




amendment
    in 2006 to the prices for mandatory postal services to business customers
    that are covered by the price control system, but this will be kept below
    the rate of wage inflation for 2004 and 2005. On 16
    December 2004 the Minister of Economic Affairs discussed his vision for the
    postal market with the members of parliament. During this meeting parliament
    gave its support to the vision, giving clarity to the following issues: 
      Full
        liberalisation of the postal market in 2007 (conditional on full market
        liberalisation in the UK and Germany). The vision foresees the possibility
        of an emergency brake procedure that allows the date of the
        introduction of liberalisation to be shifted to a later stage should the
        circumstances (delayed factual liberalisation of the German and UK postal
        markets) call for this.
      The
        price of a stamp for consumers will remain at 39 euro cents in 2004, 2005
        and 2006. TPG may introduce a one-off price increase in 2006 for services
        to business customers, which are covered by the price control system,
        but this will be kept below the rate of wage inflation for 2004 and 2005.
      From
        2007, rates for services provided under the universal service obligation
        will be regulated using a price cap system linked to inflation.
      The
        principle of non-discrimination is to apply to the services of TPG. Competitors
        and customers are to be treated equally in terms of rates and conditions.
      There
        is a clearer distinction between general and sector-specific
        competition monitoring. The Dutch regulator OPTA is
        charged with monitoring universal service and non-discrimination
        requirements.
      A
        reduction, yet to be fully defined, in the scope of themandatory postal services.
      From
        2007, the Minister of Economic Affairs will assesswhether
        an obligation for us to deliver bulk mail letters up to50 grammes will remain mandatory for an undefined transitionalperiod, without any rights for us to offset this obligation. We recognise
    that the postal vision provides clarity on the most important aspects of postal
    regulation and gives a long-term framework for the development of the postal
    market in the Netherlands. In particular, we are pleased with the policy regarding
    liberalisation as this is conditional to the future de facto liberalisation
    in the UK and Germany, where liberalisation is also scheduled to take place
    in 2007. Amsterdam,
        25 February 2005Board
        of Management
      Supervisory
        BoardM.P.
        Bakker
      R.J.N.
        AbrahamsenJ.G.
        Haars
      J.M.T.
        CochraneH.M.
        Koorstra
      R.
        DahanD.G.
        Kulik
      V.
        HalberstadtM.-C.
        Lombard
      J.H.M.
        HommenW.
        KokTPG
        N.V.
      R.W.H.
        StombergNeptunusstraat
        41-63
      M.
        Tabaksblat2132
        JA HoofddorpP.O Box 130001100 KG AmsterdamThe
        Netherlands




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---

Other
  Information

















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Chapter
  12     Financial statements and other information

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EXTRACT
    FROM THE ARTICLES OF ASSOCIATION ON APPROPRIATION OF NET INCOMEUnder
    our articles of association, a dividend of 7% of €0.48 (€0.032)
    will be paid on the special share (article 35, paragraph 1). The dividend
    specified in article 35, paragraph 1 will be paid on preference shares B.
    Preference shares B have not been issued. Subject to the approval of our Supervisory
    Board, our Board of Management will determine which part of net income remaining
    after payment of dividend on the special share (and any preference shares
    B) will be transferred to the reserves (article




35, paragraph
    2). The remaining net income will be distributed as dividend on ordinary shares
    (articles 35, paragraph 3). APPROPRIATION
    OF NET INCOMESubject
    to approval of our financial statements, the proposed 2004 dividend has been
    set at €0.57 in cash per ordinary share of €0.48 par value. After
    deducting the interim dividend of €0.20 per ordinary share paid out in
    August 2004, the final dividend will be €0.37 per ordinary share.


Appropriation
  of net income

|                                                                                                                  |      | 
|----------------------------------------------------------------------------------------------------------------- | ---- | 
|                                                                                                                  |      | 
|                                                                                                                  | 2004 | 
|                                                                                                                  |      | 
|Net
      income                                                                                                  | 667  | 
|Appropriation
      in accordance with the articles of association:                                               |      | 
|Dividend
      on special share (article 35,par. 1) € 0,032                                                       | 0    | 
|Reserves
      adopted by the Board of Management and approved by the Supervisory Board
      (article 35, par.2) | 404  | 
|                                                                                                                  |      | 
|Dividend
      on ordinary shares                                                                                 | 263  | 
|Interim
      dividend paid                                                                                       | 95   | 
|                                                                                                                  |      | 
|Final
      dividend                                                                                              | 168  | 
|                                                                                                                  |      | 
|(in
      €millions)                                                                                             

SPECIAL
    CONTROL RIGHTS UNDER THE ARTICLES OF ASSOCIATION OF SPECIAL SHAREThe State
    holds a special share that gives it the right to approve decisions that lead
    to fundamental changes in our group structure, see for these decisions note
    26 on page 143. OTHER
    ARRANGEMENTS WITH THE STATEWe have
    agreed with the State that we may issue ordinary shares up to a total par
    value of €182,833,785, subject to the approval of the State, in its capacity
    as holder of the special share, and the Supervisory Board. The State has agreed
    that it will withhold its approval only if: 
      the
        proposed share issuance is scheduled to take place, or our intention to
        make the issuance would be made public by us, within nine months prior
        to any offer of our ordinary shares by the State, and
      the
        State in its reasonable opinion expects that the proposed issuance would
        be detrimental to its interests in any later offerings of our ordinary
        shares by it.However,
        we may within such nine-month period make a public announcement of our
        intention to issue ordinary shares, if
      ordinary
        shares would be issued exclusively or almost exclusively in exchange for
        the shares of one or more companies with which we or any of our group
        companies have concluded a co-operation, merger or acquisition agreement,
        or
      the
        announcement is made in relation to a private issuance (other than an
        issuance referred to above), provided that the State in its reasonable
        opinion determines that the announcement would not be detrimental to its
        interests in any future offerings by it.




The State
    is otherwise required to give its approval within eight business days upon
    written request to that effect, if the financial conditions of the issuance
    reasonably cannot be regarded by the State as adversely affecting the interests
    of shareholders in general. In issuing
    shares, we have agreed to consider the long-term financial interests of the
    State as the holder of a substantial interest in us. Subsequent
    events REPURCHASE
    OF SHARES JANUARY 2005 TRANCHEOn 29 September
    2004 we announced that the Dutch State sold a total of 77,7 million ordinary
    shares in our outstanding share capital, representing approximately 16% in
    our company. By the sale and transfer the State has reduced its ownership
    in our capital from 34.8% to 18.6%. We repurchased 20,7 million of the total
    amount of shares sold by the State. Transfer of the repurchased ordinary shares
    has taken place in two tranches. The first tranche of 7,6 million shares was
    transferred to us on 4 October 2004. The transfer of the remaining 13,1 million
    shares was completed on 5 January 2005 and was repurchased against €259
    million. MICHELIN
    WAREHOUSE ACCIDENTOn 31 January
    2005, the Michelin warehouse located in Laurens, South Carolina (USA), operated
    by TNT Logistics North America Inc., was badly damaged after a tornado hit
    the building triggering an electrical fire. Approximately 25% (275 000 sq.
    feet) of the building was destroyed. In addition, a large number of tyres
    was destroyed.


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During
    the repair of the existing building, we will incur costs of securing and operating
    from alternative premises. The precise amount of damages is still being determined.
    We expect that most of the damages is covered by insurance. TNT Logistics
    North America has a $0,1 million self retention. On top of this our own company
    insurance captive has a limited exposure of €5 million. We are insured
    externally for amounts above €5 million.


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|Chapter 13 | Regulatory
    environment | 
|---------- | -------------------------- | 

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|13                           | 
|---------------------------- | 
|                             | 
|Regulatory
      environment
|                            



Sydney
  aquarium

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| |  | 
| |  | 

---

Mail
    regulation and concession INTERNATIONAL
    POSTAL REGULATIONUniversal
    Postal UnionThe
    Universal Postal Union is a specialised agency within the United Nations framework.
    It is responsible for the regulation of cross border postal services. Practically
    all nations are members of the UPU. The UPUs agreement for cross border
    postal services are laid down in the Universal Postal Convention. In the Universal
    Postal Convention, the UPU established an international system for mutual
    payments for the delivery of cross border letter mail, known as the terminal
    dues system. The purpose is to compensate the destination countrys public
    postal operator for delivering international letter post. A different compensation
    scheme with similar purposes exists for parcel mail. The
    UPUs current terminal dues system is effective until 31 December 2005.
    It contains different remuneration levels for industrialised countries and
    developing countries, recognising the different distribution cost levels that
    exist between those two categories of countries. However, the system does
    not adequately reflect the costs of delivery, as it is partly based on a fixed
    rate per kilogramme, while these costs are essentially a function of the number
    of postal items per kilogramme. From
    1 January 2006 a new terminal dues system will apply. Under the new system
    industrialised countries will pay each other country-specific rates linked
    to domestic post charges. Developing countries will continue to pay each other
    and industrialised countries according to a per item and per kilogramme formula
    based on world average costs. Developing countries are expected to move towards
    the industrialised system before 2014, at which time all exchanges will be
    based on country-specific compensation. Most
    European postal operators, including us, view the UPU terminal dues system
    as inadequate for these purposes. As a consequence, a significant majority,
    of European postal operators are party to a separate, multi literal REIMS
    II agreement where terminal dues are related to a percentage of domestic
    tariffs. The
    European Commission has exempted this agreement for a period up to 31 December
    2006. During this period terminal dues may gradually be increased up to 78.5%
    of domestic first-class rates for single items. The Commission has insisted
    upon access to the REIMS II agreement for third party operators on the same
    terms as REIMS II parties apply among themselves. We
    did not enter into the REIMS II agreement because we feel that it does not
    contain a strong incentive/penalty system that would guarantee improvement
    of the quality of service. Instead, we have concluded commercially oriented
    bilateral agreements with most of the European postal operators. Negotiations
    are ongoing with the remaining European operators to strike a proper balance
    between costs and quality of service. European
    Union postal regulationThe
    current European Union Postal Directive 2002/ 39 EC sets out a harmonised
    set of minimum obligations for the universal postal service (mandatory postal
    services) regarding service levels, rates, and cost and revenue accounting
    principles, as well




as
    quality of service standards, with which all member states, including the
    Netherlands, must comply. The
    Postal Directive also defines the maximum scope of postal services the European
    Union member states are permitted to reserve for national public postal operators
    (reserved postal services). Member states are permitted to reserve postal
    services for domestic and cross border mail. This reservation is limited to
    a weight of 100 grammes per item of correspondence at a price of less than
    three times the public rate for correspondence weighing no more than 20 grammes.
    Outgoing cross-border correspondence and direct mail may not be reserved. The
    Postal Directive delays full liberalisation of the EU postal market until
    at least 2009, depending on the results of a study on the effects of liberalisation
    that is to be finalised by 2006, and contains only the following steps: From
    1 January 2006 the reserved postal service will be limited to correspondence
    of up to 50 grammes at a price of less than two-and-a-half times the basic
    rate. POSTAL
    REGULATION IN THE NETHERLANDSBecause
    of the importance of postal services to society, regulation is a significant
    factor in our mail business. The mandatory undertaking of certain postal activities
    in the Netherlands, some of which are exclusive to us, has been assigned to
    us in the Dutch Postal Act. In
    the Netherlands the key legislation regulating our mail activities is the
    Postal Act. The Postal Act requires TPG to perform the mandatory postal services
    in the Netherlands, and it confers to us exclusive rights for some of these
    services, the reserved postal services. In
    connection with the Postal Act there is a parliamentary Postal Decree, which
    specifies the services that are part of the mandatory postal services and
    defines the scope of the reserved postal services. The combination of these
    mandates and exclusive rights are commonly called the Postal Concession.
    The Postal Concession is performed by our subsidiary Royal TPG Post B.V. Furthermore,
    there is a General Postal Regulations Decree, which specifies our obligations
    regarding the performance of mandatory postal services and the transparency
    of the financial accounting of these services. The
    responsibility for supervising our performance of the mandatory postal services
    lies with an independent Supervisory Authority for Post and Telecommunications
    established by the government, which is commonly called by its Dutch acronym
    OPTA. The Ministry of Economic Affairs is responsible for postal regulation
    and policy. On 16 December
2004 the Minister of Economic Affairs discussed his vision for the Dutch postal
market with parliament. During this meeting parliament gave its support to the
vision, which contains the following key elements:




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
      Full liberalisation of the Dutch postal market in 2007(conditional
        on full market liberalisation in the UK and Germany).
        There is an emergency brake procedure that allows for the
        date of the introduction of liberalisation to be shifted to a later stage
        should delayed liberalisation of the German and UK postal markets call
        for this.
      The
        price of a stamp for consumers will remain at 39 euro cents in 2005 and
        2006. We may introduce a one-off price increase in 2006 for services to
        business customers. This price increase will be subject to the price control
        system discussed below and will be kept below the rate of wage inflation
        for 2004 and 2005.
      From
        2007, rates for services provided under the universal service obligation
        will be regulated using a price cap system linked to inflation.
      Non-discrimination
        is applicable to our mail services. We must treat competitors and customers
        to be treated equally in terms of rates and conditions
      There
        is a clearer distinction between general and sector-specific competition
        monitoring. The Dutch regulator OPTA is charged with monitoring universal
        service and non-discrimination requirements.
      A
        reduction, yet to be fully defined, in the scope of the mandatory postal
        services.
      From
        2007, the Minister of Economic Affairs will assess whether our obligation
        to deliver bulk mail letters up to 50 grammes will remain mandatory for
        an undefined transitional period, without any rights for us to offset
        this obligation.The
          next step will be the conversion and further detailing of the Postal
          Vision into a proposal to amend the postal laws. The Postal Vision is
          now officially adopted governmental policy. We recognise
    that the postal vision provides clarity on the most important aspects of postal
    regulation and gives a long-term framework for the development of the postal
    market in the Netherlands. In particular, we are pleased that the policy regarding
    liberalisation is conditional on the future de facto liberalisation in the
    UK and Germany, where liberalisation is also scheduled to take place in 2007. THE
    POSTAL CONCESSIONMandatory
    postal servicesThe
    domestic mandatory postal services mainly consist of the conveyance against
    payment of standard single rates of the following postal items: 
      items
        of correspondence (including reply items) and printed matter with a maximum
        weight of two kilogrammes,
      postal
        parcels with a maximum individual weight of 10 kilogrammes, and
      registered,
        registered insured and registered value declareditems. In
    addition, bulk mail of items of correspondence up to an individual weight
    of 100 grammes, which are conveyed against separately agreed rates, are part
    of the mandatory postal services. For
    international inbound and outbound mail, based on the Postal Act and in accordance
    with the rules of the UPU, mandatory postal services comprise conveyance against
    payment of both postal items at standard single rates and of bulk mail items
    at




separately
    agreed rates with a maximum individual weight of two kilogrammes and of postal
    parcels with a maximum individual weight of 20 kilogrammes. In addition, mandatory
    postal services cover the postal services regulated by the UPU. We
    are not required to provide the delivery of bulk printed matter such as advertising,
    magazines and newspapers, the delivery of bulk letters of correspondence with
    an individual weight above 100 grammes and unaddressed mail items. REGULATORY
    CONDITIONS FOR THE PROVISION OF MANDATORY POSTAL SERVICESRegarding
    mandatory postal services the General Postal Regulations Decree imposes various
    regulatory conditions on us with respect to service provision, tariffs, cost
    and revenue accounting, financial administration and reporting. Other than
    the mandatory postal services, none of our postal services is subject to governmental
    control. With
    respect to service levels, the General Postal Regulations Decree requires
    us to provide a level of service that complies with modern standards, to provide
    nation-wide services and to perform a delivery round every day, except for
    Sundays and public holidays. We are required to deliver not less than 95%
    of all domestic items of correspondence the day after the day of posting,
    not including Sundays and public holidays. We are required to maintain a network
    of service points (post offices, agents) for the access of the general public
    to the services. With respect to rates, we are required to set rates that
    are transparent, non-discriminatory and uniform. However, we may grant volume
    discounts for items of correspondence and negotiate specific prices and conditions
    with high-volume users. We are required to submit proposed rate changes to
    OPTA, which has to evaluate whether the proposed changes are in accordance
    with the price cap system. The
    price cap system measures tariff developments in two different baskets of
    services, a total basket and a small users basket.
    The total basket comprises domestic mandatory postal services provided to
    all customers. The small users basket comprises a selection of the total basket
    of domestic mandatory postal services that is representative for consumers
    and small business users. The
    price cap system uses a weighting factor for each service in these baskets.
    The levels of the indices for both baskets are not to exceed the official
    national index of wages for employees in the market sector.




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The
    development of the indices from the base year of 1991 is illustrated below.










The
    price cap system was evaluated in 2002. On 18 November 2002, the Ministry
    of Economic Affairs decided that tariffs controlled by the current price cap
    system should be frozen until the end of 2006. The Ministry of Economic Affairs
    indicated that in the event postal services became subject to value added
    tax between 1 January 2003 and 1 January 2007, a change of the frozen tariffs
    corresponding with the resulting tax burden would be allowed. On 19 June 2003,
    when the tariff freeze was discussed in parliament, the duration of the freeze
    was limited to 1 January 2005, awaiting the vision of the Minister on the
    future regulation of the postal sector. The Minister proposed in his Postal
    Vision sent to Parliament on 1 April 2004 that the temporary tariff freeze
    would be extended until year-end 2006. On
    17 November 2003 we lodged an appeal against the administrative decision to
    freeze the tariffs. Following the grant of the formal appeal, the temporary
    tariff freeze decision was declared void in June 2004 and we remained able
    to amend the individual rates for mandatory postal services, subject to the
    provisions of the tariff control system. However,
    in view of the wider importance of the adoption of an integral and balanced
    vision for the postal market as submitted to Parliament, we announced our
    intention not to increase the price of a stamp for consumers from the present
    level of 39 euro cents for the years 2004, 2005 and 2006. We are considering
    an amendment in 2006 to the prices for mandatory postal services to business
    customers that are covered by the price control system, but this will be kept
    below the rate of wage inflation for 2004 and 2005. Reserved
    Postal ServicesUnder
    the Postal Act and the Postal Decree, the reserved postal services include
    the following exclusive rights: 
      The
        conveyance of domestic and inbound international items of correspondence
        with a maximum weight of 100 grammes at a rate of less than three times
        the standard single rate for the lowest weight class of 20 grammes (currently,
        three times €0.39 = €1.17).
      The
        exclusive right to place letter boxes intended for the public alongside
        or on public roads.





      The
        exclusive right to issue postal stamps and imprinted stamps bearing the
        effigy of the monarch and/or the word Nederland. These
    exclusive rights do not extend to courier services or services where the letters
    are delivered at the rate of more than three times the basic rate of €0.39.
    The exclusive rights also do not extend to the conveyance of parcels, letters
    weighing in excess of 100 grammes and printed materials such as advertising,
    newspapers and magazines. In addition, the exclusive rights do not extend
    to the conveyance of letters by a business to its own customers. Accounting
    and other financial obligationsOur obligations
    on reporting include the establishment of an annual report on our performance
    of the mandatory postal services, providing, among other things, an overview
    of the financial results related to the mandatory postal services. This report
    must be reviewed by an independent auditor appointed by OPTA. Our
    financial accounting obligations require us to maintain separate financial
    accounts within our internal financial administration for mandatory postal
    services. This separate accounting must be broken down into reserved postal
    services and other mandatory postal services and must be separated from the
    accounting of our other activities. Every year, we must submit to OPTA a declaration
    of an independent auditor, appointed by OPTA that our financial accounting
    system complies with these obligations. Underlying
    this accounting system and the financial reports to OPTA is a revised system
    for allocating costs and revenues to the different types of services. This
    revised system must comply with the accounting rules laid down in the Postal
    Directive and submitted to OPTA for approval. OPTA approved this system, but
    stipulated in its approval decision certain additional obligations, which,
    in our opinion, exceeded the competence of OPTA. After a formal complaint
    procedure and an appeal to the competent court, the District Court in Rotterdam
    on 20 March 2004 set aside some of the more important additional obligations
    imposed by OPTA and ordered OPTA to revise their additional obligations accordingly.




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Both
    OPTA and we appealed to the relevant court of appeal (College van Beroep voor
    het Bedrijfsleven). In its decision of 18 July 2003 the court of appeal confirmed
    the decision of the District Court of 20 March 2002, annulled the remaining
    disputed conditions and ordered OPTA to revise the additional obligations
    accordingly. OPTA
    revised its additional obligations on 16 September 2003, which we fulfilled
    on 28 May 2004. On 14 July 2004 OPTA formally approved the allocation system
    for the period ending 31 December 2006. The full text of the description of
    the allocation system was published by OPTA on their website, www.opta.nl. Value
    added tax on postal servicesAt present,
    we are not allowed to charge value added tax on postal items forming part
    of the mandatory postal services. The flip side of this is that for mandatory
    postal services we cannot deduct the VAT amounts paid on our purchases of
    services and goods. We are required to charge VAT on items carried in competition
    with other operators. Competitors are required to charge VAT on those items
    as well. Therefore, there is a level playing field for competitors and our
    company on these services. Public
    procurementPublic
    procurement is the purchase of goods, services and public works by governments
    and public utilities and is in principle subject to EU and international rules.
    Under these rules public sector procurement must follow transparent, open
    procedures ensuring fair conditions of competition for suppliers. At this
    moment we have no obligation to tender resulting from any public procurement
    regulation. On
    2 February 2004, the European Union adopted a package of amendments to simplify
    and modernise its public procurement directives. Those directives impose EU-wide
    competitive tendering for public contracts above a certain value and transparency
    and equal treatment for all tenders to ensure that the contract is awarded
    to the tender offering best value for money. The new directive co-ordinating
    the procurement procedures of entities operating in the water, energy, transport
    and postal services sectors also applies to certain postal and non-postal
    activities that are not exposed to competition. However, the directive leaves
    to the Member States the possibility of postponing implementation until 1
    January 2009. The Netherlands intends to exercise this option. We will not
    be subject to the directive in the Netherlands until the directive is implemented. COMPETITION
    LAWEuropean
    competition lawOur
    businesses are subject to competition rules in the jurisdictions in which
    they operate. The Court of Justice of the European Community has explicitly
    confirmed that the rules of EU competition law also apply to the national
    mandatory postal services of the EU member states. The European Community
    published a notice in 1998 describing the application of competition rules
    to the postal sector and on the assessment of certain state measures. In particular,
    we are subject to the competition rules contained in Articles 81 and 82 of
    the EC Treaty and to preventative control of mergers and acquisitions as regulated
    in the EC Merger Control Regulation. Article 81 prohibits collusion between
    competitors that may affect trade




between member states and which has the object or effect of restricting competition
    within the EC. Article 82 prohibits any abuse of a dominant position within
    a substantial part of the EC that may affect trade between Member States.
    Since 1 May 2004, national competition authorities and national courts have
    been empowered to apply articles 81 and 82 in full, in close operation with
    the European Commission in order to ensure the effective and uniform enforcement
    of these competition rules. We
    are also subject to the competition rules in the Agreement on the European
    Economic Area, which corresponds to the rules of EU competition law. The EEA
    rules for competition are enforced by the European Commission and the EFTA
    Surveillance Authority. See chapter 10  Risk factors. Dutch
    competition lawThe
    services we provide in the Netherlands, including the mandatory postal services,
    fall within the scope of the Dutch Competition Act. The
    Dutch Competition Act stipulates a similar structure and set of rules as the
    rules of EU competition law on the prohibition of cartels, the prohibition
    of abuse of a dominant position and the preventive control on mergers and
    acquisitions. Compliance with the Dutch Competition Act is monitored by the
    Netherlands Competition Authority, a separate agency of the Ministry of Economic
    Affairs.




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|Additional
      information | 
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Festive
  atmosphere, Puerto Rico

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Major
    shareholders and related party transactions GENERALTo
    our knowledge, no person, except for the State of the Netherlands, owns 5%
    or more our shares and there are no arrangements the operation of which might
    result in a change in our control. The table
    below sets forth, as of 22 February 2005, the persons known by us to own more
    than 5% of the indicated class of shares: 5%
        owners of TPG stock per:20-feb-05Title
        of class
      Identity
        ofperson
        or group
      Numberowned
      %Ordinary
        shares
      The
        State of the netherlands
      89,373,810
      18.6
      %Special
        share
      The
        State of the netherlands
      1
      100
      % In addition,
    as of 22 February 2005, we held 25,679,942 shares of our ordinary shares.We may
    not vote shares we hold in our own capital. For information
    as to the portion of each class of shares held in the United States and the
    number of record holders in the United States, see page 184 - Stock
    exchange and share price information. THE
    OWNERSHIP INTERESTS OF THE STATE OF THE NETHERLANDSOverviewAn effectively
    operating postal system is of great importance to Dutch society for various
    reasons, including economic, strategic and national security reasons, and
    is therefore of general interest to the State of the Netherlands. For certain
    important postal services we are the exclusive holder of the postal concession
    granted by the State (see chapter 13 - Regulatory Environment).
    As a result, we are crucial to the maintenance of an effectively operating
    postal system in the Netherlands. In addition
    to being a significant holder of ordinary shares, the State has influence
    on us and our affairs through corporate governance mechanisms, its ownership
    of the special share and a longer-term equity interest.See also
    chapter 10  Risk factors. Pending
    changes to relation with the StateIn
    view of the States reconsideration of its relationship with us, the
    State and we agreed in March 2001 to amendments to the agreements that govern
    that relationship. Following these amendments, which were implemented in the
    middle of 2002, the Minister of Transport, Public Works and Water Management
    no longer has the right to appoint three members of the Supervisory Board,
    and the State no longer has an option to acquire preference shares A from
    us.




The Commission
    of the European Union sent the State a formal request to give up the special
    share the State holds in us (described below). The State has reacted that
    it has no intention of giving up its special share in our company. The State
    is, however, considering the possibility of transferring the postal concession
    from TPG N.V. to Royal TPG Post B.V., our subsidiary for postal services and
    limiting the applicability of the rights attached to the special share to
    apply only to that subsidiary. On 17 December 2003 the Commission has announced
    its intention to bring the matter before the European Court of Justice to
    compel the State to give up the special rights conferred by the special share,
    although it has not yet done so. Special
    ShareThe State
    holds a special share that gives it the right to approve decisions that lead
    to fundamental changes in our group structure. The State has committed itself
    to exercising the rights attached to the special share only to safeguard the
    general interest in having an efficiently operating postal system in the Netherlands
    and also to protect its financial interest as a shareholder. The State may
    not exercise its special share to protect us from unwanted shareholder influence.
    The State may not transfer or encumber the special share without the approval
    of our Board of Management and Supervisory Board. Ownership of the special
    share gives the State the right to approve certain actions, see for these
    actions note 26 of the consolidated financial statements on page 143. MEMORANDUM
    AND ARTICLES OF ASSOCIATIONFollowing
    is a brief description of certain provisions of our articles of association
    dated 1 September 2004, pertaining to the rights and restrictions applicable
    to our ordinary shares. This description does not purport to be complete and
    is qualified in its entirety by reference to our articles of association,
    book 2 of the Dutch Civil Code and other Dutch laws. Copies of our articles
    of association are available on our website and upon request from us. The
    articles of association are filed with the Securities and Exchange Commission
    in the United States. GeneralPursuant
    to the Enabling Act as currently in force, we are subject to the Dutch full
    large company regime. Under these rules, we are required to adopt
    a two-tier system of corporate governance, comprising a board of management
    and a supervisory board. Under these rules, subject to statutory exceptions,
    the supervisory board, rather than the general meeting of shareholders, 
      has
        the right to make a recommendation for the nomination of members of the
        supervisory board for appointment by the general meeting of shareholders,
      appoints
        and dismisses members of the board of management,
      adopts
        the annual accounts, and
      must
        approve certain resolutions by the board of management.We
        have our corporate seat in Amsterdam, the Netherlands. We are registered
        in the Commercial Register at Amsterdam under number 27168968. Corporate
    purposeArticle
    4 of our articles of association provides that our business activity shall
    be, among other things:




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
      to
        conduct holding activities in enterprises that, among other things, operate
        in the field of the transportation, distribution and delivery of letters,
        messages, parcels and goods, as well as storing, converting and transmitting
        of information, the management and disposal of information, the providing
        of logistics services and the providing of money transactions,
      to
        permit our subsidiaries to carry out the concessions or licenses granted
        by the government for the activities described above, and
      to
        conduct other holding and financing activities. Share
        capitalUnder
        our articles of association, our authorised share capital amounts to €1,152
        million nominal value. Our authorised share capital consists of:
      1,200,000,000
        ordinary shares,
      1
        special share, and
      1,199,999,999
        preference shares B.Each
        of the above shares has a par value of €0.48. As of
  the date of this annual report 480,259,522 ordinary shares were issued, including
  25,679,942 shares held by us, and one special share and no preference shares
  B issued. The State
    of the Netherlands is the holder of the special share. See for further information
    on the special share and the preference shares B page 143. Our ordinary
  shares are issued in bearer or registered form, at the option of the holder.
  Ordinary shares in bearer form may be converted into registered form, and vice
  versa, at any time without charge. The
    foundation for the protection of TPG and preference shares BThe
    Foundation for the Protection of TPG was formed to care for our interests,
    the enterprises connected with us and all interested parties, such as shareholders
    and employees, by, among other things, preventing as much as possible influences
    which would threaten our continuity, independence and identity contrary to
    such interests. The Foundation is an independent legal entity and is not owned
    or controlled by any other legal person. Our articles
    of association provide for protective preference shares B that can be issued
    to the Foundation for the Protection of TPG. The preference shares B have
    a nominal put value of €0.48 and have the same voting rights as our ordinary
    shares. There are currently no preference shares B issued, although the Foundation
    and we have entered into agreements for the placement to or acquisition by
    the Foundation of preference shares B under certain circumstances. These agreements
    have been entered into to prevent or delay or complicate attempts at an unsolicited
    take-over, including transactions in which shareholders might otherwise receive
    a premium for their shares over then current market prices. The preference
    shares B may only be issued to serve these interests. Under
    these agreements we have a put option to place a number of our preference
    shares B, not exceeding our total issued share capital before such issue (or,
    subject to prior approval by the general meeting of shareholders, such larger
    number as




the Foundation
    and we may agree) with the Foundation for the Protection of TPG, subject to
    the Foundations ability to pay the purchase price. The Foundation has
    recently renewed its credit facility agreements to be able to pay the purchase
    price. In addition, the Foundation has a call option to acquire a number of
    preference shares B not exceeding the total issued amount of ordinary shares
    and the special share, minus one and minus any shares already issued to the
    Foundation. The exercise price with respect to each of the options is the nominal value of €0.48 per preference share B, although upon exercise only €0.12 per preference share B is required to be paid. The additional €0.36 per preference share B would not be required to be paid by the Foundation until we made a call for payment by resolution of our Board of Management, which resolution would be subject to the approval of the Supervisory Board. Beginning two years after the date of issuance of any preference shares B to the Foundation, the Foundation would have the right to demand that we propose to our general meeting of shareholders that those preference shares B be cancelled and the paid up amount returned to the Foundation. This would occur upon approval of the general meeting of shareholders. The Foundation could make this demand earlier if it had received a demand for the repayment of the funds under the credit arrangement it has arranged in order to make payments on the preference shares B. The independent members of the board of the Foundation are J. den Hoed RA (chairman), S.C. Kortmann and R. Pieterse. There is one vacancy. With the members of the board of the Foundation, we share the view that the foundation is independent in the sense referred to in Appendix X of the Listing Rules of Euronext Amsterdam. The preference
  shares B are our only anti-takeover measure as described in Annex X of the Euronext
  Listing Rules. In the event of a takeover attempt which by our Board of Management
  and the Supervisory Board is not considered to be in the interest of the company,
  the business connected with it and all appropriate interests associated with
  the company, we may initiate such actions as we may deem appropriate within
  the boundaries of Dutch law to preserve the long term interests of the company,
  the business connected with it and all appropriate interests associated with the company. Issuance
    of ordinary sharesWe
    may issue ordinary shares and grant rights to subscribe for shares, including
    options and warrants, pursuant to a resolution of the Board of Management,
    subject to the approval of the Supervisory Board and the State as holder of
    the special share. Under our articles of association, up to 719,740,478 ordinary
    shares remained available for issuance. On 7 April 2004, the annual general
    meeting of shareholders granted the Board of Management the authority to issue
    these ordinary shares. This authority will terminate on 7 October 2005. The
    general meeting of shareholders can, in accordance with our articles of association,
    extend this authority for a period not exceeding five years or extend this
    authority by amending our articles of association to that effect. If no such
    extension is given, the issuance of ordinary shares or rights to subscribe
    for shares




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requires
    a resolution of the general meeting of shareholders, upon a proposal of the
    Board of Management approved by the Supervisory Board. The resolution of the
    general meeting also requires the approval of the State as holder of the special
    share. RIGHTS
    ATTACHED TO EACH CLASS OF SHARESVoting
    rights and general meetings of shareholdersWe
    are required to hold a general meeting of shareholders within five months
    after the end of each financial year, among other things, to adopt the annual
    accounts. Other general meetings of shareholders are held as often as the
    Board of Management or the Supervisory Board deem necessary, subject to applicable
    provisions of Dutch law. One or more shareholders representing at least 10.0%
    of our issued share capital may, upon their request, be authorised by the
    president of the district court to call a general meeting of shareholders.
    The president will only give this authorisation if these shareholders have
    requested our Board of Management and our Supervisory Board in writing to
    call a general meeting, stating their proposed agenda in detail, and our Board
    of Management and our Supervisory Board have not taken steps to ensure that
    a general meeting can be held within six months after their request. General
    meetings are convened by 15 days prior notice published in a nationally
    distributed daily newspaper. There are no quorum requirements applicable to
    general meetings. General meetings of shareholders may only be held in Amsterdam,
    The Hague, Hoofddorp or in the municipality of Haarlemmermeer (Schiphol). One or more shareholders holding shares representing at least 1% of our issued capital or representing according to the Official Pricelist of Euronext N.V. a value of €50 million have the right to request the Board of Management or the Supervisory Board to place items on the agenda of the general meeting of shareholders. These requests have to be honoured by the Board of Management or the Supervisory Board provided that important company interests do not dictate otherwise. Each shareholder has the right to attend general meetings of shareholders, either in person or by written or electronic proxy, to address the meeting and to exercise voting rights, subject to the provisions of our articles of association. Holders of shares in registered form must notify us in writing of their intention to attend, in each case by the date specified in the notice of the meeting, which date may not in any event be earlier than seven days prior
  to the date of the meeting. Each of the shares in our capital carries the right
  to cast one vote. Unless otherwise required by law or our articles of association,
  resolutions are passed by a simple majority of votes cast. A resolution
    of the general meeting of shareholders to amend our articles of association
    or to merge or to demerge or to dissolve may only be adopted upon a proposal
    of the Board of Management that has been approved by the Supervisory Board.
    The holder of the special share must approve the resolutions of the general
    meeting as described on page 170 under Ownership interests of the State
    of the Netherlands. The general
  meeting of shareholders has to adopt the remuneration policy for the Board of
  Management. The remuneration itself is determined by the Supervisory Board.




Dividend
    rightsOur
    articles of association provide that within five months after the end of our
    financial year, the Board of Management must prepare financial statements
    accompanied by an annual report, which must then be adopted by the general
    meeting of shareholders. The general meeting of shareholders can extend this
    period by a maximum of six months on account of special circumstances. We pay
    dividends on profits or by exception out of the distributable part of our
    shareholders equity as shown in our financial statements. We may not
    pay dividends if the payment would reduce shareholders equity below
    the sum of the paid-up capital and any reserves required by Dutch law or our
    articles of association. Subject to certain exceptions, if a loss is sustained
    in any year, we may not distribute dividends for that year and we may not
    pay dividends in subsequent years until the loss has been compensated for
    out of subsequent years profits. We first
    have to pay dividends on the special share equal to 7% of its par value each
    year. If preference shares B have been issued and there are remaining profits available for dividends, we then have to pay dividends on the paid-up portion
    of the par value of such shares, at a rate of one point above the average
    12-monthly EURIBOR (EURO Interbank Offered Rate)weighted to reflect
    the number of days for which the payment is madeover the financial year
    to which the distribution relates. After
    payment of dividends on the special share and the preference shares B, the
    Board of Management may then determine, with the approval of the Supervisory
    Board, to appropriate part of the remaining profit to reserves. The profit
    remaining after appropriation to reserves is at the disposal of the annual
    general meeting of shareholders. The Board
  of Management may pass a resolution that has been approved by the Supervisory
  board and the holder of the special share that any dividend on ordinary shares
  be paid, at the holders option, wholly or partly in our ordinary shares
  rather than in cash. The State, in its capacity as holder of the special share,
  has agreed with us that it will give any such approval within a period of two
  business days after a written request from us. The State will give this approval
  without prejudice to the option, if such option is made available to holders
  of ordinary shares, of the State in its capacity as holder of ordinary shares
  to choose between
  a dividend paid in cash or in ordinary shares. Pursuant
  and subject to the Dutch civil code, the Board of Management may, with the prior
  approval of the Supervisory Board and subject to Dutch statutory provisions,
  distribute one or more interim dividends. Shares
  we hold in our own capital shall not be the computation of the profit distribution,
  unless the Board of Management resolves otherwise, which resolution is subject
  to the approval of the Supervisory Board. Our policy
    on additions to reserves and on dividends (the level and purpose of the addition
    to reserves, the amount of the dividend and the type of dividend) at the time
    of determination and in the event of any change and the resolution to determine




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and
    distribute dividends shall be dealt with to pay dividend and explained as
    a separate agenda item at the annual general shareholders meeting. The
    policy on additions to reserves and on dividends can be viewed at our website. Liquidation
    rightsIn
    the event of our dissolution and liquidation, the assets remaining after payment
    of all debts and liquidation expenses are to be distributed in the following
    order of preference: first, to the holders of the special share and all outstanding
    preference shares B, plus accumulated dividends for preceding years which
    have not yet been paid, the nominal value of the shares; and second, to holders
    of the ordinary shares pro rata to their holdings. Acquisition by us of our own sharesWe
    may acquire our own shares, subject to the requirements of Dutch law and our
    articles of association, if: 
      our
        shareholders equity less the payment required to make the acquisition
        does not fall below the sum of paid-up capital and any reserves required
        by Dutch law or the articles of association, and
      after
        the share acquisition, we would not hold shares with an aggregate par
        value exceeding one-tenth of our issued share capital. Shares
    held by us in our own capital may not be voted.An
    acquisition by us of our shares may be effected by the Board of Management,
    subject to the approval of the Supervisory Board and, if the acquisition amounts
    to more than 1% of the issued ordinary shares, the approval of the holder
    of the special share. We may only acquire shares in our own capital if the
    annual general meeting of shareholders has granted the Board of Management
    the authorisation to effect such acquisitions. Such an authorisation may apply
    for a maximum period of 18 months and must specify the number of shares that
    may be acquired, the manner in which shares may be acquired and the price
    limits within which shares may be acquired. The current authorisation expires
    on 7 October 2005. Under this authorisation, the maximum number of shares
    that can be acquired cannot exceed the maximum amount authorised by law (currently
    10%) of the issued ordinary shares at the time of the acquisition, for a price
    per ordinary share not exceeding the average of the closing prices as published
    in the Official Price List of Euronext Amsterdam N.V. for the five trading
    days prior to the day of acquisition,
  plus 10% of such average. This authorisation is not required for the acquisition
  by us of our shares for the purpose of transferring those shares to our employees
  pursuant to any arrangements applicable to such employees. Redemption
    provisionNone
    of our ordinary shares is subject to any redemption provisions. Sinking
    fund provisionNone
    of our ordinary shares is subject to any sinking fund provisions under our
    articles of association or as a matter of Dutch law. Liability
    to further calls or assessmentsAll
    of our outstanding shares are fully paid and non-assessable.




Discriminating
    provisionsThere
    are no discriminating provisions against any of our shareholders as a result
    of owning a number of substantial shares. Pre-emptive
    rightsExcept
    for issuances of ordinary shares for non-cash consideration and issuances
    to our employees, holders of ordinary shares have pro rata pre-emptive rights
    to subscribe for new issuances of ordinary shares in proportion to their shareholdings.
    These rights may be restricted or excluded by a resolution of the Board of
    Management, subject to the approval of the Supervisory Board and the holder
    of the special share. The State, in its capacity as holder of ordinary shares
    and the special share, has agreed with us that it will vote in favour of any
    proposal submitted annually to the annual general meeting of shareholders
    by the Board of Management to extend the authority of the Board of Management
    to restrict or exclude the pre-emptive rights of holders of ordinary shares.
    Holders of ADSs may not be able to exercise pre-emptive rights granted to
    holders of ordinary shares. Reduction
    of capitalUpon
    a proposal of the Board of Management, which proposal must be approved by
    the Supervisory Board, the general meeting of shareholders may reduce outstanding
    share capital by cancelling shares or by reducing the nominal value of shares
    subject to the provisions of the articles of association. The Board
    of Management has submitted a proposal to our annual general meeting expected
    to take place on 7 April 2005 to cancel the 20.7 million shares purchased
    from the State of the Netherlands as announced on 28 September 2004. See further
    chapter 12. Release
    from liabilities (Kwijting)At
    each annual general meeting of shareholders, our shareholders are, after the
    approval of the annual accounts, requested to adopt a separate resolution
    releasing the members of the Board of Management and the members of the Supervisory
    Board from actual or potential liabilities in connection with the execution
    of their duties during the financial year. The release from liability obtained
    by the Board of Management and the Supervisory Board is limited to the facts
    reflected in the financial statements or otherwise disclosed to the general
    meeting of shareholders prior to the approval of the financial statements.
    However, the scope of a release from liability is subject to limitations by
    virtue of the law. AMENDMENTS
    OF THE ARTICLES OF ASSOCIATION, LEGAL MERGER AND DISSOLUTIONA
    resolution of the general meeting of shareholders to amend the articles of
    association (including with respect to changing the rights of holders of our
    ordinary shares), to merge or demerge within the meaning of Part 7, Book 2
    of the Dutch civil code or to dissolve us may only be adopted on a motion
    of our Board of Management that is approved by our Supervisory Board. Proposals
    to amend the provisions of the articles of association described on page 170
    - Ownership interests of the State of the Netherlands need the
    prior approval of the holder of the special share.


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Large
  company regime Pursuant
  to the Enabling Act as currently in force, we are subject to the full large
  company regime, as amended by the recent amendment of 1 October 2004. In March
  2001, the State expressed the intention to introduce legislation to amend the
  Enabling Act, with the effect that the large company regime as provided for
  in section 6 (afdeling 6) part 4 of book 2 of the Dutch civil code would apply
  to us as it applies to all other large companies. This means that, under certain
  circumstances, the rules for large companies may no longer apply to us in full
  or in part. Such legislation has not been introduced yet. Under Dutch
  law, the powers vested in a supervisory board vary, according to whether a company
  is subject to (i) the full large company regime, (ii) the partially
  exempt large company regime, or (iii) the fully exempt large
  company regime. If a company is subject to the full large company
  regime, the company must have a two-tier management structure, including a supervisory
  board with broadened powers. The supervisory board appoints its own members.
  The supervisory board has the power to appoint and remove members of the board
  of management. The decision of the supervisory board to remove a member of the
  board of management can only be taken after the general meeting of shareholders
  has been consulted on the intended dismissal. In addition, the supervisory board
  has the power to adopt the annual accounts after which the general meeting of
  shareholders may approve them. Certain resolutions of the board of management
  are subject to the approval of the supervisory board. If a company is partially
  exempt from the large company regime, certain of these broadened powers remain
  vested in the supervisory board. However, shareholders have the power to appoint
  and dismiss members of the board of management and adopt the annual accounts.
  If a company is fully exempt from the large company regime, no statutory powers
  are vested in the supervisory board. Proposed
    amendments to our articles of associationOur
    Board of Management will submit a proposal to the annual general meeting of
    shareholders expected to be held on 7 April 2005, to amend our articles of
    association in order to bring them further in line with the act on amendment
    of Book 2 of the Dutch Civil Code, in respect of the amendment of the so-called
    large company rules (Wijziging van Boek 2 van het Burgerlijk
    Wetboek in verband met de aanpassing van de structuurregeling) that
    entered into force as per 1 October 2004. Furthermore it is proposed to change
    the statutory name TPG N.V. into TNT N.V. Finally, some technical amendments
    are proposed. IN
        RESPECT OF AMENDMENT OF THE LARGE COMPANY RULES
        Approval
          general meeting Pursuant
      to article 25 paragraph 1 as it will be amended, certain resolutions of
      the Board of Management shall be subject to the approval of the general
      meeting. This regards resolutions entailing a significant change in the
      identity or character of TPG or its business, as referred to in Section
      2:107a of the Dutch Civil Code.





      Appointment,
        suspension and dismissal of members of the Supervisory Board Under
    the new provisions of the large company regime, the members of the Supervisory
    Board are appointed by the annual shareholders meeting following nomination
    by the Supervisory Board. Both the annual shareholders meeting and the central
    works council may make recommendations and must be informed about this right
    as well as of the profile of vacancies. Nominations by the Supervisory Board
    must be reasoned against the Supervisory Board profile. The Supervisory Board
    profile which will be made available and must be discussed with the annual
    shareholders meeting and the central works council at the time of determination
    and in the event of any change. The central
    works council has a special right of recommendation for one-third of the total
    number of Supervisory Board members. The only circumstances in which the Supervisory
    Board may decide not to put a person on the nomination as recommended by the
    central works council are if the nominee is considered unsuitable to fulfil
    the function of a Supervisory Board member or if, upon acceptance, the Supervisory
    Board would not be composed properly. The Enterprise Chamber is the competent
    court to decide on disputes between the central works council and the Supervisory
    Board in this respect. The annual
    shareholders meeting may reject a nomination by the Supervisory Board with
    a majority of votes representing one third of the outstanding capital. If
    the quorum is not met, a new meeting should be convened, in which case the
    quorum requirement is not applicable. Under the new law the annual shareholders
    meeting can dismiss the Supervisory Board with a majority of votes representing
    one third of the outstanding share capital. The transitional
    arrangement of the new law obligates the Supervisory Board to grant the special
    right of recommendation to the central works council on every second vacancy
    until one third of the Supervisory Board members has been appointed accordingly. 
      Adoption
        of the financial statements. The difference
    between the adoption and approval of the financial statements no longer exists.
    The financial statements shall be adopted by the general meeting and no longer
    by the Supervisory Board. This shall be included in article 34 paragraph 4
    and article 38 paragraph 2 (b). Restriction
    on non-Dutch shareholders rightsUnder
    our articles of association there are no limitations on the rights on Dutch,
    non-resident or foreign shareholders to hold or exercise voting rights in
    respect of our securities, and we are not aware of any such restrictions under
    Dutch corporate law.


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Change
    in control provisionsNone
    of our shares is subject to any change in control provision. Exchange
    controlsThere
    are no legislative or other legal provisions currently in force in the Netherlands
    or arising under the articles of association restricting remittance to holders
    of our securities not resident in the Netherlands. Cash dividends payable
    in euro on our ordinary shares may be officially transferred from the Netherlands
    and converted into any other convertible currency. Obligations
    of shareholders to disclose holdingsThe
    Act on Disclosure of Holdings in Listed Companies 1996 (Wet Melding Zeggenschap
    in ter beurze genoteerde vennootschappen 1996) applies to any person who,
    directly or indirectly, acquires or disposes of an interest in the voting
    rights and/or the capital of a public limited company incorporated under Dutch
    law with an official listing on a stock exchange within the European Economic
    Area, if as a result of such acquisition or disposal. The percentage ranges
    referred to in the Act are 0-5, 5-10, 10-25, 25-50, 50-66.6 and over 66.6. Failure
  to comply with the Act constitutes an economic offence. In addition, a civil
  court can issue sanctions against any person who fails to notify, or incorrectly
  notifies us and the Authority Financial Markets in accordance with the Act.
  Possible court sanctions include the suspension of voting rights with respect
  to the ordinary shares held by such person. Changes
    in CapitalThe
    conditions imposed by our articles of association for changes in capital are
    not more stringent than required under Dutch law.




Material
    contractsOn
    23 June 1998, we entered into an agreement with the State of the Netherlands.
    The terms of this agreement were modified,subject
    to the approval of the Dutch Parliament, by a letter agreement dated 9 March
    2001, between us and the State of the Netherlands. For a description of certain
    terms of this agreement (and certain proposed changes to this agreement),
    see page 170 The ownership interests of the State of the Netherlands. SIGNIFICANT
    SUBSIDIARIESTPG
    N.V. is the parent company of the group. The following table sets forth, as
    of 22 February 2005, the name and jurisdiction of incorporation of our significant
    subsidiaries. EquityCompany
      Country
      
      InterestRoyal
        TPG Post B.V.
      Netherlands
      
      100
      %TNT
        Express Holdings B.V.
      Netherlands
      
      100
      %TNT
        Logistics Holdings B.V.
      Netherlands
      
      100
      %TNT
        Holdings B.V.
      Netherlands
      
      100
      %TNT
        Holdings Deutschland GmbH
      Germany
      
      100
      % The full
  list containing the information referred to in Article 379 and article 414,
  Part 9, Book 2 of the Dutch civil code is filed at the office of the Chamber
  of Commerce in Amsterdam. PROPERTY,
    PLANTS & EQUIPMENTWe
    use approximately 1,933 buildings.


MailOur mail
    division uses 546 sorting centers and distribution depots. The principal mail
    facilities are as follows:








|                                          |                     
|----------------------------------------- | --------------------
|Location                                  | Owned
      / leased
|                                          |                     
|Amsterdam-Schiphol,
      the Netherlands | Leased              
|Amsterdam,
      the Netherlands          | Owned               
|s
      Hertogenbosch, the Netherlands   | Owned               
|The
      Hague, the Netherlands          | Owned               
|Nieuwegein,
      the Netherlands         | Owned               
|Rotterdam,
      the Netherlands          | Owned               
|Zwolle,
      the Netherlands             | Owned               
|Amsterdam,
      the Netherlands          | Owned               
|Dordrecht,
      the Netherlands          | Owned               
|Zwolle,
      the Netherlands             | Owned               
|Arnhem,
      the Netherlands             | Owned               
|                                         

No material
  portion of our mail properties is subject to any encumbrances.



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ExpressOur express
  division uses 857 depots, road and air hubs. The principal express facilities
  are as follows:

|                              |                    
|----------------------------- | -------------------
|Location                      | Owned
      /leased
|                              |                    
|Liège,
      Belgium          | Leased             
|Liège,
      Belgium          | Owned              
|Wiesbaden,
      Germany      | Owned              
|Arnhem,
      the Netherlands | Owned              
|Brussels,
      Belgium       | Leased             
|                             

No
    material portion of our properties in our express division is subject to any
    encumbrances.

LogisticsOur
    logistics division uses 677 warehouses, representing 7,778,000-square metres,
    that are mainly leased and none of which are considered principal facilities. No material
    portion of our logistics properties is subject to any encumbrances. EMPLOYEESFor
    the number of employees and full time equivalents see note 17 on page 125. Labour
    RelationsEUROPEAN
    REGIONA
    significant number of our employees in Europe are presently represented by
    trade unions. Our labour relations in Europe have been good, and we have not
    experienced any material work stoppages in recent years, except for a strike
    in France in 1999 and a one day strike within a joint venture in Belgium in
    2003. In 2004 there was a 4-day stoppage at Turin TNT Automotive Logistics
    and there was a 22-day stoppage in one plant due to issues related to a customer. Wages and
  general working conditions in the Netherlands and the United Kingdom are the
  subject of centrally negotiated collective bargaining agreements. Within the
  limits established by these agreements, our operating companies negotiate directly
  with unions and other labour organisations representing our employees. Collective
  bargaining agreements relating to remuneration typically have a term of one
  or two years. In addition
    to trade unions, we also consult from time to time with various local, national
    and European works councils. Employees generally elect the members of works
    councils. Some of these works councils primarily have an advisory role, but
    in other cases, e.g. the Netherlands, we may be required to consult with or
    ask approval from one or more of the works councils before proceeding with
    a course of action. Under Dutch law, our central works council may make non-binding
    recommendations for candidates to fill vacancies on our Supervisory Board.
    Apart from that the central works counsel may file objections on certain grounds
    against candidates to fill vacancies on our Supervisory Board. Furthermore,
    we are obliged to apprise the European works council of activities that affect
    our workforce in Europe.




OTHER
    REGIONSExcept
    for our employees in Australia and those of our logistics division in the
    US, our employees outside Europe are generally neither represented by trade
    unions nor employed pursuant to collective labour agreements. Trade unions
    represent less than50%
    of our employees in Australia and fewer than 50% within our US logistics operations.
    Labour relations have been good and we have not, apart from certain labour
    disputes and some small (1/2  1 day) work stoppings in 2004 in Australia,
    experienced any material work stoppages in recent years. LEGAL
    PROCEEDINGSFor
    an overview of the legal proceedings, see chapter 12, page 122. TaxationGENERALThe
    following is a summary of the material Dutch tax consequences of the ownership
    of ordinary shares or ADSs, in particular by US Shareholders (as defined below).
    The summary does not purport to be a comprehensive description of all of the
    tax considerations that may be relevant to a decision to purchase ordinary
    shares or ADSs, and prospective investors should consult their professional
    advisors as to the tax consequences of their purchase, ownership and disposition
    of the ordinary shares and ADSs, including the consequences under applicable
    federal, state, local and foreign law. In particular, the summary does not
    address US shareholders that do not hold the shares or ADSs as capital assets
    and the tax treatment of holders subject to special tax rules, such as banks,
    insurance companies and dealers in securities, investors liable for alternative
    minimum tax or investors who hold ordinary shares or ADSs as part of a straddle
    or a hedging or conversion transaction, some of which may be subject to special
    rules. This summary should not be read as extending by implication to matters
    not specifically discussed herein. Additional rules may apply to holders who
    themselves or through affiliates actually or constructively own 10% or more
    of the voting power or value of the ordinary shares or ADSs as determined
    by US Federal income tax law. The Dutch rules applying to holders of a substantial
    interest in broad terms, individuals who hold or have held directly
    or indirectly, either independently or jointly with certain close relatives,
    at least 5% of the nominal paid-up capital of any class of shares in the company
    are not addressed in this summary. With respect


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to US
    shareholders, this discussion generally applies only to such holders who hold
    ordinary shares or ADSs as a portfolio investment. This summary does not take
    into account the specific circumstances of any particular US holder although
    such circumstances might materially affect the general tax treatment of such
    US holder. For the
  purposes of this discussion, a US Shareholder is a holder of ordinary
  shares or ADSs that is a person who is a resident of the United States or who
  holds ordinary shares or ADSs as assets effectively connected with a US trade
  or business (US Holders). This discussion does not purport to be
  a complete analysis or listing of all potential tax consequences of the purchase,
  ownership and disposal of ordinary shares or ADSs. For the purposes of this
  discussion, a shareholder is a shareholder that does not own a substantial
  interest or a deemed substantial interest in the company. In general,
  for Dutch tax purposes, US holders of ADSs will be treated as the beneficial
  owners of the ordinary shares represented by such ADSs. It is
    assumed for purposes of this summary that a US shareholder is entitled to
    the benefits of the 1992 Treaty (as defined below). However, US shareholders
    should consult with their tax advisors regarding their status under the limitation
    of benefits article under the 1992 Treaty. With respect to the applicable
    1992 Treaty it is important to notice that during the year 2004 a new protocol
    to the 1992 Treaty was ratified by both the Dutch Parliament (in June 2004)
    and the US Senate (on 17 November 2004). From a press release issued by the
    US Treasury department on 23 December 2004 it appears that the protocol will
    be effective for taxable periods beginning on or after 1 January 2005. The
    provisions of the protocol relating to withholding taxes will be effective
    for amounts paid or credited on or after 1 February 2005. DUTCH
    TAXATIONGeneralThe
    following description of Dutch tax law and practice is based on laws, tax
    conventions, published case law and other legislation in force on 1 January
    2005 with the exception of amendments subsequently introduced, possibly with
    retroactive effect. In this chapter a distinction is made between residents
    of the Netherlands and non-residents of the Netherlands. Whether an investor
    qualifies as a resident of the Netherlands or as a non-resident of the Netherlands
    is based on facts, as well as on several fictions in Dutch tax legislation.
    The general corporate income tax rate in 2004 was 34.5% (reduced to 31.5%
    as of 1 January 2005), although the first €22,689 of taxable profit is
    taxed at 29% (reduced to 27% as of 1 January 2005). As gift,
  estate and inheritance tax still apply, these taxes are dealt with separately
  at the end of this section. The descriptions
  of the Dutch tax laws and US Federal income tax laws and practices set forth
  below are based on the statutes, treaties, regulations, rulings, judicial decisions
  and other authorities in force and applied in practice on the date hereof, all
  of which are subject to change (possibly with retroactive effect) and differing
  interpretations.




Dutch
    tax on dividendsDividends
    (or similar income derived from shares qualifying as such under the Dutch
    Dividend Tax Act 1965 (Wet op de dividendbelasting 1965), hereinafter referred
    to as income) distributed
  by the company are in principle subject to tax at the current rate of 25%, which
  should be withheld and remitted by the company to the Dutch tax authorities.
  Stock dividends paid out of the companys share premium account, recognised
  as such for Dutch tax purposes, are not subject to dividend tax. The company
  has a share premium account, recognised as such for Dutch tax purposes, from
  which stock dividends could be paid. 2004
    SITUATIONAs
    regards US Holders the following will apply. A US holder can only claim the
    benefits of the tax treaty for the avoidance of double taxation and the prevention
    of fiscal evasion with respect to taxes on income signed on 18 December 1992
    between the Dutch State and the United States of America, as modified by
    the protocol of 8 March 2004 (together, the 1992 Treaty), if: 
      the
        person is a resident of the United States as defined therein;
      the
        persons entitlement to these benefits is not limited by the limitations
        on benefits provisions of article 26 of the 1992 Treaty, and
      the
        person can be considered to be the beneficial owner o the dividend under
        the Netherlands anti-dividend stripping rules. Under
    the 1992 Treaty, dividends paid by the company to a resident of the United
    States, other than an exempt organisation or exempt pension trust, as described
    below, are generally eligible for a reduction of the 25% Dutch withholding
    tax to 15%, provided that the holder does not carry on an enterprise in the
    Netherlands through a permanent establishment, permanent representative or
    fixed base to which or to whom the ordinary shares or ADSs are attributable.
    If and to the extent the ordinary shares or ADSs are attributable to this
    permanent establishment or representative, Dutch withholding tax will, depending
    on the particulars of the case, amount to 25% or 0%. The 1992 Treaty provides
    for a complete exemption for dividends received by exempt pension trusts and
    exempt organisations, as defined in the 1992 Treaty. Except in the case of
    exempt organisations, this reduced dividend withholding rate can be applied
    for at source upon payment of the dividend; exempt organisations remain subject
    to the statutory withholding tax rate of 25% and are required to file for
    a refund of this withholding. A US holder
    other than an exempt organisation, generally may claim the benefits of a
    reduced withholding tax rate pursuant to the 1992 Treaty by submitting a Form
    IB 92 USA, which includes a bankers affidavit stating that the ordinary
    shares or ADSs are in the banks custody in the name of the applicant,
    or that the ordinary shares or ADSs have been exhibited to the bank as being
    the property of the applicant. If the Form IB 92 USA is submitted prior to
    the dividend payment date, the reduced withholding tax rate can be applied
    to the dividend. A US holder unable to claim withholding tax relief in this
    manner can obtain a refund of excess tax withheld by filing a Form IB 92 USA
    and describing the circumstances that prevented a claim for withholding tax
    relief at source.


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Qualifying
    exempt organisations other than exempt pension trusts may seek a refund of
    the tax withheld by submitting Form IB 95 USA, which also includes a bankers
    affidavit. Under
    the Dutch anti-dividend stripping rules a recipient of a dividend is not considered
    to be the beneficial owner if it is plausible that: 
      the
          recipient paid, directly or indirectly, a consideration, in cash or
          in kind, in connection with the dividend distribution,and
          the payment forms part of a sequence of transactions,
      an
          individual or a company benefited, in whole or in part, directly or
          indirectly, from the dividend, where that individual or company is entitled
          to a less favourable relief from Netherlands dividend withholding tax
          than the recipient of the dividend distribution, and
      that
          individual or company directly or indirectly retains or obtains a position
          in the shares that is comparable to its position in similar shares before
          the sequence of transactions commenced. 2005
    SITUATIONAs
    described above, as of January 2005 the new Protocol of the 1992 Treaty became
    effective. With respect to withholding taxes the Protocol will be effective
    as of February 1, 2005. Under the new Protocol 0% Dutch dividend withholding
    tax is due on dividends provided that the shareholder owns at least 80% of
    the voting power. In addition, as of January 1, 2005, several changes apply
    to article 26, Limitation on Benefits, stipulating which shareholders can
    benefit from the 1992 Treaty. Dutch
    personal and corporate income taxUnder
    the Personal Income Tax Act 2001, income is divided into three separate boxes
    each of which is governed by its own rules: 
      Box
          I (work and private residence) includes business and employment income,
          income from receivables and income from assets made available to a company
          in which the individual holds a substantial shareholding and income
          from
        the
          main private residence,
      Box
          II (substantial interest) includes dividend income and capital gains
          from substantial shareholdings, and
      Box
          III (savings and investments) covers passive income from capital. The
    three boxes operate independently of each other. This means that losses from
    one box can, in principle, not be offset against income from another box.
    The elements of income will be allocated to the spouse or partner that has
    received the income. Highlights of the box system are dealt with below in
    respect of the ordinary shares or ADSs. PERSONAL
    INCOME TAX IN RESPECT OF THE ORDINARY SHARES OR ADSs Resident
    Individuals of the NetherlandsBOX I
    (WORK AND PRIVATE RESIDENCE)An individual
    Dutch shareholder, who holds the ordinary shares or ADSs that can be attributed
    to the business assets of an enterprise which is, in whole or in part, carried
    on for the account of a shareholder, is liable to income tax on the income




derived
    from the ordinary shares or ADSs at the progressive rates of Box I, the maximum
    rate being 52%. BOX
    II (SUBSTANTIAL INTEREST)Income
    (dividends and capital gains) from substantial interests (broadly, shareholdings
    of at least 5%) is taxed in Box II. The tax rate amounts to 25%. Losses from
    a substantial interest may only be offset against income or gains from a substantial
    interest and not against income from Box I (work and private residence) or
    Box III (savings and investments).There is a possibility for a credit for
    losses not compensated against the income tax liability of Box II. Such tax
    credit is limited to 25% of the amount of the loss, and can only be claimed
    on condition that the holder of the substantial interest has sold all of that
    interest and holds no such interest in another entity. Interest related to
    the financing of a substantial interest is only deductible against the 25%
    rate. Interest on debts due from the company as well as income and gains from
    other assets which are made available to the company are not taxable in Box
    II, but in Box I. Stock dividends received/ derived will not be considered
    to form taxable income in Box II at the moment of receipt. The purchase price
    of such stock dividend will in principle amount to zero. BOX
    III (SAVINGS AND INVESTMENTS)Income
    derived from capital (savings and investments) is taxed according to the regime
    of Box III. Taxable income is determined annually on the basis of a fictitiousi.e.
    deemedreturn on capital. This deemed return has been fixed at 4% of
    average net capital, assets less liabilities at market value, on 1 January
    and 31 December of any year. In this respect, assets and liabilities relating
    to income from Box I and Box II are not taken into account. The taxable income
    is computed without regard to the actual income and capital gains received.
    Thus, if actual income exceeds 4%, tax will still only be levied on the basis
    of 4%. On the other hand, there is no reduction in tax if the actual income
    is less than 4%. The deemed income is taxed at 30%. In
    principle, under the provisions of the Personal Income Tax Act 2001 the Dutch
    dividend tax can be credited, or refunded, for Netherlands residents or for
    a Dutch permanent establishment or permanent representative to which or to
    whom the underlying shares are attributable. This credit is also available
    against tax under Box III. However, in case of dividend stripping transactions,
    the dividend withholding tax cannot be credited or refunded if the recipient
    cannot be considered to be the beneficial owner of the dividend. See the discussion
    on Dutch dividend withholding tax above. Non-Resident
    Individuals of the NetherlandsEU
    residents and residents of specified countries with which the Netherlands
    has concluded a tax treaty providing for the exchange of information may elect
    to be taxed according to the rules applicable to resident taxpayers. They
    are then taxed as if they were a resident of the Netherlands. This means that
    they will be taxable in respect of their worldwide income. In that case they
    will be able to claim relief from double taxation in respect of certain non-Dutch
    source income. Income
    from savings and investments will be computed in the same way as for taxpayers
    resident in the Netherlands, on a fictitious basis.


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Other
    non-resident individual holders of the ordinary shares or ADSs may only be
    taxable in the Netherlands in respect of this shareholding if these shares: 
      are
          attributable to the business assets of a permanent establishment or
          permanent representative in theNetherlands,
      generate
          income or gains that qualify as income from miscellaneous activities
          (resultaat uit overige werkzaamheden) in the Netherlands, which include
          activities in the Netherlands with respect to these shares that exceedregular,
          active portfolio management (normaal, actiefvermogensbeheer),
          or
      part
          of a substantial interest of the shareholder in the company and this
          substantial interest does not form part ofthe
          business assets of an enterprise of the shareholder. The
    right of the Netherlands to levy personal income tax on dividends received
    by non-resident individuals may be restricted under specific provisions of
    applicable tax treaties. Dutch
    Corporate Income TaxCOMPANIES
    RESIDENT IN THE NETHERLANDSA
    legal entity or a similar entity qualifying as such under Dutch tax law (an
    entity) which holds the ordinary shares or ADSs and who resides,
    or is deemed to reside, in the Netherlands, is, in principle, able to set
    off in full the dividend tax withheld against its Dutch corporate income tax
    due on this income. An entity resident in the Netherlands which is not subject
    to Dutch corporate income tax can, under certain conditions which are not
    stated here, request a refund of the dividend tax withheld. An entity subject
    to Dutch corporate income tax for which the shareholding in the company qualifies
    for the participation exemption pursuant to Article 13 of the Corporate Income
    Tax Act 1969 (Wet op de vennootschapsbelasting 1969) is entitled to an exemption
    from dividend tax. The participation exemption normally applies if a Dutch
    resident entity which is subject to corporate income tax at the ordinary rates
    holds an interest of at least 5% of the nominal paid-up share capital of the
    company. Under specific circumstances the participation exemption can also
    apply to interests of less than 5%. If
    the ordinary shares or ADSs are held by an entity, which resides, or is deemed
    to reside, in the Netherlands, the income derived from the ordinary shares
    or ADSs is in principle subject to Dutch corporate income tax at the ordinary
    rates. An
    entity subject to Dutch corporate income tax will not be subject to corporate
    income tax on income derived from the ordinary shares or ADSs if the participation
    exemption pursuant to Article 13 of the Corporate Income Tax Act 1969 applies
    with respect to the shareholding in the company. If
    the ordinary shares are attributable to a permanent establishment or permanent
    representative in the Netherlands of a non-resident resident entity, the income
    distributed by the company will, in principle, be subject to corporate income
    tax at the rate of 34.5% (31.5% as of 1 January 2005), unless the participation
    exemption of Article 13 of the Corporate Income Tax Act 1969 applies with
    respect to the shareholding in the company. Any dividend tax withheld can
    generally be set off




against
    the Dutch corporate income tax due on this income, provided the recipient
    is the beneficial owner of the dividend. The
    State has concluded tax treaties with Canada, the United States, Switzerland,
    Japan, all EU member states, Norway and a number of other countries. Most
    tax treaties concluded by the State provide for a reduced dividend withholding
    tax rate of 15% for portfolio investment. If
    the shares are not attributable to a Netherlands permanent establishment or
    a permanent representative, dividends paid to non-resident entities which
    are shareholders of the company are in principle not subject to Dutch tax
    (other than the dividend tax mentioned above), unless the non-resident shareholder
    holds a substantial interest in the company and the substantial interest does
    not form part of the business assets of an enterprise of the shareholder.
    The right of the Netherlands to tax the dividends may be restricted under
    specific provisions of applicable tax treaties. Personal
    Income Tax and Corporate Income Tax on Capital GainsRESIDENTS OF THE NETHERLANDSIn
    principle, capital gains derived from the sale of the ordinary shares or ADSs
    by an individual shareholder who resides, or is deemed to reside, in the Netherlands
    are not subject to Dutch personal income tax provided the ordinary shares
    or ADSs do not form part of a substantial interest or cannot be attributed
    to the enterprise of that individual. Capital gains realised on the disposal
    of ordinary shares or ADSs that form part of a substantial interest of an
    individual are subject to tax in Box II at the special 25% rate. If the ordinary
    shares or ADSs form part of the business assets of an enterprise carried on,
    in whole or in part, for the account of an individual, the capital gain is
    subject to personal income tax at the ordinary progressive rates of Box I,
    currently up to 52%. If
    the ordinary shares or ADSs are held by a Dutch resident entity, any capital
    gains derived from the sale of the ordinary shares or ADSs are subject to
    corporate income tax at 34.5% (31.5% as of 1 January 2005), unless the shareholding
    in the company qualifies for the participation exemption of Article 13 of
    the Corporate Income Tax Act 1969. NON-RESIDENTS
    OF THE NETHERLANDSCapital
    gains realised by non-resident individuals who, or non-resident entities which,
    are shareholders of the company are in principle not subject to Dutch personal
    income tax or Dutch corporate income tax, provided these shareholders: 
      do
          not hold a substantial interest in the company, or
      do
          not conduct a business, trade or other taxable activities, in whole
          or in part, through a permanent establishment or permanent representative
          in the Netherlands to which or to whom the ordinary shares or ADSs are
          attributable. If
    the ordinary shares or ADSs form part of a substantial interest, the capital
    gain on the disposal of the ordinary shares or ADSs is, in principle, subject
    to tax at a rate of 25% for individuals or 34.5% (31.5% as of 1 January 2005)
    for entities, unless the substantial interest forms part of the business assets
    of an enterprise of the shareholder.


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Chapter 14    Additional
information

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The
    right of the Netherlands to tax the capital gain may be restricted under specific
    provisions of applicable tax treaties. Gift,
    estate or inheritance tax in the NetherlandsGift
    tax, estate and inheritance tax is due in the Netherlands with respect to
    the gift or inheritance of the ordinary shares or ADSs if the donor or deceased
    who owned the shares: 
      is
          or was a resident or is or was deemed to be a resident in the Netherlands,
          or
      has
          or had an enterprise or an interest in an enterprise, other than as
          shareholder, which in its entirety or in part carries, or carried on
          business in the Netherlands through a permanent establishment or permanent
          representative to which or towhom
          the ordinary shares or ADSs are or were attributable. No
    gift, estate or inheritance tax arises in the Netherlands on a gift of the
    ordinary shares or ADSs by, or on the death of, a holder of the ordinary shares
    or ADSs who at the moment the gift is made is neither a resident nor deemed
    to be a resident of the Netherlands, provided that: 
      such
          holder does not die within 180 days after having made a gift, while
          being on the moment of his death a resident ordeemed
          resident of the Netherlands, and
      the
          ordinary shares or ADSs are not attributable to an enterprise which
          in its entirety or in part is carried on through a permanent establishment
          or a permanent representative in the Netherlands and which enterprise
          the donor or the deceased owned, or in which enterprise the donor or
          the deceased owned an interest, other than as a shareholder. If
    the donor or the deceased is an individual who holds the Dutch nationality,
    he will be deemed to be resident in The Netherlands for purposes of Dutch
    gift and inheritance taxes if he has been resident in The Netherlands at any
    time during the ten years preceding the date of the gift or his death. If
    the donor is an individual who does not hold Netherlands nationality, or an
    entity, he or it will be deemed to be resident in The Netherlands for purposes
    of Netherlands gift tax if he or it has been resident in The Netherlands at
    any time during the twelve months preceding the date of the gift. Furthermore,
    in exceptional circumstances, the donor or the deceased will be deemed to
    be resident in The Netherlands for purposes of Dutch gift and inheritance
    taxes if the beneficiary of the gift, or all beneficiaries under the estate
    jointly, as the case may be, make an election to that effect. UNITED
    STATES TAXATIONThe
    following is a summary of certain United States Federal income tax consequences
    of the purchase, ownership, and disposition of ordinary shares as evidenced
    by ADSs. This summary does not purport to be a complete analysis of all potential
    United States Federal income tax consequences of the purchase, ownership and
    disposal of ordinary shares or ADSs. For
    purposes of this discussion, a US holder means an individual,
    citizen or resident of the United States for United States Federal income
    tax purposes, a corporation, a partnership or other entity created or organised
    under the laws of the United




States
    or any state thereof or the District of Columbia, or an estate or trust which
    is resident in the United States for United States Federal income tax purposes,
    in each case who 
      is
          not also resident of, or ordinarily resident in the Netherlands for
          Dutch tax purposes,
      is
          not engaged in a trade or business in the Netherlands through a permanent
          establishment, and
      does
          not own, directly, indirectly or by attribution, 10% or more of the
          Shares of TPG (by vote or value). This
    summary is of a general nature only and does not discuss all aspects of the
    United States and Dutch taxation that may be relevant to a particular investor.
    The summary deals only with ADSs held by US holders as capital assets and
    does not address special classes of purchasers, such as dealers in securities,
    a trader in securities that elects to use a mark-to-market method of accounting
    for its securities holdings, a person that holds ordinary shares or ADSs as
    part of a straddle or a hedging or conversion transaction or as part of a
    synthetic security or other integrated transaction for US federal
    income tax purposes, US holders whose functional currency is not the United
    States dollar and certain US holders (including, but not limited to, insurance
    companies, tax-exempt organisations, financial institutions and persons subject
    to the alternative minimum tax) who may be subject to special rules. If a
    partnership holds shares or ADSs, the tax treatment of a partner generally
    will depend upon the status of the partner and the activities of the partnership. Owners
    of ADSs are urged to consult their tax advisors with respect to the tax consequences
    to them of the ownership and disposition of such shares in light of their
    particular circumstances, including the tax consequences under state, local,
    foreign and other tax laws, and the possible effects of changes in United
    States Federal or other tax laws. In
    addition, this summary is based, in part, upon representations made by the
    depositary to us and assumes that the Deposit Agreement, and all other related
    agreements, will be performed in accordance with its terms. The United States
    Treasury Department has expressed concern that depositaries for ADSs, or other
    intermediaries between the holders of shares of an issuer and the issuer,
    may be taking actions that are inconsistent with the claiming of United States
    foreign tax credits by United States Holders of such receipts or shares. Accordingly,
    the analysis regarding the availability of a United States foreign tax credit
    for Dutch taxes and sourcing rules described below could be affected by ongoing
    and future actions that may be taken by the United States Treasury Department
    and/or the Internal Revenue Service. For
    purposes of tax treaties and the US Internal Revenue Code of 1986, US holders
    that own ADSs will be treated as owning ordinary shares. Under
    the 1992 Treaty, the company will generally not be subject to United States
    Federal income tax unless it engages in a trade or business in the United
    States through a permanent establishment. The company currently operates in
    the United States through various US subsidiaries. The company intends to
    conduct its business activities in a manner that will not result




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in its being considered to be engaged in a trade or business or to have a permanent establishment in the United States, even though its subsidiaries are United States taxpayers.
  Taxation of
    DividendsTo the
    extent paid out of current or accumulated earnings and profits of the company,
    as determined under US Federal income tax principles (E&P),
    a distribution made with respect to ordinary shares or ADSs (including the
    amount of any Treaty payment, and any Dutch Withholding Tax (both as defined
    below)) will be includable for US Federal income tax purposes in the income
    of a US holder as ordinary income on the day received by the US holder, in
    the case of ordinary shares, or on the day received by the Depositary, in
    the case of ADSs and will be treated as foreign source dividend income. Distributions
    in excess of current and accumulated E&P of the company, will be treated
    as a non-taxable return of capital to the extent of the US Holders adjusted
    tax basis in the ordinary shares or ADSs and thereafter as taxable capital
    gain. The company has not historically maintained calculations of earnings
    and profits under United States federal income tax principles, although it
    may be required to do so in the future. Any
    such dividend paid in euros will be included in the gross income of a US holder
    in an amount equal to the US dollar value of the euros on the date of receipt,
    which in the case of ADSs, is the date they are received by the depositary.
    If dividends received in euro are converted into US dollars on the day they
    are received by the depositary, the US holder generally will not be required
    to recognise foreign currency gain or loss in respect of the dividend income.
    The amount of any distribution of property other than cash will be the fair
    market value of such property on the date of distribution. Under
    recently enacted tax legislation, if you are a non-corporate US holder, certain
    dividends paid to you on ADSs in taxable years beginning after 31 December
    2002 and before 1 January 2009 will be taxable to you at the rate applicable
    to long-term capital gains (generally at a maximum rate of 15%). This reduced
    income tax rate is only applicable to dividends paid by qualified corporations
    and only with respect to shares held by a qualified US holder (i.e., an individual)
    for a minimum holding period (generally, 61 days during the 120-day period
    beginning 60 days before the ex-dividend date). Our company should be considered
    a qualified corporation under the new US tax legislation. Accordingly, dividends
    paid by us to individual US holders on shares held for the minimum holding
    period may be eligible for a reduced income tax rate. The reduced income tax
    rate is not applicable to dividends paid by a company that is a passive foreign
    investment company for the corporations taxable year in which the dividend
    is paid for the preceding year. Under the new US tax legislation, the reduced
    tax rate for qualified dividends is scheduled to expire on 31 December 2008,
    unless further extended by Congress. Each prospective investor should consult
    its own tax advisor regarding the implications of the new legislation. In
    the case of a corporate US holder, dividends on shares and ADSs are taxed
    as ordinary income and will not be eligible for the dividends-received deduction
    generally allowed to US corporations in respect of dividends received from
    other US corporations.




Dividends
    paid will generally be subject to a withholding tax of 25% and will generally
    be eligible for a foreign tax credit. This amount may be reduced under the
    1992 Treaty and is referred to above under Dutch Taxation  Dutch
    tax on Dividends. If
    the US holder is a United States partnership, trust or estate, the foreign
    tax credit will be available only to the extent that the income derived by
    such partnership, trust or estate is subject to US tax either as the income
    of a US resident in its hands or in the hands of its partners or beneficiaries,
    as the case may be. The withholding tax may, subject to certain limitations,
    be offset against United States Federal taxes on foreign source income by
    filing Form 1116 (or Form 1118 for corporations) Foreign Tax Credit
    with the Federal income tax return. Form 1116 can be obtained by calling 1-800-TAX
    FORM. This tax credit will normally reduce the United States tax liability
    on the dividend. A US holder of ADSs or ordinary shares nonetheless will not
    be entitled to claim the tax credit for withholding taxes if the holding of
    ADSs or ordinary shares: 
      is
          effectively connected with a permanent establishment situated in the
          Netherlands through which the holder carrieson
          business in the Netherlands, or
      is
          effectively connected with a fixed base in the Netherlands from which
          the holder performs independent personalservices. Further,
    special rules apply if the holder: 
      owns
          at least 10% of the ordinary shares of the company (or, in the case
          of a holder that is a United States corporation, controls, alone or
          with one or more associated corporations, at least 10% of the voting
          stock of the company), or
      is
          exempt from tax in the United States on dividends paid by the company. A US
    holder may elect annually either to deduct the Dutch withholding tax (see
    Dutch Taxation) from its income or take the withholding taxes
    as a credit against its US Federal income tax liability, subject to US foreign
    tax credit limitation rules. If
    and to the extent that we pay a dividend on the common shares or ADSs out
    of dividend income from our non-Dutch subsidiaries and are therefore entitled
    to a credit for Dutch tax purposes for foreign taxes attributable to such
    dividend income from non-Dutch subsidiaries, there is a risk that the United
    States Internal Revenue Service might take the position that our allowable
    credit for Dutch tax purposes constitutes a partial subsidy of our withholding
    tax obligation and that, therefore, a United States Holder would not be entitled
    to a foreign tax credit with respect to the amount so allowed. However, this
    Dutch tax credit is available only to us and does not reduce the amount of
    withholding tax applied against the dividends paid by us. We believe that
    such a position would not be correct because such Dutch credit is based primarily
    on the net dividend received and the United States Holder does not receive
    any benefit from such Dutch tax credit available to us.


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Chapter
    14    Additional
information

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Taxation of capital gainsIn
    general, a US holder who is a resident of the United States for purposes of
    the Treaty and who is entitled to Benefits of the 1992 Treaty under the limitations
    on Benefits provision contained therein
    will not be subject to Dutch taxation on any gain derived from the sale or
    exchange of ADSs, except in certain instances where the US holder maintains
    a permanent establishment or fixed base in the Netherlands. A United States
    resident holder of ADSs or ordinary shares generally will be liable for United
    States Federal income tax on such gains to the same extent as on any other
    gains from sales of stock. For
    US tax purposes, US holders will generally recognise gain or loss upon the
    sale or exchange of ADSs equal to the difference between the amount realised
    from the sale or exchange of the ADSs and the US holders basis in such
    ADSs. In general, such gain or loss will be US source capital gain or loss.
    In the case of individual US holders, capital gains are subject to US Federal
    income tax at preferential rates if specified minimum holding periods are
    met and if such shares are held as a capital asset. If held for more than
    one year, such gain or loss will generally be long-term capital gain or loss.
    Long-term capital gain of a non-corporate US holder that is recognised on
    or after 6 May 2003 and before 1 January 2009 is generally taxed at a maximum
    rate of 15%. Subject
    to the discussion below under Passive foreign investment company considerations,
    a US holder will be liable for United States Federal income tax on gains from
    sales or dispositions of ADSs or ordinary shares to the same extent as on
    any other gains from sales or dispositions of shares. Passive
    foreign investment company considerationsIn
    general, a foreign corporation is a passive foreign investment (PFIC)
    if either 75% of its gross income for a year is passive income
    or 50% of its assets during the year produce or are held for the production
    of passive income. Based on the manner in which the company currently
    operates its business, the company does not believe that it is currently a
    PFIC for US Federal income tax purposes. However, the company can give no
    assurances that it will not at some time in the future become a PFIC. If the
    company were classified as a PFIC for any taxable year during which a US holder
    held an ADS or ordinary share, certain adverse tax consequences could apply
    to the US holder. A prospective purchaser of the companys ADSs should
    consult with their tax advisor regarding the application of the PFIC rules
    to their ownership of an ADS or ordinary share. US
    information reporting and backup withholdingGenerally,
    the amount of dividends paid to US holders of ADSs, the name and address of
    the recipient and the amount, if any, of tax withheld must be reported annually
    to the US Internal Revenue Service. A similar report is sent to the US holder. A holder
    of ordinary shares or ADSs may be subject to United States backup withholding
    tax, unless such holder: 
      is
          a corporation or other exempt recipient and, if required, demonstrates
          its status as such, or
      provides
          a United States taxpayer identification number, certifies as to no loss
          of exemption from backup withholding and otherwise complies with any
          applicable backup




withholding
          requirements. Holders who fail to furnish certain identifying information
          under the United States information reporting rules will be subject
          to backup withholding. Amounts withheld from payments will be allowed
          as a credit against such US holders United States Federal income
          taxliability. Backup
    withholding is not an additional tax and may be claimed as a credit against
    the US Federal income tax liability of a US holder or refunded, provided that
    the required information is furnished to the US Internal Revenue Service.
    The backup withholding is currently 28% but this rate is subject to change. Persons
    required to establish their exempt status generally must provide such certification
    on IRS Form W-9 (Request for Taxpayer Identification Number and Certification)
    in the case of US persons and on IRS Form W-8 (Certificate of Foreign Status)
    in the case of non-US persons. Holders of ordinary shares should consult their
    tax advisors regarding the application of the information reporting and backup
    withholding rules, including the finalised Treasury regulations. United
    States gift and estate taxAn
    individual US holder will be subject to United States gift and estate taxes
    with respect to the ADSs in the same manner and to the same extent as with
    respect to other types of personal property.


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|15                       | 
|------------------------ | 
|                         | 
|                         | 
|Investor
      Relations
|                        
|                        

Traffic,
  Shanghi

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Chapter
15    Investor relations

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Further
    information for shareholders The
    Board of Management and the Supervisory Board provide the shareholders meeting
    with all information that it requires for the exercise of its powers, unless
    this would be contrary to an overriding interest of the company. If the Board
    of Management and the Supervisory Board invoke an overriding interest, they must
    give reasons. We
    adhere to the principle that we must explain business developments and financial
    results to investors. Our chief financial officer has the principle responsibility
    for investor relations with the active involvement of our chief executive
    officer. Our investor relations department organises presentations for analysts
    and institutional investors, which can be viewed on our website. Our
    policy is to provide all shareholders and other parties in the financial markets
    with equal and simultaneous information about matters that may influence the
    share price. The contacts between the Board of Management on the one hand
    and press and analysts on the other must be carefully handled and structured,
    and the company must not engage in any acts that compromise the independence
    of analysts in relation to the company and vice versa. Briefings on quarterly
    results are given either via group meetings or teleconference and are both
    accessible by telephone or via our website. Briefings are similarly given
    to update the market between each quarterly announcement. We may hold briefing
    meetings with institutional shareholders to ensure that the investing community
    receives a balanced and complete view of the Groups performance and
    the issues faced by the business. These meetings generally occur after publication
    of our second and fourth quarter results, but also happen during other periods
    of the year, for example during broker conferences. We communicate with our
    shareholders through the annual general meeting of shareholders, newsletters
    and our website. Meetings of analysts can by way of webcasting at all times
    be reviewed by shareholders. Our website provides all relevant information
    with regard to dates of analyst meetings and procedures concerning webcasting.
    Our group compliance officer is responsible for monitoring this process and
    the meetings. Analysts reports and valuations shall not be assessed,
    commented upon or corrected other than factually, by the company in advance.
    For further information visit our website at www.tpg.com. We
    do not pay any fee(s) to parties for the carrying out of research for analysts
    reports or for the production or publication of analysts reports with
    the exception of credit rating agencies. Analysts
    meetings, presentations to institutional or other investors and direct discussions
    with the investors shall not take place shortly before the publication of
    the regular quarterly financial information (closed period). Our
    Board of Management has adopted investor relations and media guidelines with
    which all Board of Management members must at all times abide unless explicitly
    exempted by the chief executive officer.




Our
    website provides all information that is required to be published. Our website
    will also give access to shareholders circulars required for any approvals
    sought from the shareholders meeting. We commit in this respect to shareholders
    circulars that in form and substance will be similar to the standard that
    applies to similar instruments issued by FTSE 100 companies. Our
    website provides a summary of the minutes of shareholders meetings.
    All shareholders resolutions are decided on a poll, except when the
    issue relates to a vote concerning individuals or the meeting decides to have
    a ballot. The proxy votes cast in relation to all resolutions are disclosed
    to those in attendance at the meeting and the results of the poll are published
    at our website. STOCK
    EXCHANGE AND SHARE PRICE INFORMATIONSince
    29 June 1998, following our demerger from KPN, our ordinary shares have been
    listed on the Amsterdam stock exchange, which was renamed Euronext Amsterdam
    in connection with the merger of the Amsterdam, Brussels and Paris Stock Exchanges
    in 2000, the London Stock Exchange, the New York Stock Exchange and the Frankfurt
    Stock Exchange. The
    principal market for trading in the ordinary shares is Euronext Amsterdam.
    TPG is included in the AEX index, which consists of the top 25 companies in
    the Netherlands, ranked on the basis of their turnover in the stock market
    and free float. We have an unrestricted sponsored American Depositary Receipt
    (ADR) facility with Citibank N.A. as depositary. The ADRs evidence American
    Depositary Shares (ADSs), which represent the right to receive one ordinary
    share. The ADSs trade on the New York Stock Exchange under the symbol TP. The
    following table sets forth the high and low closing prices for our ordinary
    shares on Euronext Amsterdam and the ADSs on the New York Stock Exchange for
    the periods indicated:


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|--- | ----------------------

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---

|Trading
      prices |                       |  |       |                     |       |  |       | 
|-------------------- | --------------------- |  | ----- | ------------------- | ----- |  | ----- | 
|                     |                       |  |       |                     |       |  |       | 
|                     | Euronext
      (in €) |  |       | NYSE
      (in US$) |       |  |      
|                    
|                     | High                  |  | Low   |                     | High  |  | Low   | 
|                     |                       |  |       |                     |       |  |       | 
|2000                 | 31.19                 |  | 22.31 |                     | 30.94 |  | 19.44 | 
|2001                 | 28.29                 |  | 16.46 |                     | 26.50 |  | 16.25 | 
|2002                 | 25.08                 |  | 14.98 |                     | 22.72 |  | 15.30 | 
|2003                 | 19.34                 |  | 11.71 |                     | 23.59 |  | 13.10 | 
|2004                 | 20.15                 |  | 16.22 |                     | 27.25 |  | 19.79 | 
|                     |                       |  |       |                     |       |  |       | 
|2002                 |                       |  |       |                     |       |  |       | 
|1st
      Quarter    | 25.08                 |  | 21.65 |                     | 22.08 |  | 19.32 | 
|2nd
      Quarter    | 25.07                 |  | 20.65 |                     | 22.63 |  | 19.70 | 
|3rd
      Quarter    | 23.00                 |  | 16.55 |                     | 22.72 |  | 16.28 | 
|4th
      Quarter    | 19.35                 |  | 14.98 |                     | 18.50 |  | 15.30 | 
|                     |                       |  |       |                     |       |  |       | 
|2003                 |                       |  |       |                     |       |  |       | 
|1st
      Quarter    | 16.00                 |  | 11.71 |                     | 17.00 |  | 13.10 | 
|2nd
      Quarter    | 15.74                 |  | 13.53 |                     | 18.65 |  | 15.10 | 
|3rd
      Quarter    | 17.62                 |  | 14.83 |                     | 20.08 |  | 17.13 | 
|4th
      Quarter    | 19.34                 |  | 16.11 |                     | 23.59 |  | 19.14 | 
|                     |                       |  |       |                     |       |  |       | 
|2004                 |                       |  |       |                     |       |  |       | 
|1st
      Quarter    | 19.34                 |  | 16.22 |                     | 24.30 |  | 19.79 | 
|2nd
      Quarter    | 18.95                 |  | 17.12 |                     | 23.08 |  | 20.86 | 
|3rd
      Quarter    | 19.80                 |  | 17.74 |                     | 24.50 |  | 21.50 | 
|4th
      Quarter    | 20.15                 |  | 18.65 |                     | 27.25 |  | 23.83 | 
|                    

|                                          |                       |  |       |  |       | 
|----------------------------------------- | --------------------- |  | ----- |  | ----- | 
|                                          | Euronext
      (in €) |  | LOW   |  | NYSE  | 
|                                          |                       |  |       |  |       | 
|                                          | HIGH                  |  | LOW   |  | HIGH  | 
|                                          |                       |  |       |  |       | 
|2004                                      |                       |  |       |  |       | 
|July                                      | 18.78                 |  | 17.74 |  | 23.04 | 
|August                                    | 19.03                 |  | 17.74 |  | 23.35 | 
|September                                 | 19.80                 |  | 18.80 |  | 24.50 | 
|October                                   | 20.15                 |  | 18.65 |  | 24.81 | 
|November                                  | 19.79                 |  | 18.82 |  | 26.41 | 
|December                                  | 19.98                 |  | 19.51 |  | 27.25 | 
|                                          |                       |  |       |  |       | 
|2005                                      |                       |  |       |  |       | 
|January                                   | 21.04                 |  | 19.65 |  | 27.38 | 
|February
      (through 22 February 2005) | 21.80                 |  | 20.90 |  | 28.49 | 
|                                          |                       |  |       |  |       | 



Average
  daily volume (in shares) in 2004 was as follows:

|                  |           |      |           | 
|----------------- | --------- | ---- | --------- | 
|                  | 2004      | 2003 |          
|                  |           |      |           | 
|1st
      Quarter | 1,654,655 |      | 1,356,444 | 
|2nd
      Quarter | 1,492,099 |      | 1,242,102 | 
|3rd
      Quarter | 1,491,089 |      | 1,404,351 | 
|4th
      Quarter | 1,559,948 |      | 1,272,351 | 
|                  |           |      |           | 
|                  |           |      |           | 

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Chapter
    15    Investor relations

---

The highest
    quotation during the year was €20.15 on 7 October 2004 and the lowest
    €16.22 on 24 March 2004. A total of 5,836,500 shares in the form of American
    Depository Receipts (ADRs) were traded on the New York Stock Exchange, compared
    with 5,674,500 in the previous year.




EXCHANGE RATESThe
    following tables set forth the noon buying rates in the City of New York for
    cable transfers as certified by the Federal Reserve Bank of New York for the
    euro.


|                 |        |  |        |  |                     | 
|---------------- | ------ |  | ------ |  | ------------------- | 
|                 |        |  |        |  |                     | 
|US$
      per €1 | High   |  | Low    |  | Average
      rate1 | 
|                 |        |  |        |  |                     | 
|2000             | 1.0335 |  | 0.8270 |  | 0.9228              | 
|2001             | 0.9535 |  | 0.8370 |  | 0.8955              | 
|2002             | 1.0485 |  | 0.8594 |  | 0.9451              | 
|2003             | 1.2597 |  | 1.0361 |  | 1.1411              | 
|2004             | 1.3625 |  | 1.1801 |  | 1.2478              | 
|                 |        |  |        |  |                     | 

|(1) | Average
        of the noon buying rates on the last day of each month during the year.
|--- | ---------------------------------------------------------------------------------------

---

|                                          |  |        |  |        | 
|----------------------------------------- |  | ------ |  | ------ | 
|                                          |  | HIGH   |  | LOW    | 
|                                          |  |        |  |        | 
|2004                                      |  |        |  |        | 
|July                                      |  | 1.2452 |  | 1.2018 | 
|August                                    |  | 1.2368 |  | 1.2025 | 
|September                                 |  | 1.2417 |  | 1.2052 | 
|October                                   |  | 1.2783 |  | 1.2271 | 
|November                                  |  | 1.3288 |  | 1.2703 | 
|December                                  |  | 1.3625 |  | 1.3224 | 
|                                          |  |        |  |        | 
|2005                                      |  |        |  |        | 
|January                                   |  | 1.3465 |  | 1.2963 | 
|February
      (through 22 February 2005) |  | 1.3259 |  | 1.2757 | 
|                                          |  |        |  |        | 

Since 4
    January 1999, our ordinary shares have traded on Euronext Amsterdam in euro.
    Fluctuations in the exchange rate between the euro and the US dollar will
    affect the US dollar equivalent of the euro price of our ordinary shares on
    Euronext




Amsterdam
    and, as a result, will affect the market price of our American Depositary
    Shares in the United States. See chapter 10  Risk factors.


STOCK
  PERFORMANCE

Stock
  price

|                                                          |             |      |             |      |             | 
|--------------------------------------------------------- | ----------- | ---- | ----------- | ---- | ----------- | 
|                                                          | 2004        | 2003 |             | 2002 |            
|                                                          |             |      |             |      |             | 
|Stock
      price (in €)                                  |             |      |             |      |             | 
|High                                                      | 20.15       |      | 19.34       |      | 25.07       | 
|Low                                                       | 16.22       |      | 11.71       |      | 14.98       | 
|Close                                                     | 19.98       |      | 18.57       |      | 15.45       | 
|Earnings
      per outstanding share in € cents           | 140.9       |      | 63.1        |      | 126.1       | 
|Dividend
      in € cents                                 | 57.0        |      | 48.0        |      | 40.0        | 
|Dividend
      pay-our ratio (as a %)                     | 40.5        |      | 76.1        |      | 31.7        | 
|Dividend
      yield (based on closing rate for the year) | 2.85        |      | 2.58        |      | 2.59        | 
|P/E
      Ratio                                           | 14.18       |      | 29.41       |      | 12.26       | 
|Number
      of issued shares                             | 480,259,522 |      | 480,259,522 |      | 480,259,522 | 
|Stock
      market capitalisation (in € billions)         | 9,596       |      | 8,823       |      | 7,420       | 
|                                                          |             |      |             |      |             | 

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---

Our relative performance to the Euronext Amsterdam (AEX) at closing prices during 2004 (AEX index rebased to our company)






|
|
|
|

Our relative performance to the Euronext Amsterdam (AEX) at closing prices since its listing in 1998 (AEX index rebased to our company)






|
|
|
|

Our ordinary shares are held worldwide in the form of bearer shares, non-ADS registered shares and A
  DSs. Outside the United States, ordinary shares are held primarily in bearer form. In the United States,
  ordinary shares are held primarily in the form of ADSs. Only bearer shares are traded on Euronext Amsterdam
  and the other European exchanges on which our ordinary  shares
    are listed. Only ADRs relating to ADSs are traded on the NYSE. The
    following table indicates the form in which the ordinary shares were held
    as of 22 February 2005:






|                                |                        |  |                                                 |  
|------------------------------- | ---------------------- |  | ----------------------------------------------- | -
|Forum                           | Number
      of shares |  | Percentage
      of outstanding ordinary shares |  
|                                |                        |  |                                                 |  
|Bearer
      shares             | 385,065,260            |  | 80.18                                           | %
|Non-ADS
      registered shares | 89,376,767             |  | 18.61                                           | %
|ADSs
      1                    | 5,817,496              |  | 1.21                                            | %
|                                |                        |  |                                                 |  

|1. | Held
      by approximately 55 holders of record. Since some shares are held by brokers
      and other nominees for their clients, thisnumber may not be representative of the actual number of ordinary shares
      held by US residents or of the actual number of US-resident
      beneficial holders of ordinary shares.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Chapter
  15    Investor relations

---

In
    2004, 398.7 million TPG shares were traded on the Euronext Amsterdam market
    (2003: 336.6 million). PEER
    GROUP COMPARISONFor
    comparative reasons, our company has defined a peer group of publicly listed
    companies with activities in the same industries in which TPG is active. This
    peer group consists of the Germany-based company Deutsche Post, with activities
    in mail, express and logistics; the United Kingdom-based company Exel, having
    activities in the field of logistics; Swiss based Kuehne & Nagel International
    AG, active in freight management and logistics; as well as the two United
    States-based express carriers FedEx and United Parcels Services. For this
    peer group, the comparative performance in terms of total shareholder returns
    in 2004 is charted below.






|
|
|
|

DIVIDEND
    TPG (IN € CENTS)We
    try to meet shareholders return requirements through dividends and growth
    in value of our shares. TPG annually pays interim and final dividends in cash.
    TPG pays cash dividends in
    euro. Exchange rate movements will affect the amounts received by ADS holders
    on conversion by the depository of such cash dividends.












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      Annual Report 2004
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---

FINANCIAL
        CALENDAR FOR 200528
        February
      Announcement
        of 2004 Full Year results7
        April
      TPG
        Annual General Meeting of Shareholders11
        April
      Ex-dividend
        listing of TPG shares18
        April
      Payment
        of final dividend4
        May
      Publication
        of 2005 first quarter results29
        July
      Publication
        of 2005 half year results31
        October
      Publication
        of 2005 third quarter results DOCUMENTS
    ON DISPLAYSecurities
    and Exchange CommissionWe
    are subject to the informational reporting requirements of the Securities
    Exchange Act of 1934 and file reports and other information with the Securities
    and Exchange Commission. You may examine the reports and other information
    filed by us, without charge, at the public reference facilities maintained
    by the Securities and Exchange Commission at Room 1024, 450 Fifth Street,
    N.W., Washington, D.C., 20549. You may also receive copies of these materials
    by mail from the Securities and Exchange Commissions Public Reference
    Branch at 450 Fifth Street, N.W., Washington, D.C., 20549. For more information
    on the public reference rooms, call the Securities and Exchange Commission
    at 1-800-SEC-0330. Our reports and other information filed with the Securities
    and Exchange Commission are also available to the public from commercial document
    retrieval services and the website maintained by the Securities and Exchange
    Commission at http://www.sec.gov. Our ADRs are traded on the New York Stock
    Exchange, and these materials are available for inspection and copying at
    their offices at 20 Broad Street, New York, NewYork, 10005. PublicationsShare
    is a Dutch-language quarterly magazine distributed to 14,000 individual shareholders
    and other interested readers in the Netherlands. This magazine and other publications
    can also be viewed and ordered through our website. WebsitesFor the
    latest and archived press releases, corporate presentations and speeches,
    current share price and other company information such as our online annual
    report and interim reports, please visit our corporate website at www.tpg.com. We also
  invite you to visit the sites of our two main trading brands: www.tnt.com, www.tpgpost.nl. The information on this website does not form part of this annual report.




TPG
    INVESTOR RELATIONSThrough
    our investor relations activities, we aim to provide shareholders with accurate
    and timely information. We proactively and openly communicate with institutions
    and private investors and with intermediary groups such as analysts and financial
    journalists. In addition
  to the quarterly, half-yearly and yearly result presentations, we maintain regular
  contacts with financial analysts and retail and institutional investors through
  meetings, roadshows, conference calls and company visits. In 2004, we visited
  investors in major financial cities in Europe, the United States and Asia. The annual
  report on Form 20-F is filed electronically with the United States Securities
  and Exchange Commission. Mailing
    addressTPG
    Investor Relations
  P.O. Box 13000
  1100 KG Amsterdam
  The Netherlands Visiting
    addressNeptunusstraat
    41-63
  2132 JA Hoofddorp
  The Netherlands Telephone
      +31
        20 500 6455Fax
      +
        31 20 500 7515E-mail
      investorrelations@tpg.comInternet
        site
      www.tpg.com




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      Annual Report 2004 | 189
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Chapter
  15    Investor relations

---



TPG in
  figures from 2000



|                                                                  |                                 |     
|----------------------------------------------------------------- | ------------------------------- | ----
|                                                                  | Year
      ended at 31 December |     
|                                                                  |                                
|                                                                  | 2004                            | 2003
|                                                                  |                                 |     
|Mail                                                              | 3,900                           |     
|Express
      2                                                   | 4,696                           |     
|Logistics
      2                                                 | 4,081                           |     
|Intercompany
      / Non-allocated                                | (42                             | )   
|                                                                  |                                 |     
|Total
      operating revenues                                    | 12,635                          |     
|Salaries
      /social security contributions                     | 4,305                           |     
|Depreciation,
      amortisation and impairments                  | 533                             |     
|Other
      expenses                                              | 6,623                           |     
|                                                                  |                                 |     
|Total
      operating expenses                                    | 11,461                          |     
|Total
      operating income                                      | 1,174                           |     
|as
      % of total operational revenues                          | 9.3                             | %   
|Net
      income                                                  | 667                             |     
|                                                                  |                                 |     
|Fixed
      assets                                                | 5,083                           |     
|Current
      Assets                                              | 3,199                           |     
|Total
      Assets                                                | 8,282                           |     
|Group
      Equity 3                                              | 2,784                           |     
|Provisions                                                        | 1,237                           |     
|Long-term
      liabilities                                       | 1,646                           |     
|Short-term
      liabilities                                      | 2,615                           |     
|Total
      liabilities and group equity 3                        | 8,282                           |     
|                                                                  |                                 |     
|Net
      cash provided by operating activities                   | 1,000                           |     
|Net
      cash used in investing activities                       | (338                            | )   
|Net
      cash used by financing activities                       | (500                            | )   
|Changes
      in cash and cash equivalents                        | 162                             |     
|                                                                  |                                 |     
|Interest
      cover (times)                                      | 15.2                            |     
|Average
      total capital                                       | 8,099                           |     
|Return
      on average total capital                             | 14.5                            | %   
|Return
      on Assets                                            | 14.2                            | %   
|Net
      return on Equity 3                                      | 24.0                            | %   
|Gearing
      at year end3                                        | 23.6                            | %   
|Capital
      expenditure on property, plant and equipment        | 290                             |     
|Capital
      expenditures on major fixed assets as % of turnover | 2.8                             | %   
|Capital
      expenditure on investments as % of turnover         | 1.8                             | %   
|Cash
      conversion efficiency                                  | 7.9                             | %   
|Number
      of ordinary shares on diluted basis (in millions)    | 474.0                           |     
|Net
      income per diluted ordinary share (€)                   | 1.41                            |     
|Total
      shareholder return (%)                                | 10.6                            |     
|                                                                  |                                 |     

|                                              
|----------------------------------------------
|(in
      € millions, unless otherwise stated)
|1                                             
|2                                             
|3                                             
|                                              



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      Annual Report 2004
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---



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---

Average
  total capitalThe
  averaged sum of the total assets of two consecutive years. Cash
    conversion efficiencyNet
    cash provided by operating activities as a percentage of total operating revenues. Gearing
    at year endThe
    net debt as percentage of total group equity plus net debt. Interest
    cover (times)Total
    operating income divided by net financial (expenses)/ income. Net
    return on equityThe
    net income as percentage of the total group equity. Return
    on assetsThe
    total operating income as a percentage of the total assets. Return
    on average total capitalThe
    total operating income as percentage of the average total capital. Capital
    expenditures on major fixed assets as % of turnoverThe
    capital expenditures on property, plant and equipment and other intangibles
    as percentage of the total operating revenues. Capital
    expenditures on investments as % of turnoverThe
    capital expenditures on acquisitions of new or stake increase in existing
    group and or affiliated companies as percentage of the total operating revenues. Total
    shareholder return (source: Bloomberg Professional)The
    total share price appreciation (or depreciation) plus return on reinvestment
    of gross dividend




---

|TPG
      Annual Report 2004 | 191
|---------------------------- | ---

---



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---



|16                                       |  | 
|---------------------------------------- |  | 
|                                        
|Cross
      Reference Table to Form 20-F





The river
  P, Turin

---

|192 | TPG
      Annual Report 2004 |  |  | 
|--- | ---------------------------- |  |  | 

---



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---

|     |                                                               |  |                                        
|---- | ------------------------------------------------------------- |  | ---------------------------------------
|Item | Required
      item in form 20-F                              |  | Page
      number                      
|     |                                                               |  |                                        
|     | Part
      I                                                  |  |                                        
|     |                                                               |  |                                        
|1    | Identity
      of directors, senior management and advisors   |  | N/a                                    
|     |                                                               |  |                                        
|2    | Offer
      statistics and expected timetable                 |  | N/a                                    
|     |                                                               |  |                                        
|3    | Key
      information                                         |  |                                        
|3A   | Selected
      financial data                                 |  | 10-12                                  
|3B   | Capitalisation
      and indebtedness                         |  | N/a                                    
|3C   | Reasons
      for the offer and use of proceeds               |  | N/a                                    
|3D   | Risk
      factors                                            |  | 73-80                                  
|     |                                                               |  |                                        
|4    | Information
      on the company                              |  |                                        
|4A   | History
      and development of the company                  |  | 14-17,
      25-29, 35-37, 42-44       
|4B   | Business
      overview                                       |  | 14-17,
      25-29, 35-37, 42-44       
|4C   | Organisational
      structure                                |  | 14-17,
      25-29, 35-37, 42-44       
|4D   | Property,
      plants and equipment                          |  | 175-176                                
|     |                                                               |  |                                        
|5    | Operating
      and financial review and prospects            |  |                                        
|5A   | Operating
      results                                       |  | 14-23,
      25-33, 35-40, 42-49, 82-96
|5B   | Liquidity
      and capital resources                         |  | 87-88                                  
|5C   | Research
      and development, patents and licences          |  | N/a                                    
|5D   | Trend
      information                                       |  | 14-23,
      25-33, 35-40, 42-49       
|5E   | Off-balance
      sheet arrangements                          |  | 87,
      120-124                      
|5F   | Tabular
      disclosure of contractual obligations           |  | 120                                    
|5G   | Safe
      harbour [forward looking statements]               |  | 74                                     
|     |                                                               |  |                                        
|6    | Directors,
      senior management and employees              |  |                                        
|6A   | Directors
      and senior management                         |  | 54,
      61                           
|6B   | Compensation                                                  |  | 63-68,
      125-136                   
|6C   | Board
      practices                                         |  | 51                                     
|6D   | Employees                                                     |  | 125                                    
|6E   | Share
      ownership                                         |  | 143-144,
      158-159, 162, 170-172   
|     |                                                               |  |                                        
|7    | Major
      shareholders and related party transactions       |  |                                        
|7A   | Major
      shareholders                                      |  | 170-172                                
|7B   | Related
      party transactions                              |  | 144                                    
|7C   | Interests
      of experts and counsel                        |  | N/a                                    
|     |                                                               |  |                                        
|8    | Financial
      information                                   |  |                                        
|8A   | Consolidated
      statements and other financial information |  | 100-155                                
|8B   | Significant
      changes                                     |  | 52-53                                  
|     |                                                               |  |                                        
|     |                                                               |  |                                        
|     |                                                               |  |                                        
|     |                                                               |  |                                        
|     |                                                               |  |                                        
|     |                                                               |  |                                        
|     |                                                               |  |                                        

---

|TPG
      Annual Report 2004 | 193
|---------------------------- | ---

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Chapter
  16    Cross reference to Form 20-F

---

|     |                                                                                    |  |                         
|---- | ---------------------------------------------------------------------------------- |  | ------------------------
|Item | Required
      item in form 20-F                                                   |  | Page
      number       
|     |                                                                                    |  |                         
|9    | The
      offer and listing                                                        |  |                         
|9A   | Offer
      and listing details                                                    |  | 184                     
|9B   | Plan
      of distribution                                                         |  | N/a                     
|9C   | Markets                                                                            |  | 184                     
|9D   | Selling
      shareholders                                                         |  | N/a                     
|9E   | Dilution                                                                           |  | N/a                     
|9F   | Expenses
      of the issue                                                        |  | N/a                     
|     |                                                                                    |  |                         
|10   | Additional
      information                                                       |  |                         
|10A  | Share
      capital                                                                |  | N/a                     
|10B  | Memorandum
      and articles of association                                       |  | 170-174                 
|10C  | Material
      contracts                                                           |  | 175                     
|10D  | Exchange
      controls                                                            |  | 175                     
|10E  | Taxation                                                                           |  | 176-182                 
|10F  | Dividends
      and paying agents                                                  |  | N/a                     
|10G  | Statement
      by experts                                                         |  | N/a                     
|10H  | Documents
      on display                                                         |  | 189                     
|10I  | Subsidiary
      information                                                       |  | N/a                     
|     |                                                                                    |  |                         
|11   | Quantitative
      and qualitative disclosures about market risk                   |  | 95                      
|     |                                                                                    |  |                         
|12   | Description
      of securities other than equity securities                       |  | N/a                     
|     |                                                                                    |  |                         
|     | Part
      II                                                                      |  |                         
|     |                                                                                    |  |                         
|13   | Defaults,
      dividend arrearages and delinquencies                              |  | N/a                     
|     |                                                                                    |  |                         
|14   | Material
      modifications to the rights of security holders and use of proceeds |  | N/a                     
|     |                                                                                    |  |                         
|15   | Controls
      and procedures                                                      |  | 52-53                   
|     |                                                                                    |  |                         
|16A  | Audit
      committee financial expert                                             |  | 55                      
|     |                                                                                    |  |                         
|16B  | Code
      of ethics                                                               |  | 70-71                   
|     |                                                                                    |  |                         
|16C  | Principal
      accountant fees and services                                       |  | 56,
      137           
|     |                                                                                    |  |                         
|16D  | Exemptions
      from the listing standards for audit committees                   |  | N/a                     
|     |                                                                                    |  |                         
|16E  | Purchases
      of equity securities by the issuer and affiliated purchasers       |  | 158                     
|     |                                                                                    |  |                         
|     | Part
      III                                                                     |  |                         
|     |                                                                                    |  |                         
|17   | Financial
      statements                                                         |  | N/a                     
|     |                                                                                    |  |                         
|18   | Financial
      statements                                                         |  | 100-163                 
|     |                                                                                    |  |                         
|19   | Exhibits                                                                           |  | Filed
      with the SEC
|     |                                                                                    |  |                         
|     |                                                                                    |  |                         
|     |                                                                                    |  |                         

---

|194 | TPG
      Annual Report 2004
|--- | ----------------------------

---



Back to Contents






---



|1.1  | Articles
      of Association of TPG N.V., as amended (English translation).                                                                                                                                                      
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                   
|2.1  | Deposit
      Agreement dated as of 15 June 1998, among TNT Post Group N.V., Citibank
      N.A., as Depositary,and
      all registered holders and beneficial owners from time to time of ADRs.1                                
|     |                                                                                                                                                                                                                                   
|2.2  | Form of
      American Depositary Receipt (included in Exhibit 2.1).                                                                                                                                                              
|     |                                                                                                                                                                                                                                   
|2.3  | Fiscal Agency
      Agreement dated as of 29 November 2001, between TPG N.V. and ING Bank N.V.,
      asFiscal
      Agent and Paying Agent.2                                                                                     
|     |                                                                                                                                                                                                                                   
|4.1  | Letter Agreement
      dated 23 June 1998, between The State of the Netherlands and TNT Post Group
      N.V.(English
      translation).3                                                                                        
|     |                                                                                                                                                                                                                                   
|4.2  | Letter Agreement
      dated 9 March 2001, between TNT Post Group N.V. and the State Secretary
      of Transport,Public
      Works and Water Management, on behalf of the State of the Netherlands (English
      translation).4
|     |                                                                                                                                                                                                                                   
|4.3  | Employment
      Agreement of M.P. Bakker.5                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                   
|4.4  | Employment
      Agreement of J.G. Haars.6                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                   
|4.5  | Employment
      Agreement of H.M. Koorstra.7                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                   
|4.6  | Participation
      Agreement dated 20 December 2002 between TNT Post Groep N.V. and the StichtingPensioenfonds
      TNT Post Groep (English summary of Dutch agreement).8                                                       
|     |                                                                                                                                                                                                                                   
|4.9  | Fiat Spare
      Parts Renewal agreement dated 19 February 2004 between TNT Automotive Logistics
      S.p.A andFiat
      Auto S.p.A. (English translation of Italian agreement).9                                               
|     |                                                                                                                                                                                                                                   
|8.1  | Significant
      subsidiaries (see chapter 14  Additional information).                                                                                                                                                       
|     |                                                                                                                                                                                                                                   
|11.1 | Code
      of ethics for senior financial officers (see "TPG Code of Business Principles",
      chapter 9  Code of Business Principles and corporate social
      responsibility).                                            
|     |                                                                                                                                                                                                                                   
|12.1 | Certification
      by Chief Executive Officer pursuant Section 302 of the Sarbanes -Oxley Act
      of 2002.                                                                                                                     
|     |                                                                                                                                                                                                                                   
|12.2 | Certification
      by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.                                                                                                                   
|     |                                                                                                                                                                                                                                   
|13.1 | Certification
      by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes -Oxley Act of 2002.                                                                   
|     |                                                                                                                                                                                                                                   
|13.2 | Certification
      by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes -Oxley Act of 2002.                                                                   

---

---

|TPG
      Annual Report 2004 | 195
|---------------------------- | ---

---



SIGNATURE

The
  registrant hereby certifies that it meets all of the requirements for filing
  on Form 20-F and has duly caused and authorised the undersigned to sign this
  annual report on its behalf.

| | TPG
        N.V.
        By: /s/ M. P. Bakker
        Name: M. P. Bakker
        Title: Chairman of the Board of Management and CEO
| | -----------------------------------------------------------------------------------------------------------------------------------

Date: 25 February
  2005

---



1

Exhibit
  1.1

ARTICLES OF ASSOCIATION
  of TPG N.V.,having its official seat in Amsterdam.

1 September
  2004















Office translation
  of the complete text of the Articles of Association of TPG N.V., having its
  official seat in Amsterdam, as they read after the deed of amendment executed
  on 1 September 2004 before G.W.Ch. Visser, civil law notary in Amsterdam, in
  respect of which a ministerial Statement of No objections was granted on 26
  July 2004, under number NV 617722.

In preparing the attached document, an attempt has been made to translate as literally as possible without jeopardizing the overall continuity of the text. Inevitably, however, differences may occur in translation, and if they do, the Dutch text will govern by law.

In the attached
  document, Dutch legal concepts are expressed in English terms and not in their
  original Dutch terms; the concepts concerned may not be identical to concepts
  described by the English terms as such terms may be understood under the laws
  of other jurisdictions.

---



2

CHAPTERI Definitions
  .
  Article1.

In these articles
  of association the following terms shall have the meanings as assigned below:

|a. | general meeting: the body formed by shareholders with voting rights and
      others holding voting rights;                                                                                                    
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                
|b. | general meeting of shareholders: the meeting of shareholders and other persons
      entitled to attend meetings;                                                                                              
|   |                                                                                                                                                                                                                
|c. | depositary receipts: depositary receipts for shares in the company;                                                                                                                                            
|   |                                                                                                                                                                                                                
|d. | distributable part of the shareholders' equity: that part of the shareholders'
      equity which exceeds the paid and called capital plus the reserves which
      are required to be held by law;            
|   |                                                                                                                                                                                                                
|e. | auditor: a "registeraccountant" or other auditor referred to in section
      393 of Book 2 of the Netherlands Civil Code or an organisation in which
      such auditors work together;                       
|   |                                                                                                                                                                                                                
|f. | the annual meeting: the general meeting of shareholders convened to consider
      the financial statements and annual report;                                                                                 
|   |                                                                                                                                                                                                                
|g. | subsidiary:                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                
|   | -                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                
|   | -                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                
|   | all
      this subject to the provisions of paragraphs 3 and 4 of section 24a of Book
      2 of the Netherlands Civil Code.                                                                                   
|   |                                                                                                                                                                                                                
|   | A
      company operating under its own6 name, for the debts of which the company
      or one or more subsidiaries is fully liable as a partner towards its creditors,
      shall be treated as a subsidiary;
|   |                                                                                                                                                                                                                
|h. | group
        company: a legal entity or company within the meaning of section 24b of
        Book 2 of the Netherlands Civil Code which is united with the company
        in one group;                      
|   |                                                                                                                                                                                                                
|i. | dependent
      company:                                                                                                                                                                                       
|   |                                                                                                                                                                                                                
|   | -                                                                                                                                                                                                              

---



3

|   | -                                                                                                                                                                                                                                                                      | a
      partnership, a (business) undertaking of which has been registered in the
      commercial register and for which the company or a dependent company is
      fully liable as a partner towards third parties for all liabilities;
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                           
|j. | Official
      Price List: the Official Price List of Euronext Amsterdam N.V. or an official
      publication replacing it;                                                                                                                                          
|   |                                                                                                                                                                                                                                                                       
|k. | Rules
      relating to Securities (Fondsenreglement):
      the Rules relating to Securities on the stock exchange maintained by Euronext
      Amsterdam N.V.;                                                                                                      
|   |                                                                                                                                                                                                                                                                       
|l. | Necigef:Nederlands
      Centraal Instituut voor Giraal Effectenverk eer B.V.:
      the Netherlands central securities depository (centraal
      instituut)
      as referred to in the Securities Bank Giro Transfer Act (Wet
      giraal effectenverkeer);       
|   |                                                                                                                                                                                                                                                                       
|m. | Necigef-beneficiary:
        in respect of ordinary shares, a participant (deelgenoot)
        in the collective deposit (verzameldepot)
        of ordinary shares of a Necigef-participant, all within the meaning of
        the Securities Bank Giro Transfer Act;
|   |                                                                                                                                                                                                                                                                       
|n. | Necigef-participant: an
      institution which is an
      associated institution
      (aangesloten
      instelling)
      within the meaning of the Securities Bank Giro Transfer Act;                                                                            
|   |                                                                                                                                                                                                                                                                       
|o. | Necigef
      Global Certificate: the one single share certificate representing all bearer
      ordinary shares in issue from time to time referred to in article 6, paragraph
      2, of these articles of association.                                            

CHAPTER II Name, registered
  office, structure and object. Article 2.
  Name and seat.

|1. | The name
      of the company is: TPG N.V.               
|-- | ---------------------------------------------------------
|2. | The company
      has its registered office in Amsterdam.

Article 3. Structure.

The company is a 'large company'. The sections 158 to 164 inclusive of Book 2 of the Netherlands Civil Code shall be applicable. Pursuant to the Enabling Act Koninklijke PTT Nederland N.V. (Machtigingswet Koninklijke PTT Nederland N.V.) as lastly amended by law of 1 November 2001 (Wijziging van de Mach-tigingswet Koninklijke PTT Nederland N.V. in verband met het opheffen van de uitzonderingen die voor Koninklijke KPN Nederland N.V. gelden ten aanzien van de in Boek 2 van het Burgerlijk Wetboek opgenomen regeling voor grote ven-nootschappen, Statute Book (Staatsblad) 2001, 560), the exceptions pursuant to the sections 153 paragraph 3 and 155 of Book 2 of the Netherlands Civil Code do not apply to it.

Article 4. Object.

The objects
  of the company are:

|a. | to
      participate in and to manage other enterprises and companies, among such,
      companies that operate in the field of the transportation, distribution
      and delivery of letters, messages, parcels and goods, as well as the storing,
      converting and transmitting of information, to manage and dispose of in-
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                    

---



4

|   | formation,
      the providing of logistic services and the providing of money transactions;                                                                                            
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                         
|b. | to
      let its subsidiaries carry out the concessions or licenses that are granted
      by the Netherlands government in the field mentioned under a;                                
|   |                                                                                                                                                                                         
|c. | to
      manage and finance subsidiaries, group companies, dependent companies and
      participations, among which to guarantee the debts of those companies and
      participations,

and
  further to engage in any activity which may be related or conductive to the
  objects set out hereinabove.

CHAPTER III Capital and
  shares. Registers. Article 5.
  Authorised capital. Classes of shares.

|1. | The
      authorised capital amounts to one billion one hundred fifty-two million
      euros (EUR 1,152,000,000).                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                 
|2. | The
      authorised capital is divided into two billion four hundred million (2,400,000,000)
      shares of forty-eight eurocents (EUR 0.48) each, namely :                                                                                   
|   |                                                                                                                                                                                                                                                 
|   | a.                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                 
|   | b.                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                 
|   | c.                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                 
|3. | The
      ordinary shares may, at the choice of the shareholder, be registered shares
      or bearer shares. The special share and the preference shares B shall be
      registered shares.                                                   
|   |                                                                                                                                                                                                                                                 
|4. | Where
      the terms "shares" and "shareholders" are used in these articles of association
      they shall, unless the context indicates otherwise, be taken to mean all
      classes of shares referred to in paragraph 2 and their holders.

Article 6.
  Bearer ordinary shares: Necigef Global Certificate.

|1. | On
      the occasion of the issuance of ordinary shares any person entitled to receive
      such share may submit a written request to the company for a registered
      ordinary share. Without such request, the person entitled to such share
      shall obtain a bearer ordinary share in conformity with the provisions of
      this article 6.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                          
|2. | All
      bearer ordinary shares in issue from time to time shall be represented by
      one single share certificate (the "Necigef Global Certificate").                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                          
|3. | The
      company shall have the Necigef Global Certific ate kept in safe custody
      by Necigef for the benefit of the Necigef-beneficiaries.                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                          
|4. | The
      company shall confer a right to a bearer ordinary share on a person by (i)
      having Necigef enable the company to add an ordinary share to the Necigef
      Global Certificate, and (ii) by the entitled person designating a Necigef-participant
      that will accordingly credit him as Necigef-beneficiary in                        

---



5

|   | in
      this Necigef-participant's collective deposit of ordinary shares in the
      company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|5. | Without
      prejudice to the provisions in article 44, paragraph 4, of these articles
      of association, Necigef shall be irrevocably charged with the management
      of the Necigef Global Certificate and be irrevocably authorised on behalf
      of the Necigef-beneficiaries to perform all acts in respect of the shares
      concerned, including acceptance and delivery and lending cooperation in
      the crediting and debiting of the Necigef Global Certificate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|6. | No
      individual bearer ordinary share shall be handed over                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|7. | A
      Necigef-beneficiary may at any time require the conversion of one or more
      bearer ordinary shares up to the maximum number he is entitled to into registered
      ordinary shares. Such conversion of one or more ordinary shares is only
      allowed to the maximum number for which he is Necigef-participant and shall
      require (i) the transfer by deed of the shares concerned by Necigef to the
      Necigef-beneficiary, (ii) the company acknowledging the transfer of the
      shares concerned, (iii) Necigef enabling the company to have the ordinary
      shares debited from the Necigef Global Certificate, (iv) the Necigef-participant
      concerned debiting the Necigef -beneficiary accordingly as a participant
      in its collective deposit of ordinary shares in the company and (v)
      the company
      effecting the entry of the Necigef-beneficiary's name in the company's register
      of shareholders as holder of the registered ordinary shares concerned.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|8. | A
      holder of registered ordinary shares may at any time require the conversion
      of such ordinary shares into bearer ordinary shares. Conversion of one or
      more registered ordinary shares shall require (i) the transfer by deed of
      the shares concerned by the shareholder to Necigef, (ii) the company acknowledging
      the transfer of the shares concerned, (iii) Necigef enabling the company
      to have the ordinary shares credited to the Necigef Global Certificate,
      (iv) the Necigef-participant crediting the shareholder accordingly as Necigef-beneficiary
      in its collective deposit of ordinary shares in the Company, and (v) the
      company effecting the deletion of the shareholder's name as holder of the
      shares concerned in the company's register of shareholders.                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|9. | For
      the purpose of application of the provisions of these articles of association,
      shareholders shall be understood to include Necigef-beneficiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10 | In
      the event of the damage, destruction or loss of share certificates, the
      Board of Management may issue duplicates. The issue of a duplicate shall
      render the original document worthless vis-à-vis the company. The
      new document shall clearly state that it is a duplicate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Article
  7.Has
  been cancelled.Article 8.Has
  been cancelled.

---



6

Article9.Has
  been cancelled. Article 10.
  Depositary receipts for shares.

|1.                                            | The
      company may cooperate towards the issue of depositary receipts for its shares.                                                                                                                                                                             
|--------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                              |                                                                                                                                                                                                                                                                      
|2.                                            | If
      such an issue has been effected, the holders of the depositary receipts
      shall have the rights conferred by law upon the holders of depositary receipts,
      among which:                                                                            
|                                              |                                                                                                                                                                                                                                                                      
|                                              | a.                                                                                                                                                                                                                                                                   
|                                              |                                                                                                                                                                                                                                                                      
|                                              | b.                                                                                                                                                                                                                                                                   
|                                             
|Article
      11. Registers for shareholders.
|                                              |                                                                                                                                                                                                                                                                      
|1.                                            | No
      share certificates shall be issued for the ordinary registered shares, for
      the special share and for the preference shares B.                                                                                                                         
|                                              |                                                                                                                                                                                                                                                                      
|2.                                            | The
      Board of Management shall keep a register in which are entered the names
      and addresses of all holders of the special share and the ordinary registered
      shares, indicating the class of shares.                                                 
|                                              |                                                                                                                                                                                                                                                                      
|3.                                            | The
      Board of Management shall also keep a separate register in which are entered
      the names and addresses of all holders of preference shares B.                                                                                                          
|                                              |                                                                                                                                                                                                                                                                      
|4.                                            | Each
      holder of one or more registered shares and each person holding a right
      of usufruct or pledge on one or more of such shares is obliged to notify
      the company in writing of his address.                                                       
|                                              |                                                                                                                                                                                                                                                                      
|5.                                            | All
      entries and notes in a register shall be signed by a member of the Board
      of Management and by a member of the Supervisory Board, or by a person authorised
      thereto by the Board of Management with the approval of the Supervisory
      Board.
|                                              |                                                                                                                                                                                                                                                                      
|6.                                            | Section
      85 of Book 2 of the Netherlands Civil Code shall also be applicable to the
      registers.                                                                                                                                                            
|                                              |                                                                                                                                                                                                                                                                      
|7.                                            | Extracts
      from a register shall be non-negotiable.                                                                                                                                                                                                              

CHAPTER IV
  Issue of shares. Article 12.
  Competent body.

|1. | Shares shall
      be issued pursuant to a resolution of the Board of Management. The resolution
      shall be subject to the approval of the Supervisory Board and the holder
      of the special share. The scope of authority of the Board of Management
      shall be determined by a resolution of the general meeting of shareholders
      and relate at most to all unissued shares of the authorised capital, as
      applicable now or at any time in the future. The duration of this authority
      shall be determined by a resolution of the general meeting and shall be
      for a period of five years at most.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2. | Designation
      of the Board of Management as the body competent to issue shares may be
      extended by the articles of association or by a resolution of                                                                                                                                                                                                                                                                                                                                                                                                                                                                         



---



7

|   | the general
      meeting for a period not exceeding five years in each case. The resolution
      of the general meeting thereto shall be subject to the approval of the holder
      of the special share. The number of shares which may be issued shall be
      determined at the time of designation. Designation pursuant to the articles
      of association may be withdrawn by an amendment to the articles of association.
      Designation by resolution of the general meeting cannot be withdrawn unless
      determined otherwise at the time of designation.                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3. | Upon termination
      of the authority of the Board of Management, the issue of shares shall thenceforth
      require a resolution of the general meeting, save where another corporate
      body has been designated by the general meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4. | A resolution
      by the general meeting to issue shares or to designate another body as the
      body competent to issue such shares, may only be taken upon a proposal of
      the Board of Management subject to the approval of the Supervisory Board.
      The resolution of the general meeting shall be subject to the approval of
      the holder of the special share. A resolution of the general meeting to
      designate another corporate body can only be effected if it is determined
      thereto that every resolution to issue shares of that body shall be subject
      to the approval of the Supervisory Board and the holder of the special share.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|5. | The issue
      of preference shares B pursuant to a resolution of a body other than the
      general meeting as a result of which the amount of preference shares B issued
      would exceed one hundred per cent (100%) of the amount of other shares issued
      may only take place with the prior approval of the general meeting, granted
      from case to case.                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|6. | In the event
      of an issue of preference shares B pursuant to a resolution of a body other
      than the general meeting as a result of which the amount of preference shares
      B issued does not exceed one hundred per cent (100%) of the amount of other
      shares issued, a general meeting of shareholders shall be convened within
      four weeks of the issue at which the reasons for the issue shall be explained.                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|7. | The provisions
      of paragraphs 1 to 6 inclusive shall be applicable mutatis mutandis to the
      granting of rights to subscribe to shares, but shall not be applicable to
      the issue of shares to persons exercising a previously granted right to
      subscribe to shares.                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|8. | In the event
      of an issue of preference shares B, a general meeting of shareholders shall
      be convened, to be held not later than two years after the date on which
      preference shares B were issued for the first time. The agenda for that
      meeting shall include a resolution relating to the repurchase or cancellation
      of the preference shares B. If the resolution to be adopted in respect of
      this item on the agenda does not extend to the repurchase or cancellation
      of the preference shares B, a general meeting of shareholders shall be convened
      and held, in each case within two years of the previous meeting, the 



---



8

|                                                        | agenda of
      which meetings shall include a resolution relating to the repurchase or
      cancellation of the preference shares B, until such time as no more preference
      shares B remain issued. The foregoing provisions of this paragraph shall
      not be applicable to preference shares B issued pursuant to a resolution
      of the general meeting.                           
|------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|9.                                                      | Section
      96 of Book 2 of the Netherlands Civil Code shall also be applicable to the
      issue of shares and the granting of rights to subscribe to shares.                                                                                                                                                                                                                                  
|                                                       
|Article
      13. Share issue terms. Pre-emptive right.
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|1.                                                      | The price
      and other terms of issue shall be determined at the time of the resolution
      to issue shares. Save as provided in section 80, paragraph 2 of Book 3 of
      the Netherlands Civil Code, the issue price shall not be less than par.                                                                                                                                           
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|2.                                                      | Each holder
      of ordinary shares shall have a pre-emptive right to any issue of ordinary
      shares pursuant to the provisions of section 96a of Book 2 of the Netherlands
      Civil Code. The same shall apply to the granting of rights to subscribe
      to ordinary shares.                                                                                                           
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|3.                                                      | The pre-emptive
      right may be restricted or excluded by a resolution of the Board of Management.
      The resolution shall be subject to the approval of the Supervisory Board
      and the holder of the special share. The authority vested in the Board of
      Management shall terminate on the date of termination of the authority of
      the Board of Management to issue shares.
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                        | Paragraphs
        1 to 4 inclusive of article 12 shall be applicable mutatis mutandis.                                                                                                                                                                                                                                                                                                            
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|4.                                                      | Sections
      96a and 97 of Book 2 of the Netherlands Civil Code shall also be applicable
      to the issue terms and the pre-emptive right, respectively.                                                                                                                                                                                                                                       
|                                                       
|Article
      14. Paying up on shares.                 
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|1.                                                      | On subscription
      to each ordinary share and the special share, payment must be made of its
      nominal value and, if an ordinary share is subscribed to at a higher amount,
      the difference between such amounts, without prejudice to the provisions
      of section 80, paragraph 2 of Book 2 of the Netherlands Civil Code.                                                        
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|2.                                                      | On subscription
      to each preference share B, paying up must be made of at least one-quarter
      of its nominal value.                                                                                                                                                                                                                                                                       
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|3.                                                      | Further
      paying up on preference shares B shall not be made until a call for such
      paying up is made by the company. Calls for further paying up shall be made
      pursuant to a resolution of the Board of Management. The resolution is subject
      to the approval of the Supervisory Board.                                                                                      
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|4.                                                      | Paying up
      on preference shares B and on the special share may be made only in cash.
      Paying up on ordinary shares must be made in cash, insofar as another form
      of contribution has not been agreed to.                                                                                                                                                                           
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|5.                                                      | The Board
      of Management shall be authorised, without the prior approval of the general
      meeting, to perform legal acts relating to non-cash contributions for ordinary
      shares and the other legal acts referred to in section 94 of Book 2 of the
      Netherlands Civil Code.                                                                                                   
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|6.                                                      | Sections
      80, 80a, 80b and 94b of Book 2 of the Netherlands Civil Code shall also
      be applicable to payment on shares and non-                                                                                                                                                                                                                                                           



---



9

| | cash contributions,
      respectively.
| | ---------------------------------------

CHAPTER V Shares in the
  company's own capital and depositary receipts therefor. Article 15. Acquisition.

|1. | The
      company may acquire fully paid up shares in its own capital or depositary
      receipts therefor, but may only do so for no consideration or if:                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                            
|   | a.                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                            
|   | b.                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                            
|2. | The
      company may acquire shares in its own capital or depositary receipts therefor
      for the purpose of transferring the same to employees of the company or
      of a group company under a scheme applicable to s uch employees.                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                            
|3. | Shares
      in the company's own capital shall be acquired or disposed of pursuant to
      a resolution of the Board of Management.                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                            
|   | A
      resolution to acquire or dispose of shares in its own capital amounting
      to more than one per cent (1%) of the issued capital of ordinary shares
      shall be subject to the approval of the holder of the special share; all
      without prejudice to the provisions of article 25 paragraph 1 under A.a
      and section 98, paragraph 4 of the Netherlands Civil Code.
|   |                                                                                                                                                                                                                                                                                                                                                                                            
|4. | Sections
      24d, 89a, 95, 98, 98a, 98b, 98c, 98d and section 118, paragraph 7 of Book
      2 of the Netherlands Civil Code shall also be applicable to shares in the
      company's own capital or depositary receipts therefor.                                                                                                                                                      

CHAPTER VI Reduction of
  capital. Article 16.

|1. |                                                                                                                                                               | The general
      meeting may, but only on a proposal of the Board of Management with the
      approval of the Supervisory Board, resolve to reduce the issued capital:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                               |                                                                                                                                                                         
|   | a.                                                                                                                                                            | by a cancellation
      of shares; or                                                                                                                                   
|   |                                                                                                                                                               |                                                                                                                                                                         
|   | b.                                                                                                                                                            | by a reduction
      of the nominal amount of the shares by amendment of the articles of association.                                                                   
|   |                                                                                                                                                               |                                                                                                                                                                         
|2. | A
      resolution to cancel may only relate to:                                                                                                             
|   |                                                                                                                                                               |                                                                                                                                                                         
|   | a.                                                                                                                                                            | shares
      held by the company itself or for which it holds the depositary receipts;
      or                                                                         
|   |                                                                                                                                                               |                                                                                                                                                                         
|   | b.                                                                                                                                                            | all preference
      shares B, all ordinary shares or the special share, in all cases with repayment.                                                                   
|   |                                                                                                                                                              
|3. | A
      resolution to cancel the special share shall only be adopted with the prior
      approval of the holder of the special share.                       
|   |                                                                                                                                                               |                                                                                                                                                                         
|4. | Any
      partial repayment on shares or release from the obligation to pay up shall
      only be permitted in order to implement a resolution to reduce the



---



10

|   | nominal
      amount of the shares. Such a repayment or release must be made:                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                
|   | a.                                                                                                                                             
|   |                                                                                                                                                
|   | b.                                                                                                                                             
|   |                                                                                                                                                
|5. | The
      provisions of sections 99 and 100 of Book 2 of the Netherlands Civil Code
      shall also be applicable to the reduction of capital.

CHAPTER VII Transfer of
  the special share. Transfer of the registered shares. Restricted rights. Article
  17. Transfer of the special share.

|1.                                                                  | The special
      share can be transferred to the company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2.                                                                  | Any transfer
      other than that to the company can only be effected with the approval of
      the Board of Management and the Supervisory Board.                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3.                                                                  | The transfer
      must take place within three months after the approval has been granted.
      The approval shall be deemed to have been granted if the Board of Management
      and the Supervisory Board, having informed the applicant of the refusal
      of the request, do not simultaneously inform the applicant of one or more
      prospective buyers who are prepared to purchase the special share against
      payment in cash. The company itself can be designated as a prospective buyer.                                                              
|                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4.                                                                  | The
      transfer of the special share to the company or to another prospective buyer
      as referred to in paragraph 3 shall take place against a purchase price
      that equals the nominal value of the special share.                                                                                                                                                                                                                                                                                                                                                
|                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|5.                                                                  | If the special
      share is transferred without the approval of the Board of Management and
      the Supervisory Board, the rights granted to the holder of the special share
      as such in the articles of association shall terminate.                                                                                                                                                                                                                                                                                                                                
|                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Article
      18. Transfer of registered shares. Restricted rights.
|                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|1.                                                                  | A transfer
      of a registered share or of a restricted right thereto shall require a deed
      of transfer drawn up for that purpose and, save when the company itself
      is a party to the legal act, acknowledgement in writing by the company of
      the transfer.                                                                                                                                                                                                                                                                                                
|                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                    | Acknowledgement
      must be given in the instrument or by a dated statement embodying such acknowledgement
      on the instrument or on a copy or extract thereof duly authenticated by
      a civil-law notary or by the transferor. Service of such instrument, copy
      or extract on the company shall be deemed as acknowledgement. If the transfer
      relates to preference shares B which have not been paid up in full, the
      acknowledgement may be given only if the instrument of transfer bears an
      officially recorded or otherwise fixed date.
|                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2.                                                                  | A pledge
      may be also established on a share without acknowledgement by the company
      or service of an instrument on the company. In such cases, section 239 of
      Book 3 of the Netherlands Civil Code shall be applicable mutatis mutandis
      whereby acknowledgement by the company or service of an instrument on the
      company shall replace the notification referred to in paragraph 3 of that
      section.                                                                                                                                       



---



11

|3.                                  | The acknowledgement
      shall be signed with due observance of the provisions on representation
      of article 24.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Article
      19. Usufruct. Pledge.
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|1.                                  | The shareholder
      shall have the right to vote on shares subject to a usufruct or pledge.
      The usufructuary or the pledgee shall, however, have the right to vote if
      so provided upon the establishment of the usufruct or pledge. A shareholder
      without the right to vote and a usufructuary or a pledgee with the right
      to vote shall have the rights conferred by law upon the holders of depositary
      receipts issued for shares with the cooperation of a company. A usufructuary
      or pledgee without the right to vote shall not have the rights referred
      to in the preceding sentence.
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2.                                  | The shareholder
      shall have the rights attaching to the share on which a usufruct has been
      established with respect to the acquisition of shares, provided that he
      shall compensate the usufructuary for the value of these rights to the extent
      that the latter is entitled thereto under his right of usufruct.                                                                                                                                                                                                                                                                                               

CHAPTER VIII Management. Article 20.
  Board of Management.

|1.                                                       | The management
      of the company shall be formed by a Board of Management consisting of a
      number of members to be determined by the Supervisory Board at three or
      more members.                                                                                                                                                                                                                                                                       
|-------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.                                                       | The Supervisory
      Board shall appoint a chairman from among the members of the Board of Management.                                                                                                                                                                                                                                                                                                                                                              
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Article
      21. Appointment, suspension and dismissal.
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|1.                                                       | The Supervisory
      Board shall appoint the members of the Board of Management. It shall notify
      the general meeting of an intended appointment.                                                                                                                                                                                                                                                                                                              
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.                                                       | The Supervisory
      Board shall not dismiss a member of the Board of Management until the general
      meeting has been consulted on the intended dismissal. The Supervisory Board
      shall permit the member of the Board of Management who it intends to dismiss,
      to be heard before the general meeting regarding the intended dismissal.                                                                                                             
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.                                                       | The Supervisory
      Board can suspend a member of the Board of Management.                                                                                                                                                                                                                                                                                                                                                                                         
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.                                                       | A suspension
      may be extended on one or more occasions, but is not to last for a total
      of more than three months. If no decision has been made to set aside the
      suspension or dismiss such member by the end of that period the suspension
      shall be set aside.                                                                                                                                                                                
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5.                                                       | Section
      158, paragraph 11 of Book 2 of the Netherlands Civil Code shall also apply
      to the appointment and dismissal of the members of the Board of Management.                                                                                                                                                                                                                                                                                           
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Article
      22. Remuneration.                         
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|1.                                                       | The company
      has a policy on the remuneration of the Board of Management.The
      policy shall be proposed by the Supervisory Board and adopted by thegeneral
      meeting. The policy on remuneration shall in any case include thesubjects
      referred to in sections 383c, 383d and 383e of Book 2 of the Netherlands
      Civil Code insofar as they regard issues related to the Board of Management.                                                
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.                                                       | The remuneration
      and further terms of employment of the Board of Management
      shall be determined by the Supervisory Board, with due observanceof
      the policy referred to in paragraph 1.                                                                                                                                                                                                                                                             
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.                                                       | If the remuneration
      of the Board of Management also consists of schemesunder
      which shares or rights to subscribe for shares are granted, the Supervisory
      Board shall submit these schemes to the general meeting for approval.The
      proposal must as a minimum state the number of shares or rights to subscribe
      for shares that can be granted to the Board of Management and theconditions
      for the granting and amending thereof.
|                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



---



12

Management shall
  be determined by the Supervisory Board.

Article 23.
  Management duties. Decision-making. Allocation of tasks.

|1.                                                                    | Subject
      to the restrictions imposed by the articles of association, the Board of
      Management shall be charged with the management of the company.                                                                                                                                                                                                        
|--------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|2.                                                                    | The
      Board of Management shall resolve with an absolute voting majority. In the
      event the votes are equally divided, the chairman of the Board of Management
      shall have a casting vote                                                                                                                                                             
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|3.                                                                    | The
      Board of Management shall draw up by-laws containing further regulations
      on the procedure of holding meetings and decision-making by the Board of
      Management, and its operating procedures. Such by-laws shall require the
      approval of the Supervisory Board.                                                                           
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|4.                                                                    | In
      allocating its duties, the Board of Management may determine the tasks for
      which each member of the Board of Management bears special responsibility.
      The allocation of tasks shall require the approval of the Supervisory Board.                                                                                                             
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|Article
      24. Representation.                                    
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|1.                                                                    | The
      Board of Management represents the company. Representative authority shall
      also vest in:                                                                                                                                                                                                                                                            
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|                                                                      | a.                                                                                                                                                                                                                                                                                                                                                                  
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|                                                                      | b.                                                                                                                                                                                                                                                                                                                                                                  
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|2.                                                                    | The
      Board of Management may appoint officers with general or restricted power
      to represent the company. Any such appointment may be withdrawn at any time.
      All such officers shall represent the company with due observance of the
      restrictions imposed on their powers. Their titles shall be determined by
      the Board of Management.
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|3.                                                                    | In
      the event of a conflict of interest between the company and a member of
      the Board of Management, the company shall be represented by a member of
      the Board of Management or a member of the Supervisory Board appointed by
      the Supervisory Board for this purpose.                                                                       
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|Article
      25. Approval of resolutions of the Board of Management.
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|1.                                                                    | Without
      prejudice to the other provisions of these articles of association as to
      that subject, the approval of the Supervisory Board shall be required for:                                                                                                                                                                                             
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|                                                                      | A                                                                                                                                                                                                                                                                                                                                                                   
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                     

---



13

|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | company
      or a dependent company with any other company or legal entity or as fully
      liable partner in a limited partnership or general partnership if such cooperation
      or termination is of fundamental importance to the company;                                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                           | e.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | the acquisition
      of a participation worth at least a quarter of the value of the issued capital
      plus reserves according to the company's balance sheet plus explanatory
      notes, by the company or a dependent company in the capital of another company,
      and any substantial increase or decrease of such a participation;
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                           | f.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | investments
      requiring an amount equal to at least a quarter of the company's issued
      capital plus reserves according to its balance sheet plus explanatory notes;                                                                                                                                                                    
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                           | g.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | a proposal
      to amend the articles of association;                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                           | h.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | a proposal
      to dissolve the company;                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                           | i.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | a petition
      for bankruptcy (faillissement)
      or a request for suspension of payments (surséance
      van betaling);                                                                                                                                                                                                                   
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                           | j.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | the termination
      of the employment of a considerable number of the company's employees or
      of a dependent company's employees simultaneously or within a short period
      of time;                                                                                                                                                  
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                           | k.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | a significant
      change in the employment conditions of a considerable number of the company's
      employees or of a dependent company's employees;                                                                                                                                                                                        
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                           | l.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | a proposal
      to reduce the issued capital of the company;                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | B.                                                                                                                                                                                        | -
      insofar not already subject to A mentioned hereinabove - the resolutions
      of the Board of Management, against which the chairman has cast his vote
      in the voting of the Board of Management.                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|2. | Without
      prejudice to the provisions of paragraph 1 of this article, the approval
      of the Supervisory Board shall be required for resolutions of the Board
      of Management:
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|   | a.                                                                                                                                                                                        | to
      exercise the right to vote on shares in Koninklijke TPG Post B.V. or another
      legal entity within the meaning of section 4, paragraph 1 of the Netherlands
      Postal Act (Postwet)
      with respect to a proposal to issue shares by the legal entity involved,
      if this issue of shares shall result in the legal entity no longer meeting
      that what is provided for in section 4, paragraph 1 sub c. of the Netherlands
      Postal Act;
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|   | b.                                                                                                                                                                                        | to
      sell shares in Koninklijke TPG Post B.V. or another legal entity within
      the meaning of section 4, paragraph 1 of the Netherlands Postal Act, if
      the selling shall result in the legal entity no longer meeting that what
      is provided for in sec tion 4, paragraph 1 under c. of the Netherlands Postal
      Act.                                                                                                                             
|   |                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                 
|   | For
      the application of what is provided for in this sub-paragraph, granting
      approval for resolutions of a Board of Management of a legal entity referred                     
|   |                                                                                                                                                                                          

---



14

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | to
      in a. or b. of this sub-paragraph to vote on shares in the capital of another
      legal entity referred to in section 4, paragraph 1 of the Netherlands Postal
      Act which are held by the former legal entity, shall be equated with voting
      on shares                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Without
      prejudice to the provisions of paragraph 1 and 2 of this article, the approval
      of both the Supervisory Board and the holder of the special share shall
      be required for resolutions of the Board of Management:                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | a.                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | b.                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | The
      Supervisory Board may require other resolutions of the Board of Management
      than those specified in paragraphs 1, 2 and 3, to be subject to its approval.
      The Board of Management shall be notified in writing of such resolutions,
      which shall be clearly specified.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | The
      lack of approval of the Supervisory Board or the holder of the special share,
      respectively, for a resolution as referred to in the paragraphs 1, 2, 3
      and 4 shall not affect the authority of the Board of Management and its
      members to represent the company.     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|Article
      26. Absence or inability to act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|In
      the event of the absence or inability to act of a member of the Board of
      Management, the remaining members shall be charged temporarily with the
      management of the company. In the event of the absence or inability to act
      of all the members of the Board of Management, the Supervisory Board shall
      be charged temporarily with the management of the company and shall have
      the authority to delegate the management of the company temporarily to one
      or more persons, whether or not members of the Supervisory Board.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|CHAPTER
      IX                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 
|Supervisory
      Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                 

---



15

|Article
      27. Number of Members. Profile.
|---------------------------------------------
|                                             
|1.                                           
|                                             
|2.                                           
|                                             
|3.                                           
|                                             
|Article
      28. Appointment.               
|                                             
|1.                                           
|                                             
|2.                                           
|                                             
|3.                                           
|                                             
|4.                                           
|                                             
|5.                                           
|                                             
|                                             
|                                             
|6.                                           
|                                             
|7.                                           
|                                             

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16

|                                                                                                                  | Supervisory
      Board, the Enterprise Chamber (Ondernemingskamer)
      of the Amsterdam Court of Appeal declares the objection to be unfounded.                                                                                                                                                                                                                                                                                                    
|----------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|8.                                                                                                                | The
      sections 158 to 161 inclusive of Book 2 of the Netherlands Civil Code shall
      apply to the members of the Supervisory Board.                                                                                                                                                                                                                                                                                                            
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Article
      29. Appointment. Retirement.                                                                       
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|1.                                                                                                                | The
      position of a member of the Supervisory Board may not be held by:                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                  | a.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                  | b.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                  | c.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2.                                                                                                                | A
      member of the Supervisory Board shall resign no later than at the time of
      closure of the general meeting following the day four years after his last
      appointment and be qualified for re-appointment. A member of the Supervisory
      Board shall be dismissed and suspended in the manner defined in the second
      respectively third paragraph of section 161 of Book 2 of the Netherlands
      Civil Code.               
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.                                                                                                                | The
      members of the Supervisory Board shall resign periodically in accordance
      with a rotation plan to be drawn up by the Supervisory Board. An alteration
      to the rotation plan cannot imply that an incumbent member of the Supervisory
      Board shall resign against his will before the period for which he was appointed
      has expired.                                                                                    
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Article
      30. Remuneration.                                                                                  
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|The
      remuneration for each member of the Supervisory Board shall be determined
      by the general meeting.
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Article
      31. Duties and powers.                                                                             
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|1.                                                                                                                | The
      duties of the Supervisory Board shall be the supervision of the policy of
      the Board of Management and the general course of affairs of the company
      and the enterprise connected therewith. It shall assist the Board of Management
      with advice. In the performance of their duties the members of the Supervisory
      Board shall be guided by the interest of the company and the enterprise
      connected therewith.
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2.                                                                                                                | The
      Board of Management shall provide the Supervisory Board in good time with
      the information necessary for the performance of its duties.                                                                                                                                                                                                                                                                                                
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.                                                                                                                | At
      least once a year, the Board of Management shall inform the SupervisoryBoard
      of the main aspects of the strategic policy, the general and financialrisks
      and the company's management and auditing systems in writing.                                                                                                                                                                                                           
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.                                                                                                                | The
      Supervisory Board shall have access to the company's buildings and premises
      and shall be entitled to inspect the company's books and documents. The
      Supervisory Board may appoint one or more persons from among its number
      or an expert to exercise these powers. The Supervisory Board may also otherwise
      call upon the assistance of experts. The costs of such experts shall be
      borne by the company.     
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Article
      32. Working procedures and decision-making.                                                        
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|1.                                                                                                                | The
      Supervisory Board shall appoint from among its midst a chairman and a                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---



17

|                                                                                              | vice-chairman
      who shall substitute for the former in his absence. The board shall appoint
      a secretary from among its midst or from outside and shall make a provision
      for the substitution of the secretary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2.                                                                                            | In the absence
      of the chairman and the vice-chairman at a meeting, the meeting itself shall
      designate a chairman.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3.                                                                                            | The Supervisory
      Board shall meet whenever the chairman, or two other members of the Supervisory
      Board, or the Board of Management so requests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.                                                                                            | Minutes
      shall be kept by the secretary of the proceedings of meetings of the Supervisory
      Board. The minutes shall be adopted by the Supervisory Board at the same
      meeting or at a subsequent meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5.                                                                                            | All resolutions
      of the Supervisory Board shall be passed by absolute majority of the votes
      cast.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|6.                                                                                            | The Supervisory
      Board may only pass valid resolutions at a meeting if the majority of the
      members of the Supervisory Board are present or represented at the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|7.                                                                                            | A member
      of the Supervisory Board may have himself represented by a fellow member
      holding a written proxy. By 'written proxy' shall be understood a proxy
      transmitted by any accepted means of communication and received in writing.
      A member of the Supervisory Board may not act as proxy on behalf of more
      than one fellow member of the Supervisory Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|8.                                                                                            | The Supervisory
      Board may also adopt resolutions without holding a meeting, provided the
      proposal in question has been submitted to all members of the Supervisory
      Board and none has objected to this form of decision-making.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                              | A report
      shall be drawn up by the secretary of a resolution adopted in this way,
      enclosing the replies received, and shall be signed by the chairman and
      the secretary. In the minutes of the subsequent meeting of the Supervisory
      Board, this form of decision-making shall be stated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|9.                                                                                            | The Supervisory
      Board shall meet together with the Board of Management whenever the Supervisory
      Board or the Board of Management so requests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.                                                                                           | The Supervisory
      Board shall draw up by-laws containing further regulationson
      the procedure for holding meetings and decision-making by the Supervisory
      Board, and its operating procedures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|11.                                                                                           | The Supervisory
      Board may, without prejudice to its responsibilities, designate
      one or more committees from among its members, who shall have theresponsibilities
      specified by the Supervisory Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|12.                                                                                           | The composition
      of any such committee shall be determined by the Supervisory
      Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|13.                                                                                           | The general
      meeting may additionally remunerate the members of the committee(s)
      for their services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                             
|Article
      33. Indemnity.                                                                 
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|1.                                                                                            | The company
      shall indemnify and hold harmless each member of the Boardof
      Management and each member of the Supervisory Board (each of them,for
      the purpose of this article 33 only, the "Director") against any and all
      liabilities,
      claims, judgements, fines and penalties (the "Claims"), incurred bythe
      Director as a result of any threatened, pending or completed action, investigation
      or other proceeding, whether civil, criminal or administrative(the
      "Action"), brought by any party other than the company itself or itsgroup
      companies, in relation to acts or omissions in or related to his capacity
      as a Director. Claims will include derivative actions brought on behalf
      ofthe
      company or its group companies against the Director and claims by thecompany
      (or one of its group companies) itself for reimbursement for claims
      by third parties
      on the ground that the Director was jointly liable toward thatthird
      party in addition to the company.
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2.                                                                                            | The Director
      will not be indemnified with respect to Claims in so far as they relate
      to the gaining in fact of personal profits, advantages or remuneration to
      which he was not legally entitled, or if the Director shall have been adjudged
      to be liable for wilful misconduct (opzet) or intentional recklessness
      (bewuste roekeloosheid).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3.                                                                                            | Any expenses
      (including reasonable attorneys' fees and litigation costs) (together
      the "Expenses") incurred by the Director in connection with any Action,
      shall be reimbursed by the company, but only upon receipt of a writtenundertaking
      by that Director that he shall repay such Expenses if a competent
      Court should determine that he is not entitled to be indemnified. Expenses
      shall be deemed to include any tax liability which the Director maybe
      subject to as a result of his indemnification.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.                                                                                            | Also in
      case of an Action against the Director by the company itself or itsgroup
      companies, the company will advance to the Director his reasonableattorneys'
      fees and litigation costs but only upon receipt of a written undertaking
      by that Director that he shall repay such fees and costs if a competentCourt
      should resolve the Action in favour of the company rather than theDirector.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5.                                                                                            | The Director
      shall not admit any personal financial liability vis-à-vis thirdparties,
      nor enter into any settlement agreement, without the company'sprior
      written authorisation. The company and the Director shall use all reasonable
      endeavours to cooperate with a view to agreeing on the defence ofany
      Claims but in the event that the company and the Director would fail toreach
      such agreement, the Director shall comply with all directions given bythe
      company in its sole discretion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|6.                                                                                            | The indemnity
      contemplated by this article 33 shall not apply to the extentClaims
      and Expenses are reimbursed by insurers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|7.                                                                                            | In case
      of amendment of this article 33, the indemnity provided therebyshall
      nevertheless continue to apply to Claims and/or Expenses incurred inrelation
      to the acts or omissions by the Director during the periods in whichthis
      clause was in effect.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|CHAPTER
      X                                                                              
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Financial
      statements and annual report. Profit.                                        
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Article
      34. Financial year. Financial statements and annual report. Adoption. Approval.
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|1.                                                                                            | The financial
      year shall coincide with the calendar year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2.                                                                                            | Each year,
      within five months after the end of the financial year, save where this
      period is extended by a maximum of six months by the general meeting on
      account of special circumstances, the Board of Management shall prepare
      the financial statements and shall lay them open for inspection by the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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18



|                                           | shareholders
      at the office of the company. Within that period the Board of Management
      shall also present the annual report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.                                         | Within
      the period referred to in paragraph 2 the Board of Management shall submit
      the thus prepared financial statements together with the annual report to
      the Supervisory Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.                                         | The Supervisory
      Board shall determine the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|5.                                         | The Supervisory
      Board shall submit the financial statements determined by it to the general
      meeting for approval.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|6.                                         | Simultaneously,
      the Supervisory Board submits the financial statements determined by it
      to the central works council for discussion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|7.                                         | The financial
      statements require the approval of the general meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|8.                                         | In the general
      meeting of shareholders where the resolution to approve the financial statements
      is passed, a proposal to release the members of the Board of Management
      from liability for the exercise of the management and a proposal to release
      the members of the Supervisory Board from liability for the exercise of
      the supervision of the management, insofar as the exercise of such duties
      is reflected in the financial statements or otherwise disclosed to the general
      meeting prior to the approval of the financial statements, shall be brought
      up for discussion as two separate items. The scope of a release from liability
      shall be subject to limitations by virtue of the law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|9.                                         | Sections
      101, 102 and 103 and Part 9 of Book 2 of the Netherlands Civil Code shall
      also be applicable to the financial statements and the annual report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Article
      35. Dividends. Reservations.
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|1.                                         | Out of the
      profit - the credit balance of the profit and loss account - earned in the
      past financial year shall first be paid, if possible, a dividend on the
      special share of seven percent (7%) of the nominal value of that share,
      and a dividend on the preference shares B of a percentage equal to the average
      twelve monthly EURIBOR (EURO Interbank Offered Rate) - weighted to reflect
      the number of days for which the payment is made - plus a premium, to be
      determined by the Board of Management, subject to the approval of the Supervisory
      Board, of at least one percentage point and at most three percentage points,
      depending on the prevailing market conditions. In the event the relevant
      preference shares B are issued in the course of a financial year the dividend
      shall be calculated as a proportion of the time lapsed. If at any time the
      twelve monthly EURIBOR is no longer fixed, the dividend percentage shall
      be equal to the arithmetic mean of the average effective yields of the five
      longest-dated state loans, as calculated by the Central Bureau of Statistics
      (Centraal
      Bureau voor de Statistiek)
      and published in the Official Price List, over the last twenty stock-exchange
      business days before the date of issue, plus a premium, to be determined
      by the Board of Management and subject to the approval of the Supervisory
      Board, of at least one-quarter of a percentage point and at most one percentage
      point, depending on the prevailing market conditions. If the distribution
      on the preference shares B for any financial year as referred to in the
      preceding paragraph cannot be made or cannot be made in full because the
      profit does not permit it, the deficit shall be distributed as a charge
      to the distributable part of the shareholders' equity.
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                           | The dividend
      on preference shares B shall be calculated on the paid-up part of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---



19



|                                                                                     | the nominal
      value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2.                                                                                   | The Board
      of Management shall then subject to the approval of the Supervisory Board
      determine what part of the profit remaining after the application of paragraph
      1 is to be appropriated to reserves.                                                                                                                                                                                                                                                                                                                         
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3.                                                                                   | The part
      of the profit remaining after the appropriation to reserves shall be at
      the disposal of the general meeting, except that no further distributions
      can be made on the special share and on the preference shares B.                                                                                                                                                                                                                                                                                                     
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.                                                                                   | If a loss
      is sustained in any year, no dividend shall be distributed for that year.
      No dividend may be paid in subsequent years until the loss has been compensated
      by profits. The general meeting may, however, resolve on a proposal of the
      Board of Management which has received the approval of the Supervisory Board
      to compensate the loss out of the distributable part of the shareholders'
      equity or also to distribute a dividend out of the distributable part of
      the shareholders' equity.
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|5.                                                                                   | The Board
      of Management may resolve to distribute an interim dividend. Such a resolution
      shall be subject to the approval of the Supervisory Board.                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|6.                                                                                   | No dividend
      shall be paid on the shares held by the company in its own capital. For
      the computation of the profit distribution, the shares on which according
      to this paragraph 6 no dividend shall be paid, shall not be included. The
      provisions laid down before in this paragraph 6 shall not be applicable
      in the event that the Board of Management resolves otherwise, which resolution
      shall be subject to the approval of the Supervisory Board.                                                     
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|7.                                                                                   | Sections
      103, 104 and 105 of Book 2 of the Netherlands Civil Code shall also be applicable
      to distributions to shareholders.                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Article
      36. Distributions in shares and distributions charged to the reserves.
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|1.                                                                                   | The Board
      of Management may resolve that all or part of the dividend on ordinary shares
      shall be paid in shares in the company instead of cash. The resolution of
      the Board of Management thereto shall be subject to the approval of the
      Supervisory Board and of the holder of the special share.                                                                                                                                                                                                                       
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2.                                                                                   | The general
      meeting may resolve, on a proposal of the Board of Management which has
      received the approval of the Supervisory Board, and the holder of the special
      share, to charge distributions to holders of ordinary shares to the distributable
      part of the shareholders' equity. All or part of these distributions may
      also be paid in shares in the company instead of cash.                                                                                                                                 
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Article
      37. Payments.                                                         
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                     | An announcement
      of dividends and other distributions becoming payable shall be made in accordance
      with article 46.                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|CHAPTER
      XI                                                                    
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|General
      meetings of shareholders.                                             
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Article
        38. Annual meeting.                                                 
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|1.                                                                                   | The annual
      meeting shall be held each year within six months after the end of the financial
      year.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2.                                                                                   | The agenda
      for that meeting shall include the following items:                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| |    |                                                                                                                                                    
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | the annual
      report;                                                                                                                           
| |    |                                                                                                                                                    
| | b. | approval
      of the financial statements;                                                                                                        
| |    |                                                                                                                                                    
| | c. | determination of dividend;                                                                                                                         
| |    |                                                                                                                                                    
| | d. | release
      from liability of members of the Board of Management;                                                                                
| |    |                                                                                                                                                    
| | e. | release
      from liability of members of the Supervisory Board;                                                                                  
| |    |                                                                                                                                                    
| | f. | if applicable,
      notification of intended appointments of members of the Supervisory Board
      and members of the Board of Management, and of
| |    |                                                                                                                                                    

---



20



|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | expected
      vacancies in the Supervisory Board;                                                                                                                                                                                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                            | g.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | any other
      proposals put forward by the Supervisory Board or the Board of Management
      and announced pursuant to article 40, such as a proposal to designate a
      body competent to issue shares or to authorise the Board of Management to
      cause the company to acquire its own shares or depositary receipts therefor.
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                           
|Article
      39. Other meetings.                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                           
|Other
      general meetings of shareholders shall be held as often as the Board of
      Management or the Supervisory Board considers it necessary, without prejudice
      to the provisions of sections 110, 111 and 112 of Book 2 of the Netherlands
      Civil Code.
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                           
|Article
      40. Notice convening a meeting. Agenda.                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                           
|1.                                                                                                                                                                                                                                                                          | General
      meetings of the shareholders shall be convened by the Supervisory Board
      or the Board of Management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2.                                                                                                                                                                                                                                                                          | Notice
      convening a meeting shall be given no later than on the fifteenth day prior
      to that of the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3.                                                                                                                                                                                                                                                                          | The
      notice convening a meeting shall state the subjects to be considered or
      it shall state that the shareholders may inspect the same at the office
      of the company, without prejudice to the provisions of section 99, paragraph
      7 of Book 2 of the Netherlands Civil Code, and article 47, paragraph 3.                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.                                                                                                                                                                                                                                                                          | The
      notice convening a meeting shall state the requirements for admittance to
      the meetings as described in article 44.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5.                                                                                                                                                                                                                                                                          | The
      notice convening a meeting shall be given in the manner stated in article
      46.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|6.                                                                                                                                                                                                                                                                          | Matters
      not stated in the notice convening the meeting may be further announced,
      subject to the time limit pertaining to the convocation of meetings, in
      the manner stated in article 46.                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|7.                                                                                                                                                                                                                                                                          | Unless
      the notice convening the meeting includes the contents of all the documents
      which according to the law or the articles of association shall be available
      to shareholders for inspection in connection with the meeting to be held,
      these documents shall be made available to shareholders free of charges
      in Amsterdam at an admitted establishment (toegelaten
      instelling)
      by Euronext Amsterdam N.V., to be designated in the notice convening the
      meeting or at another payment office as referred to in the Rules relating
      to Securities.
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|8.                                                                                                                                                                                                                                                                          | Holders
      of shares representing alone or in the aggregate at least one percent (1%)
      of the issued capital, or alone or in the aggregate, at least a value of
      fifty million euros (EUR 50,000,000) according to the Official Price List,
      have the right to request to the Board of Management or the Supervisory
      Board to place items on the agenda of the general meeting of shareholders.
      These requests have to be honoured by the Board of Management or the Supervisory
      Board on the condition:                                                               
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                            | These
      requests shall in principal be honoured by the Board of Management or the
      Supervisory Board on the condition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                            | a.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | that
      important company interests do not dictate otherwise; and                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                           

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21



|                                                                                                                                            | b.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | that
      the request is received by the Board of Management or the chairman of the
      Supervisory Board in writing, at least sixty days before the date of the
      general meeting of shareholders.
|------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                           
|9.                                                                                                                                          | The
      term "shareholders" in this article shall include usufructuaries and pledgees
      in whom the voting rights on shares are vested.                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Article
      41. Venue of meetings.                                                                                                       
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|The
      general meetings of shareholders shall be held in Amsterdam, The Hague,
      Hoofddorp or in the municipality of Haarlemmermeer.
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Article
      42. Chairmanship.                                                                                                            
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|1.                                                                                                                                          | The
      general meetings of shareholders shall be presided over by the chairman
      of the Supervisory Board or, in his absence, by a vice-chairman of that
      board; in the event that the latter is (are) also absent, the members of
      the Supervisory Board present shall appoint a chairman from their midst.                                                                                                                                                                                                                                        
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                            | The
      Supervisory Board may appoint another chairman for a general meeting of
      shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.                                                                                                                                          | If
      the chairman of a meeting has not been appointed in accordance with paragraph
      1, the meeting itself shall appoint a chairman. Until that moment, a member
      of the Board of Management designated thereto by the Board of Management
      shall substitute as chairman.                                                                                                                                                                                                                                                                          
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Article
      43. Minutes.                                                                                                                 
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|1.                                                                                                                                          | Minutes
      shall be kept of the proceedings of each general meeting of shareholders
      by a secretary appointed by the chairman. The minutes shall be adopted by
      the chairman and the secretary and shall be signed by them in witness thereof.                                                                                                                                                                                                                                                                                                          
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.                                                                                                                                          | The
      Supervisory Board or the chairman may determine that a notarial record shall
      be made of the proceedings of the meeting. Such a record shall be co-signed
      by the chairman.                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Article
      44. Rights to attend meetings. Admission.                                                                                    
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|1.                                                                                                                                          | Each
      shareholder who is entitled to vote and each usufructuary or pledgee of
      shares in whom voting rights are vested shall be entitled to attend the
      general meeting of shareholders, to address the meeting and to exercise
      his voting rights. In the case of ordinary registered shares, the intention
      to attend the meeting must be notified to the Board of Management in writing.
      Such notification must be received by the Board of Management not later
      than on the date stated in the notice convening the meeting.
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.                                                                                                                                          | The
      rights to take part in the meeting pursuant to paragraph 1 may be exercised
      by a person holding a written proxy, provided that in the case of ordinary
      shares such proxy has been received by the Board of Management no later
      than on the date stated in the notice convening the meeting.                                                                                                                                                                                                                                              
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

---



22



|3. | If the voting
      rights in respect of a share are vested in the usufructuary or pledgee instead
      of in the shareholder, the shareholder shall also be entitled to attend
      the general meeting of shareholders and to address the meeting, provided
      that in the case of ordinary registered shares the Board of Management has
      been notified of the shareholder's in tention to attend the meeting in accordance
      with paragraph 1. Paragraph 2 shall be applicablemutatis
      mutandis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4. | With respect
      to the voting rights and the right to participate in meetings attached to
      ordinary bearer shares, the company shall apply by analogy the provisions
      of Sections 88 and 89 of Book 2 of the Netherlands Civil Code and recognise
      as a shareholder the person named in a written statement from a Necigef-participant
      as a Necigef-beneficiary, entitled to a given number of ordinary bearer
      shares belonging to such Necigef -participant's collective deposit of ordinary
      bearer shares in the company and remaining thus entitled until the close
      of the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | A holder
      of ordinary bearer shares or his proxy shall only have admittance to the
      meeting if the foregoing statement has been deposited not later than on
      the date stated in the notice convening the meeting at the place mentioned
      therein. The receipt issued once such statement has been deposited shall
      give admittance to the meeting. The foregoing provisions of this paragraph
      4 shall applymutatis
      mutandisto each pledgee or usufructuary of ordinary bearer shares in whom voting
      rights are vested or their proxy.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|5. | The Board
      of Management has the power to determine in the notice convening the meeting
      that for the application of section 117, paragraphs 1 and 2, of Book 2 of
      the Netherlands Civil Code, the persons that are entitled to attend and
      address meetings and to vote are the persons who have those rights on a
      determined day ("date of registration") and are entered as such in a register
      (or one or more parts thereof) that has been designated for that purpose
      by the Board of Management, notwithstanding who is entitled to those shares
      or depositary receipts at the time of the meeting. In this matter the provisions
      of paragraphs 1 up to and including 4 also apply by analogy on the understanding
      that the statement of the Necigef-participant as referred to in paragraph
      4 must show that on the relevant date of registration the person named in
      the statement was participant entitled to the number of shares specified
      in the statement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|6. | The date
      stated in the notice convening the meeting as referred to in paragraphs
      1, 2, 4 and 5 shall not be earlier than the seventh day before that of the
      meeting or at some time, so much earlier as will be allowed by law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|7. | Each share
      shall entitle to one vote.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|8. | Each person
      entitled to vote or his proxy shall sign the attendance list.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|9. | The members
      of the Supervisory Board and the members of the Board of Management shall
      have an advisory vote at the general meeting of shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

---



23



|10.                                   | The chairman
      shall decide whether persons other than those who shall be admitted in accordance
      with the above provisions of this article shall be admitted to the meeting.                                                                                                                                                                                                                                                                                                                                                                               
|------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Article
      45. Voting.            
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|1.                                    | All resolutions
      for which no greater majority is required by law or the articles of association
      shall be passed by an absolute majority of the votes cast.                                                                                                                                                                                                                                                                                                                                                                                               
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.                                    | If in an
      election of persons an absolute majority is not obtained, there shall be
      a second free ballot.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                      | If again
      an absolute majority is not obtained, further ballots shall be held until
      either one person obtains an absolute majority or there is a tie in a ballot
      between two persons.                                                                                                                                                                                                                                                                                                                                                               
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                      | Such further
      voting (not including the second free ballot) shall be between the persons
      voted upon in the preceding ballot with the exclusion of the person obtaining
      the lowest number of votes in that preceding ballot. If more than one person
      obtained the lowest number of votes in the preceding ballot, lots shall
      be drawn to decide which of those persons is to withdraw from the next ballot.
      In the event of a tie in a ballot between two persons, lots shall be drawn
      to decide which of the two is elected.
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.                                    | In the event
      of a tie in a vote on matters other than the election of persons, the proposal
      shall be rejected.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.                                    | All voting
      shall be oral. The chairman may, however, determine that voting shall be
      in writing. In the case of the election of persons, any person present who
      is entitled to vote may demand that voting shall be in writing. Voting in
      writing shall take place by means of unsigned sealed ballot papers.                                                                                                                                                                                                                                 
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5.                                    | Abstentions
      and invalid votes shall be counted as not cast.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|6.                                    | Voting by
      acclamation shall be possible if none of the persons present and entitled
      to vote objects thereto.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|7.                                    | The provisions
      of sections 13 and 117 of Book 2 of the Netherlands Civil Code shall also
      apply to the general meeting of shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|CHAPTER
      XII                    
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Convocations
      and notifications.
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Article
      46.                    
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|1.                                    | All notices
      convening general meetings of shareholders, all announcements relating to
      dividends and other distributions and all other notifications to shareholders
      shall be given by publication in a nationally distributed daily newspaper
      and in the Official Price List, without prejudice to the provisions of section
      96a, paragraph 4 of Book 2 of the Netherlands Civil Code.                                                                                                                                                 
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.                                    | The expression
      "shareholders" in paragraph 1 shall include usufructuaries and pledgees
      in whom the voting rights on shares are vested as well as the holders of
      the depositary receipts for shares as referred to in article 10.                                                                                                                                                                                                                                                                                                                   
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.                                    | Notice convening
      general meetings of shareholders to the holder of the special share shall
      be given by means of a letter .                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

---



24

|CHAPTER
      XIII Amendment
      of the articles of association. Statutory merger. Statutory demerger.
      Dissolution. Article
      47. Amendment of the articles of association. Dissolution.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                    
|1.                                                                                                                                                                                                  
|                                                                                                                                                                                                    
|2.                                                                                                                                                                                                  
|                                                                                                                                                                                                    
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25

|3.                             | If a proposal
      to amend the articles of association or to dissolve the company is to be
      put to the general meeting, this must in all cases be stated in the notice
      convening the general meeting of shareholders or announced subsequently
      as referred to in article 40, paragraph 6, and, in the case of an amendment
      to the articles of association, simultaneously a copy of the proposal including
      the verbatim text of the proposed amendment must be deposited for inspection
      at the office of the company and must be made available free of charge to
      shareholders and to the persons referred to in article 46, paragraph 2,
      until the end of the meeting.
|------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Article
      48. Liquidation.
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.                             | In the
      event of dissolution of the company pursuant to a resolution of the general
      meeting, the members of the Board of Management shall be charged with the
      liquidation of the business of the company and the Supervisory Board with
      the supervision thereof.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.                             | During
      liquidation the provisions of the articles of association shall remain in
      force as far as possible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.                             | Out of
      the surplus remaining after settlement of the debts shall first be distributed
      to the holders of the special share and the preference shares B the nominal
      amount paid up on these shares and any amount still owed by way of dividend
      to which these shares entitle, insofar as this has not been distributed
      in previous years. If the balance is not sufficient thereto, the distribution
      shall be made in proportion to the amounts paid up on those shares. The
      remainder shall be distributed to the holders of ordinary shares in proportion
      to the aggregate nominal value of their ordinary shares.                                                     
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.                             | The liquidation
      shall otherwise be subject to the provisions of Part 1 of Book 2 of the
      Netherlands Civil Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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Back to Contents
Certifications
I, M.P. Bakker, certify
  that:
1.
      I have reviewed
        this annual report on Form 20-F of TPG N.V.;2.
      Based on my
        knowledge, this report does not contain any untrue statement of a material
        fact or omit to state a material fact necessary to make the statements
        made, in light of the circumstances under which such statements were made,
        not misleading with respect to the period covered by this report;3.
      Based on my
        knowledge, the financial statements, and other financial information included
        in this report, fairly present in all material respects the financial
        condition, results of operations and cash flows of the company as of,
        and for, the periods presented in this report;4
      The companys
        other certifying officer(s) and I are responsible for establishing and
        maintaining disclosure controls and procedures (as defined in Exchange
        Act Rules 13a-15(e) and 15d-15(e)) for the company and have:(a)Designed
        such disclosure controls and procedures, or caused such disclosure controls
        and procedures to be designed under our supervision, to ensure that material
        information relating to the company, including its consolidated subsidiaries,
        is made known to us by others within those entities, particularly during
        the period in which this report is being prepared;(b)Evaluated
        the effectiveness of the companys disclosure controls and procedures
        and presented in this report our conclusions about the effectiveness of
        the disclosure controls and procedures, as of the end of the period covered
        by this report based on such evaluation; and

(c)   Disclosed
        in this report any change in the companys internal control over
        financial reporting that occurred during the period covered by the annual
        report that has materially affected, or is reasonably likely to materially
        affect, the companys internal control over financial reporting;
        and5.
      The companys
        other certifying officer(s) and I have disclosed, based on our most recent
        evaluation of internal control over financial reporting, to the companys
        auditors and the audit committee of the companys board of directors
        (or persons performing the equivalent functions):(a)All
        significant deficiencies and material weaknesses in the design or operation
        of internal control over financial reporting which are reasonably likely
        to adversely affect the companys ability to record, process, summarise
        and report financial information; and(b)Any
        fraud, whether or not material, that involves management or other employees
        who have a significant role in the companys internal control over
        financial reporting.Date: 25 February 2005
  /s/ M.P. BakkerChief Executive Officer


Back to Contents

I,
  J.G. Haars, certify that:

1.
      I
        have reviewed this annual report on Form 20-F of TPG N.V.;2.
      Based
        on my knowledge, this report does not contain any untrue statement of
        a material fact or omit to state a material fact necessary to make the
        statements made, in light of the circumstances under which such statements
        were made, not misleading with respect to the period covered by this report;3.
      Based
        on my knowledge, the financial statements, and other financial information
        included in this report, fairly present in all material respects the financial
        condition, results of operations and cash flows of the company as of,
        and for, the periods presented in this report;4.
      The
        companys other certifying officer(s) and I are responsible for establishing
        and maintaining disclosure controls and procedures (as defined in Exchange
        Act Rules 13a-15(e) and 15d-15(e)) for the company and have:(a)   Designed
        such disclosure controls and procedures, or caused such disclosure controls
        and procedures to be designed under our supervision, to ensure that material
        information relating to the company, including its consolidated subsidiaries,
        is made known to us by others within those entities, particularly during
        the period in which this report is being prepared;
    (b)   Evaluated
        the effectiveness of the companys disclosure controls and procedures
        and presented in this report our conclusions about the effectiveness of
        the disclosure controls and procedures, as of the end of the period covered
        by this report based on such evaluation; and




(c)   Disclosed
        in this report any change in the companys internal control over
        financial reporting that occurred during the period covered by the annual
        report that has materially affected, or is reasonably likely to materially
        affect, the companys internal control over financial reporting;
        and5.
      The
        companys other certifying officer(s) and I have disclosed, based
        on our most recent evaluation of internal control over financial reporting,
        to the companys auditors and the audit committee of the companys
        board of directors (or persons performing the equivalent functions):(a)All
        significant deficiencies and material weaknesses in the design or operation
        of internal control over financial reporting which are reasonably likely
        to adversely affect the companys ability to record, process, summarise
        and report financial information; and(b)Any
        fraud, whether or not material, that involves management or other employees
        who have a significant role in the companys internal control over
        financial reporting.Date:
        25 February 2005/s/
        J.G. HaarsChief
        Financial Officer




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CERTIFICATION
      PURSUANT TO18
      U.S.C. SECTION 1350
      AS ADOPTED PURSUANT TOSECTION
      906 OF THE SARBANES-OXLEY ACT OF 2002

In connection
      with the Annual Report of TPG N.V. (the "Company") on Form 20-F for the period
      ended 31 December 2004 as filed with the Securities and Exchange Commission
      on the date hereof (the "Report"),
      I, M.P. Bakker, Chief Executive Officer of the Company, hereby certify,
      pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the
      Sarbanes-Oxley Act of 2002, that:

(1)
      to my knowledge, the Report fully complies with the requirements of section
      13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
      to my knowledge, the information contained in the Report fairly presents,
      in all material respects, the financial condition and result of operations
      of the Company.

25 February
      2005

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CERTIFICATION
      PURSUANT TO18
      U.S.C. SECTION 1350
      AS ADOPTED PURSUANT TOSECTION
      906 OF THE SARBANES-OXLEY ACT OF 2002

In connection
      with the Annual Report of TPG N.V. (the "Company") on Form 20-F for the period
      ended 31 December 2004 as filed with the Securities and Exchange Commission
      on the date hereof (the "Report"),
      I, J.G. Haars, Chief Financial Officer of the Company, hereby certify, pursuant
      to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley
      Act of 2002, that:

(1)
      to my knowledge, the Report fully complies with the requirements of section
      13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
      to my knowledge, the information contained in the Report fairly presents,
      in all material respects, the financial condition and result of operations
      of the Company.

25 February
      2005

/s/ J.G. Haars_________________________
      J.G. Haars
      Chief Financial Officer

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Published
  by

TPG N.V.
  P.O. Box
  13000 
  1100 KG Amsterdam 
  The Netherlands

TelephoneGeneral
  +31 20
  500 6000 
  Investor Relations 
  +31 20 500 6241

Fax+31 20
  500 7000

Websitewww.tpg.com

Chamber
  of Commerce, AmsterdamReg. No.
  27168968

Coordination
  and designMattmo
  concept | design
  www.mattmo.com

PhotographyAnton Corbijn

Lithography
  and printingDe Bussy
  Ellerman Harms

BindingBinderij
  Hexspoor

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|196 | TPG Annual Report 2004
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