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UNITED
  STATESSECURITIES
  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 2003
      OR
|                                                            | TRANSITION
      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934            
|                                                            | For
        the transition period from:toCommission 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.


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



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

ChapterIntroduction
      21
      From
        the chief executive officer
      52
      Information
        on the company
      83
      The
        mail division
      164
      The
        express division
      245
      The
        logistics division
      306
      Corporate
        governance
      377
      Report
        of the Supervisory Board
      448
      Remuneration
        report
      479
      Code
        of business principles & corporate social responsibility
      6010
      Cautionary
        statement regarding forward lookingstatements
        / risk factors
      6311
      Other
        financial information on the company
      7012
      Financial
        statements and other information
      85
      Report
        of independent auditors
      85
      Consolidated
        balance sheets
      86
      Consolidated
        statements of income
      88
      Consolidated
        cash flow statements
      89
      Consolidated
        statements of changes in shareholders' equity
      90
      Notes
        to the consolidated financial statements
      91
      Accounting
        principles for consolidation, valuation,determination
        of results and cash flows
      91
      Notes
        to the consolidated balance sheets
      95
      Notes
        to the consolidated statements of income
      108
      Notes
        to the consolidated cash flow statements
      122
      Additional
        notes
      124
      TPG
        N.V. corporate balance sheets
      137
      TPG
        N.V. corporate statements of income
      138
      Notes
        to the corporate balance sheets andstatements
        of income
      138
      Other
        information
      14213
      Regulatory
        environment
      14514
      Additional
        information
      14915
      Cross
        reference to Form 20-F
      172CertificationsThis
        annual report constitutes TPG N.V.s annual report in accordance
        with Dutch regulations. It is also our annual report on Form 20-F for
        the year ended 31 December 2003 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.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.




To guide your reading of this document,
      please find below a summary of each chapters contents. Chapter 1 contains a letter from our chief executive officer Peter Bakker to his fellow shareholders and all other readers. Chapter 2 presents some high-level information on our company, including a group financial review and prospects. Chapters 3 through 5 deal 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 6 discusses corporate governance, an area where we have been very active in 2003.This chapter gives an overview of our procedures and the checks and balances that govern the way we manage our company. Chapter 7 contains the report of our Supervisory Board. Chapter 8 sets out our remuneration report. It comprises our remuneration policy and the detailed compensation plan for our Board of Management and Supervisory Board. Chapter 9 deals with corporate social responsibility. Here our business principles, as well as our sustainability policy, are outlined. Chapter 10 cautions against forward-looking statements and presents an overview of risk factors concerning our business. Chapter 11 gives some other financial information on the company, in particular with regard to cash flow, liquidity, capital resources and critical accounting policies. Chapter 12 holds our financial statements and other information as required by article 392, part 9, book 2 Dutch Civil Code. Chapter 13 deals with our regulatory environment. Chapter 14 contains various additional information, including our relationship with the State of the Netherlands and information for our shareholders. Finally, chapter 15 contains 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 | 1

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|Introduction
|------------

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,USD 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
    (EMU) 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 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 30 to our 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 $1.2597
    per   1.00, the noon buying rate in The City of New York on 31 December
    2003 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. Selected
    financial data The selected consolidated financial data below for each of the years in the
    three-year period ended 31 December 2003 has been derived from our audited
    financial statements and the related notes appearing elsewhere in this annual
    report.The selected consolidated financial data at year-end and for each of
    the years in the two-year period ended 31 December 2000 has been derived from
    our financial statements not included in this annual report. We have acquired
    a number of companies and businesses during the five-year period ended 31
    December 2003, which limits the comparability of our year-on-year figures.


|2 | 2003
      annual report | 
|- | ------------------------ | 

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|
|

|Income
      statement data                                    | Year
      ended at 31 December | 
|-------------------------------------------------------------- | ------------------------------- | 
|                                                               |                                 | 
|                                                               | 2003                            | 
|                                                               |                                 | 
|                                                               | US$                             | 
|Amounts
      in accordance with Dutch GAAP:                   |                                 | 
|Net sales                                                      | 14,846                          | 
|Total operating
      revenues                                 | 14,947                          | 
|Total operating
      expenses                                 | 13,981                          | 
|Total operating
      income                                   | 966                             | 
|As
      % of total operating revenues                         | 6.5                             | 
|                                                               |                                 | 
|Income before
      income taxes                               | 850                             | 
|Net income                                                     | 378                             | 
|Net income per
      ordinary share in cents2                  | 79.6                            | 
|Net income per
      diluted ordinary share in cents3          | 79.5                            | 
|Dividend per share
      paid in the year in cents             | 54.2                            | 
|Dividend per share
      declared over financial year in cents | 60.5                            | 
|Issued share capital                                           | 290                             | 
|                                                               |                                 | 
|Amounts
      in accordance with US GAAP:                      |                                 | 
|Net sales                                                      | 14,847                          | 
|Total operating
      income                                   | 930                             | 
|Income before
      income taxes                               | 839                             | 
|Net income                                                     | 418                             | 
|Net income per
      ordinary share in cents 2                 | 88.0                            | 
|Net income per
      diluted ordinary share in cents 3         | 87.9                            | 
|                                                               |                                 | 

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

| | 2003
        annual report | 3
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Introduction

|
|

|                                                 |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|------------------------------------------------ | -------------------------------------------- | - |  | ----- | - |  | ----- |  |  | ----- |  |  | ----- |  |  | ----- | -
|Balance sheet
      data                         | Year
      ended and position at 31 December |  
|                                                 |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|                                                 | 2003                                         |   |  | 2003  |   |  | 20021 |  |  | 20011 |  |  | 20002 |  |  | 19992 |  
|                                                 |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|                                                 | US$                                          |   |  |      |   |  |      |  |  |      |  |  |      |  |  |      |  
|Amounts
      in accordance with Dutch GAAP:     |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|Total assets                                     | 9,971                                        |   |  | 7,915 |   |  | 8,266 |  |  | 8,454 |  |  | 7,596 |  |  | 6,299 |  
|Long-term liabilities                            | 2,092                                        |   |  | 1,661 |   |  | 1,661 |  |  | 1,789 |  |  | 577   |  |  | 523   |  
|Provisions                                       | 373                                          |   |  | 296   |   |  | 294   |  |  | 304   |  |  | 335   |  |  | 318   |  
|Pension liability                                | 656                                          |   |  | 521   |   |  | 742   |  |  | 869   |  |  | 976   |  |  | 1,038 |  
|Group equity3                                    | 3,761                                        |   |  | 2,986 |   |  | 2,979 |  |  | 2,613 |  |  | 2,199 |  |  | 2,141 |  
|As
      % of total liabilities and group equity | 37.7                                         |   |  | 37.7  |   |  | 36.0  |  |  | 30.9  |  |  | 28.9  |  |  | 34.0  |  
|                                                 |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|Amounts
      in accordance with US GAAP:        |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|Total assets                                     | 10,228                                       |   |  | 8,119 |   |  | 8,490 |  |  | 8,388 |  |  | 7,398 |  |  | 6,293 |  
|Long-term liabilities                            | 2,114                                        |   |  | 1,678 |   |  | 1,681 |  |  | 1,789 |  |  | 577   |  |  | 523   |  
|Provisions                                       | 356                                          |   |  | 283   |   |  | 349   |  |  | 197   |  |  | 274   |  |  | 318   |  
|Pension liability                                | 656                                          |   |  | 521   |   |  | 742   |  |  | 869   |  |  | 976   |  |  | 1,038 |  
|Group equity3                                    | 3,984                                        |   |  | 3,163 |   |  | 3,128 |  |  | 2,653 |  |  | 2,340 |  |  | 2,175 |  
|                                                 |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|Mail
      financial data                        |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|Total operating
      revenues                   | 4,932                                        |   |  | 3,915 |   |  | 4,005 |  |  | 3,896 |  |  | 3,706 |  |  | 3,651 |  
|Depreciation and
      amortisation of PP&E4     | 131                                          |   |  | 104   |   |  | 102   |  |  | 99    |  |  | 86    |  |  | 63    |  
|Depreciation of
      other intangibles          | 20                                           |   |  | 16    |   |  | 6     |  |  |       |  |  |       |  |  |       |  
|Earnings from
      operations5                  | 1,033                                        |   |  | 820   |   |  | 804   |  |  | 781   |  |  | 713   |  |  | 447   |  
|Amortisation of
      goodwill                   | 68                                           |   |  | 54    |   |  | 30    |  |  | 19    |  |  | 24    |  |  | 4     |  
|Total operating
      income                     | 965                                          |   |  | 766   |   |  | 774   |  |  | 762   |  |  | 689   |  |  | 433   |  
|As
      % of total operating revenues           | 19.6                                         |   |  | 19.6  |   |  | 19.3  |  |  | 19.6  |  |  | 18.6  |  |  | 11.9  |  
|Total assets6                                    | 2,618                                        |   |  | 2,078 |   |  | 2,181 |  |  | 2,342 |  |  | 1,805 |  |  | 1,614 |  
|                                                 |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|Express
      financial data                     |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|Total operating
      revenues                   | 5,355                                        |   |  | 4,251 |   |  | 4,175 |  |  | 3,910 |  |  | 4,145 |  |  | 3,538 |  
|Depreciation and
      amortisation of PP&E4     | 155                                          |   |  | 123   |   |  | 122   |  |  | 111   |  |  | 108   |  |  | 92    |  
|Depreciation of
      other intangibles          | 29                                           |   |  | 23    |   |  | 15    |  |  | 7     |  |  | 1     |  |  |       |  
|Earnings from
      operations5                  | 348                                          |   |  | 276   |   |  | 246   |  |  | 157   |  |  | 156   |  |  | 17    |  
|Amortisation of
      goodwill                   | 67                                           |   |  | 53    |   |  | 54    |  |  | 52    |  |  | 55    |  |  | 47    |  
|Total operating
      income                     | 281                                          |   |  | 223   |   |  | 192   |  |  | 105   |  |  | 101   |  |  | (30   | )
|As
      % of total operating revenues           | 5.2                                          |   |  | 5.2   |   |  | 4.6   |  |  | 2.7   |  |  | 2.4   |  |  | (0.8  | )
|Total assets6                                    | 4,021                                        |   |  | 3,192 |   |  | 3,250 |  |  | 3,257 |  |  | 3,445 |  |  | 3,509 |  
|                                                 |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|Logistics
      financial data                   |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  
|Total operating
      revenues                   | 4,705                                        |   |  | 3,735 |   |  | 3,610 |  |  | 3,353 |  |  | 2,179 |  |  | 1,522 |  
|Depreciation and
      amortisation of PP&E4     | 131                                          |   |  | 104   |   |  | 88    |  |  | 81    |  |  | 49    |  |  | 24    |  
|Depreciation of
      other intangibles          | 6                                            |   |  | 5     |   |  |       |  |  |       |  |  |       |  |  |       |  
|Earnings from
      operations5                  | 30                                           |   |  | 24    |   |  | 157   |  |  | 190   |  |  | 110   |  |  | 52    |  
|Amortisation of
      goodwill                   | 286                                          |   |  | 227   |   |  | 70    |  |  | 68    |  |  | 19    |  |  | 7     |  
|Total operating
      income                     | (256                                         | ) |  | (203  | ) |  | 87    |  |  | 122   |  |  | 91    |  |  | 45    |  
|As
      % of total operating revenues           | (5.4                                         | ) |  | (5.4  | ) |  | 2.4   |  |  | 3.6   |  |  | 4.2   |  |  | 3.0   |  
|Total assets6                                    | 3,332                                        |   |  | 2,645 |   |  | 2,835 |  |  | 2,855 |  |  | 2,346 |  |  | 1,099 |  
|                                                 |                                              |   |  |       |   |  |       |  |  |       |  |  |       |  |  |       |  

|                                        |                                                                                                                                                                                                                     
|--------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(in
      millions, except percentages)
|1                                       | Figures for 2001
      and 2002 have been restated to reflect the transfer of Innight services
      from express to logistics.                                                                                     
|2                                       | Restated for changes
      in the accounting principles.                                                                                                                                                            
|3                                       | Per 1 January
      2003 dividends proposed, but not yet declared, are to be presented as a
      component of equity instead of as a liability. The prior year balances are
      adjusted for comparison purposes.
|4                                       | PP&E = property,
      plant and equipment.                                                                                                                                                                         
|5                                       | We define earnings
      from operations as operating income excluding the amortisation of goodwill.
      See ``Earnings from operations'', below.                                                                 
|6                                       | Identifiable assets
      used jointly for the segments have been allocated based on estimated usage.                                                                                                               
|                                        |                                                                                                                                                                                                                     

|4 | 2003
      annual report |  |  | 
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|Chapter
      1 From the CEO
|----------------------------



Dear fellow
    shareholder and other readers, 2003 was a year
    with mixed results for our company. Despite an uninspiring global economy,
    our mail and express businesses again turned in good performances. Our logistics
    business, however, did not fare as well and ultimately depressed our group
    results. Given our strong presence in the United Kingdom and the United States,
    the strengthening euro also had a negative influence on our results. Including
    the impairments and the one-off costs for the restructuring of our logistics
    business, we had to report a net income of 300 million, compared to
    2002 a decrease of approximately 50%. Our audit committee,
    on behalf of the Supervisory Board, has 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 InlandRevenue
    and PricewaterhouseCoopers. In response to the findings of these investigations,
    we have taken an additional tax charge of 59 million in the 2003 results
    to cover our estimate of total liability to the UK Inland Revenue, relating
    to these tax matters. We
    take our results personally. The key issue in our logistics division was operational problems.
    The integration of acquired companies in France, Germany and our non-automotive
    business in Italy has not gone as smoothly as we had planned. Those operational
    issues, combined with the economic slowdown, created problems. As a result,
    our logistics performance fell well short of our expectations and caused us
    to recognise unprecedented goodwill impairments, leading to our first-ever
    quarterly loss in the third quarter of 2003. We responded to
    the problems with a restructuring programme  Transformation through
    Standardisation (TtS)  which includes comprehensive actions not only
    to correct all the problems but to realise greater efficiency across our logistics
    business. Steps were taken towards the standardisation of procurement, operations
    and IT. Executing these measures, however, also meant significant one-off
    costs in our 2003 accounts. First benefits of this programme have been realised,
    but are only partly able to compensate for the material one-off costs related
    to the restructuring. What makes 2003
    a mixed year is the fact that the difficulties in our logistics division masked
    strong performances in our mail and express divisions. In our mail business
     despite further volume declines  we realised the first significant
    benefits of our cost




flexibility
    programme in the Netherlands, the driver behind our improved margins. The
    continued good performance in our express business delivered two of the important
    promises weve made in the past. First, our once-troubled express business
    in Australia achieved a full year of profitability. Secondly, for the first
    time ever, our express division as a whole delivered more than 6% return on
    sales  a commitment we made when we purchased TNT in 1996. We produced a sound
    cash flow in 2003, despite an additional 100 million payment in pension
    contributions. Net debt was reduced by 24% to approximately 1.1 billion
    at the end of 2003. Clear evidence that our focus on cash continues to pay
    off. We
    take integrity personally. We are in the service business. Our customers trust us to store,
    transport and deliver their products or documents around the world. Our
    reputation is a key asset and we are serious about the way we manage it. Of
    course, the integrity of our company is only as good as the integrity of each
    of our employees. We are committed
    to lead the industry in compliance in all matters of corporate governance.
    We applied 98% of the relevant principles and best practices of the Dutch
    Corporate Governance Code shortly after the code came into force. These initiatives
    put us in the forefront of the international business community. We are publishing
    increased disclosures on subjects such as risk factors, corporate governance
    and management remuneration in this combined annual report and Form 20-F. We
    take quality and reliability personally.Core to our
    commitment to our customers is reliability. This is why we focus on quality
    in all of our operations. Quality is integral to every aspect of our business.
    We use the European Foundation for Quality Management excellence model to
    achieve continuous improvement, and we deliver quality for our customers.
    Customers of Royal TPG Post in the Netherlands enjoy more than 95% next -day
    delivery of standard letters. TNT Express customers regularly report satisfaction
    and loyalty levels that are among the industrys highest, and TNT Logistics
    ensures customer satisfaction with individual service level agreements for
    each contract. We
    take employee pride and engagement personally. In our company we share a passion for people. We are the largest
    private employer in the Netherlands, and we employ approximately 163,000 people
    around the world. We provide our employees safe working conditions and competitive
    compensation and pension packages. In January
    2004, Fortune magazine profiled our company as one of 10 great companies
    to work for in Europe. Companies were selected based on interviews with
    individual employees, and,


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        annual report | 5

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according to Fortune,
    the common thread among the winners was the fact that their employees
    like working for a company with a distinctive culture and a clear social mission. We recognise that
    our people are the only sustainable competitive advantage we have, and we
    aim to cultivate mutually beneficial relationships with each of them. Our
    human resources strategy aims to equip employees to provide continuously improving
    customer satisfaction. In many areas of our company, we apply the Investor
    in People standard, which sets levels of good practice for training and developing
    people to achieve business goals. Following the example of our express division,
    TPG Post was officially certified as an Investor in People in December 2003. In 2003,
    we established a framework for what we call people accountability. Within
    this framework, all managers are accountable to those individuals who report
    to them. We launched people accountability by measuring engagement among our
    staff, surveying 2,000 of them on their levels of satisfaction, sense of ownership,
    loyalty and involvement. The results of the independently conducted survey
    put their level of overall engagement in the top 25% of the broader business
    market.Being
    proud of our work and our company is an important objective for us. We
    take teamwork personally. In 2003 we took
    a long hard look at our strategy. We  not just the Board of Management,
    but many other of our senior managers  spent the last three months of
    the year uncovering what we call the brutal facts about our business, devising
    ways to address the issues and developing scenarios to ensure sustainable
    success into the future. Of course, some of the work will continue in 2004,
    notably the deeper review of divisional strategies, but I believe we have
    made a real step forward. We have redefined
    who we are and what we stand for as a company. The results are a revised mission
    statement. We will strengthen our co-operation among our businesses, jointly
    offering our services to all of our customers. To the outside world, we will
    be operating outside the Netherlands under a single brand name: TNT. Well
    do more work to investigate the optimal branding in the Netherlands where
    our 200-plus year presence may call for more continuity. We will leverage
    our size by combining our forces in a number of fields. In addition to their
    existing roles, each member of the Board of Management will assume a new company-wide
    responsibility. Chief financial officer Jan Haars takes on the task of exploring
    company-wide e-back office systems. Harry Koorstra is charged with the development
    of global key account management. Marie-Christine Lombard is working to create
    a single global IT structure. And Dave Kulik is setting up a single procurement
    function. I will concern myself with a worldwide strategic human




resources framework
    as well as the strengthening of internal communication and reporting functions
    around the group. Let me be clear:
    We will continue the focussed approach of the single divisions, each in charge
    of its own customers and products. But we fully intend to offer a better service
    at lower cost by working together as a team, each member doing the utmost
    to improve the net income of the company as a whole. We
    take our growth strategy personally. The final important
    result of our strategy review is the identification of three major growth
    areas: mail consolidation, freight forwarding and China. Its clear
    to us that developments in regulation will ultimately bring about liberalisation
    in mail markets. This will probably take some years, but in the run-up there
    are already some interesting developments. Countries such as Denmark and Austria
    have already put part of their mail operators up for sale. Other operators
    are showing signs of interest in co-operation. As in other areas, we intend
    to lead in this field. Freight forwarding
    is another promising area. Put simply, freight forwarding means brokering
    transportation. As a result of increased visibility in global supply chains,
    specifically from Asia and the electronics sector, customers are demanding
    that operators like us offer a complete logistics solution. Establishing a
    freight forwarding function enables us to offer such a solution. We will continue
    to pursue options to enter this segment of our business. China undoubtedly
    represents the largest growth opportunity in the world today. As you will
    read later in this annual report, we are already well positioned there. For
    more than three years, weve had a successful strategic partnership with
    China Post, for whom we carry all outbound express consignments. We already
    have a firm position in the automotive logistics market there. In fact, our
    joint venture with SAIC (Shanghai Automotive Industry Corporation) makes us
    the largest automotive logistics operator in China. We will increase our efforts
    in the country. In 2004 we will set up a single mail, express and logistics
    company to access the Chinese market. We view China as our biggest market
    opportunity after Europe. We
    take our responsibility for the world personally. Like many environment-conscious companies, we are committed
    to minimising the environmental impact of our operations. But more than simply
    complying with laws and guidelines, we want to be a leader in sustainability.
    Our corporate sustainability policy  presented in chapter 9 of this
    document and available at www.tpg.com  reflects our ambition. Were
    also working with the World Economic Forums logistics and transportation
    governors group to select key environmental performance indicators relevant
    for our industry.


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We integrate sustainability
    with active and ongoing programmes in many of these areas. Royal TPG Post,
    for instance, was the first postal company to receive global ISO 14001 certification
    for environmental management. Beginning in 2005, we will publish an annual
    report on sustainability, showing our commitment and progress in line with
    relevant elements of the Global Reporting Initiative guidelines. The first
    report will cover our activities for the year 2004. We understand that
    there is more to our planet than business alone. There are great inequalities
    in our world, differences between the rich and the poor, between the well-fed
    and the hungry. We believe the international business community can play an
    important role in addressing these issues, by leveraging the very skills that
    make it successful in business. Thats why
    we have entered into a partnership with United Nations World Food Programme,
    a partnership which in its first year proved to be a good success. Through
    the work and dedication of 189 of our people in the field, we began to help
    World Food Programme become a more effective and efficient organisation. Whats
    more, our employees raised 1,033,635 for World Food Programme, enough
    to feed 27,000 children for an entire school year. I think these are achievements
    to be proud of. I am proud of our people, and I know they are proud of our
    company. This year we will
    continue to build on our partnership with United Nations World Food Programme.
    We will try to find new corporate sponsors for the organisation. We will continue
    our work setting up a global humanitarian supply chain. And we will organise
    new fund-raising activities, like our global Walk the World sponsored walk
    on 20 June 2004. Be sure to watch your television that day to see our employees
    take part in this worthy cause. Our goal for the initial global event is to
    raise enough money to feed and educate 30,000 children for one school year.
    Our ultimate goal is to raise enough money each year to feed and educate one
    child for every one of our 163,000 employees. An ambitious goal to be sure,
    but at our company we dont shy away from an ambit ious goal. We take
    it personally. Best regards,


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|Chapter
      2 Information on the company
|------------------------------------------

Group
    business descriptionTPG 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 34.8% of our issued 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 14  Additional information.




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. Mission
    & strategy MissionOur 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, andsharing 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.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.Our individual
        businesses have strong strategies underpinned by value-based management.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.Our brand reputation
        and employee pride/satisfaction are the two most important assets we manage. In 2003,
    we had total operating revenues of11,866 million.
    Our mail division accounted for 33.0% of our operating revenues, 99.9% of
    our operating income and 73.2% of our earnings from operations (operating
    income excluding goodwill amortisation and non-allocated operating income/expense).
    Our express division accounted for 35.8% of our operating revenues, 29.1%
    of our operating income and 24.6% of our earnings from operations (operating
    income excluding goodwill amortisation and non-allocated operating income/expense).
    Our logistics division accounted for 31.5% of our operating revenues, a negative
    26.5% of our operating income and 2.1% of our earnings from operations (operating
    income excluding goodwill amortisation and non-allocated operating income/expense).


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|                                                           | As
      of and for the year ended at 31 December |  
|---------------------------------------------------------- | ------------------------------------------------- | -
|                                                           |                                                   |  
|                                                           | **2003**                                          |  
|                                                           |                                                   |  
|                                                           | **US$**                                           |  
|Divisional operating
      revenues2                       |                                                   |  
|Mail                                                       | 4,932                                             |  
|Express                                                    | 5,355                                             |  
|Logistics                                                  | 4,705                                             |  
|                                                           |                                                   |  
|Total                                                      | 14,992                                            |  
|Non-allocated                                              | 21                                                |  
|Intercompany                                               | (66                                               | )
|                                                           |                                                   |  
|Total
      operating revenues3                            | 14,947                                            |  
|                                                           |                                                   |  
|                                                           |                                                   |  
|Depreciation,
      amortisation and impairments           | 896                                               |  
|Total operating
      income                               | 966                                               |  
|As
      % of total operating revenues                     | 6.5                                               |  
|Net income                                                 | 378                                               |  
|                                                           |                                                   |  
|                                                           |                                                   |  
|Capital expenditure
      on property, plant and equipment | 362                                               |  
|Average total
      capital4                               | 10,192                                            |  
|Return on average
      total capital (%)5                 | 9.5                                               |  
|                                                           |                                                   |  

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

Group
    financial reviewThe 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
    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; our ability
    to manage our cost structure for capital expenditures and operating expenses;
    and our ability to match our operating costs to shifting volume levels. 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 the
    performance of our divisions. Other operating revenues include sales of real
    estate and redundant assets after contract terminations. 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 prior years 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 SEC rules, which 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 business. 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 business 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, and we believe this is in line with the way our US peers
    present their performance. This non-GAAP financial measure


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Chapter 2 Information
  on the company

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|

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 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 tables "Operating
  income" throughout this annual report.


|Results
      of operations                                |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|---------------------------------------------------------- | ------------------------------- | - | -------- | ---------- | ---------------- | - | ----- | - | ---------------- | - | ------ | - | ------- | -
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|Consolidated
      group results                           | Year
      ended at 31 December |  
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|                                                           | **2003**                        |   | **2003** |            | %
      variance |   | 2002  |   | %
      variance |   | 2001   |  
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |  
|                                                           | **US$**                         |   | ****    |            |                  |  |       |   |                 |  
|Total operating
      revenues                             | 14,947                          |   |          | 11,866     |                  |   | 0.7   |   | 11,782           |   | 5.0    |   | 11,218  |  
|Total operating
      expenses                             | (13,981                         | ) |          | (11,099    | )                |   | (3.5  | ) | (10,724          | ) | (5.1   | ) | (10,201 | )
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|Total
      operating income                               | **966**                         |   |          | **767**    |                  |   | (27.5 | ) | 1,058            |   | 4.0    |   | 1,017   |  
|As
      % of total operating revenues                     | 6.5                             |   |          | 6.5        |                  |   |       |   | 9.0              |   |        |   | 9.1     |  
|Net financial
      expense                                | (116                            | ) |          | (92        | )                |   | 14.8  |   | (108             | ) | (16.1  | ) | (93     | )
|Income taxes                                               | (464                            | ) |          | (368       | )                |   | (7.9  | ) | (341             | ) | (1.8   | ) | (335    | )
|Results from investments
      in affiliated companies     | (7                              | ) |          | (6         | )                |   | (20.0 | ) | (5               | ) | (400.0 | ) | (1      | )
|Minority interests                                         | (1                              | ) |          | (1         | )                |   | 80.0  |   | (5               | ) | (66.7  | ) | (3      | )
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|Net
      income                                           | **378**                         |   |          | **300**    |                  |   | (49.9 | ) | 599              |   | 2.4    |   | 585     |  
|Net income per
      diluted ordinary share                | 79.5                            |   |          | 63.1       |                  |   | (50.0 | ) | 126.1            |   | 2.5    |   | 123.0   |  
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|(in millions,
      except percentages and per share data) |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|Operating revenue
      by division                        | Year
      ended at 31 December |  
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|                                                           | **2003**                        |   | **2003** |            | %
      variance |   | 20021 |   | %
      variance |   | 20011  |  
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |  
|                                                           | **US$**                         |   | ****    |            |                  |  |       |   |                 |  
|Operating revenue
      by division:                       |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|Mail                                                       | 4,932                           |   |          | 3,915      |                  |   | (2.2  | ) | 4,005            |   | 2.8    |   | 3,896   |  
|Express                                                    | 5,355                           |   |          | 4,251      |                  |   | 1.8   |   | 4,175            |   | 6.8    |   | 3,910   |  
|Logistics                                                  | 4,705                           |   |          | 3,735      |                  |   | 3.5   |   | 3,610            |   | 7.7    |   | 3,353   |  
|Non-allocated                                              | 21                              |   |          | 17         |                  |   | (51.4 | ) | 35               |   | (69.6  | ) | 115     |  
|Inter-company
      eliminations                           | (66                             | ) |          | (52        | )                |   | (20.9 | ) | (43              | ) | 23.2   |   | (56     | )
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  
|Total
      operating revenues                             | **14,947**                      |   |          | **11,866** |                  |   | 0.7   |   | 11,782           |   | 5.0    |   | 11,218  |  
|                                                           |                                 |   |          |            |                  |   |       |   |                  |   |        |   |         |  

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

|                                               |                                 |   |          |           |                  |   |        |   |                  |   |       |  
|---------------------------------------------- | ------------------------------- | - | -------- | --------- | ---------------- | - | ------ | - | ---------------- | - | ----- | -
|                                               |                                 |   |          |           |                  |   |        |   |                  |   |       |  
|                                               |                                 |   |          |           |                  |   |        |   |                  |   |       |  
|Operating income                               | Year
      ended at 31 December |  
|                                               |                                 |   |          |           |                  |   |        |   |                  |   |       |  
|                                               | **2003**                        |   | **2003** |           | %
      variance |   | 20021  |   | %
      variance |   | 20011 |  
|                                               |                                 |   |          |           |                  |   |        |   |                  |   |       |  
|                                               | **US$**                         |   | ****    |           |                  |  |        |   |                 |  
|Earnings from
      operations by division:    |                                 |   |          |           |                  |   |        |   |                  |   |       |  
|Mail                                           | 1,033                           |   |          | 820       |                  |   | 2.0    |   | 804              |   | 2.9   |  
|Express                                        | 348                             |   |          | 276       |                  |   | 12.2   |   | 246              |   | 56.7  |  
|Logistics                                      | 30                              |   |          | 24        |                  |   | (84.7  | ) | 157              |   | (17.4 | )
|                                               |                                 |   |          |           |                  |   |        |   |                  |   |       |  
|Total
      earnings from operations           | **1,411**                       |   |          | **1,120** |                  |   | (7.2   | ) | 1,207            |   | 7.0   |  
|Amortisation of
      goodwill                 | (421                            | ) |          | (334      | )                |   | (116.9 | ) | (154             | ) | (10.8 | )
|Non-allocated
      operating income (expense) | (24                             | ) |          | (19       | )                |   | (480.0 | ) | 5                |   | (82.1 | )
|                                               |                                 |   |          |           |                  |   |        |   |                  |   |       |  
|Total
      operating income                   | **966**                         |   |          | **767**   |                  |   | (27.5  | ) | 1,058            |   | 4.0   |  
|                                               |                                 |   |          |           |                  |   |        |   |                  |   |       |  

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



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Group overviewWeak economic
    conditions and adverse foreign exchange movements against the euro continued
    to affect our business in 2003.Total operating revenues increased by 0.7%
    compared to 2002. Operating income decreased by 27.5% primarily due to a total
    goodwill impairment of  183 million and assets impairments of 
    10 million, both described in more detail in note 1 to our financial statements.
    In addition, we recorded  69 million of cost associated with the Transformation
    through Standardisation programme in our logistics division described in more
    detail in the chapter on the logistics division. Operating
    revenues of our mail division suffered from the lower addressed mail volumes,
    a trend fuelled by substitution of physical mail by forms of electronic communication
    and deepened by the slow economy. However, the negative effect of this decline
    was successfully countered by the cost flexibility programme described in
    chapter 3 on the mail division. Operating income of the mail division decreased
    by 1.0% in particular due to a goodwill impairment of  20 million in
    our UK data and document management business and higher pension cost. Earnings
    from operations (operating income minus goodwill amortisation) increased 2.0%
    reflecting the success of strict cost control. Our express
    division performed strong with 1.8% higher operating revenues and significant
    increased operating income (16.1%).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,
    coupled with further operating efficiencies, fuelled this result. Despite
    an increase of operating revenues in our logistics division, our logistics
    division incurred an operating loss of  203 million. Operational difficulties
    in the process of integrating the various acquired companies in prior years,
    aggravated by the economic slowdown and reduced volumes in many of our contracts
    led to under utilisation of assets in some of our businesses and forced us
    to take goodwill and asset impairments of  163 million and  10
    million respectively in the third quarter. On top of this, a total of 
    69 million of cost associated with our Transformation through Standardisation
    programme negatively affected our logistics division's operating income. Cash generation
    for the group continued to be strong with lower cash flow from operations
    more than offset by a lower cash flow from investing activities reflecting
    a lower acquisition volume and a prudent view on capital expenditure thus
    allowing for a further reduction of debt. Our audit
    committee, on behalf of the Supervisory Board, has 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. We are preparing a report
    to UK Inland Revenue in relation to these UK tax issues pursuant to a procedure
    under UK law designed to ensure full disclosure of relevant information to
    the UK Inland Revenue. Although we believe we have adequately accrued in our
    financial statements for the potential taxes, interest and penalties in relation
    to these matters, we are in ongoing discussions with the UK Inland Revenue
    on these issues, upon completion of which the actual amount of liability will
    be determined. Group
    operating revenues2003Total
    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 is  13 million of revenues from our
    subsidiary Global Collect B.V., a payment provider. Overall,
    the distribution of operating revenues remained in line with our strategy
    of spreading our operating revenues equally over our three divisions. Organic
    growth, defined as the growth calculated against last years foreign exchange
    rates and excluding the effect from the first time consolidation of acquisitions
    or de-consolidation of disposed companies, 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. 2002In 2002, our
    total operating revenues increased by  564 million to  11,782
    million, rising 5.0% compared to 2001. Of this increase,  109 million
    related to our mail division,  265 million related to our express division,
     257 million related to our logistics division, and the remaining negative
     67 million was attributable to changes in non-allocated items and inter-company
    eliminations. Included in the non-allocated operating revenue is  14
    million in net proceeds, primarily from the sale of our 49.9% shareholding
    in a pension administration business and  14 million of revenues from
    our subsidiary, Global Collect B.V.


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Chapter 2 Information
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|Group operating
      expenses                        | Year
      ended at 31 December | 
|----------------------------------------------------- | ------------------------------- | 
|                                                      |                                 | 
|                                                      | **2003**                        | 
|                                                      |                                 | 
|                                                      | **US$**                         | 
|Cost of materials                                     | 688                             | 
|Work contracted
      out and other external expenses | 6,198                           | 
|Salaries and social
      security contributions      | 5,244                           | 
|Depreciation,
      amortisation and impairments      | 896                             | 
|Other operating
      expenses                        | 955                             | 
|                                                      |                                 | 
|Total
      operating expenses                        | **13,981**                      | 
|                                                      |                                 | 
|(in millions,
      except percentages)               |                                 | 
|                                                      |                                 | 

As
    a result of organic growth and acquisitions, the distribution of revenues
    continued to develop in line with our strategy of becoming more evenly spread
    over our three divisions. Our businesses were responsible for total organic
    operating revenue growth of 3.4%, while acquisitions accounted for 3.1%, but
    this was partly offset by a 1.5% decrease attributable to unfavourable changes
    in foreign exchange rates.The effect of unfavourable 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 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 B.V., Blitzpunkt GmbH,Werbeagentur
    Fischer GmbH, Full Service Srl. and Archive and Data Storage Ltd.) 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 from the focus on cost control in our mail division.
    Changes in foreign exchange rates further decreased these costs by16 million
    (-2.9%). Work contracted
    out and other external expenses related to fees paid for external sub-contractors,
    consultants, rent and leases. 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 are experiencing a trend ofreplacing
    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.We expect this charge to pick up
    once economies recover translating into higher capital needs to address higher
    trading volumes. 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


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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 described in chapter 5 The logistics division.
    Of this amount  9 million is included in expenses for work contracted
    out,  20 million in salaries and  40 million in other expenses. 2002In 2002, total
    operating expenses increased by  523 million (5.1%) compared to 2001.
    Our gross margin declined from 9.1% in 2001 to 9.0% in 2002.The underlying
    organic growth in operating expenses was 3.2%, the increase due to acquisitions
    was 3.4%, and changes in foreign exchange rates had a favourable effect of
    -1.5%. Total cost
    of materials increased by  47 million (9.3%) in 2002 compared to 2001.
    Acquisitions effective in 2001 (including Advanced Logistics Services SpA,
    Circular Distributors Ltd., Directview and Lason UK Ltd) and 2002 (including
    DIMAR, Cerilly, Bleckmann Group,Transports Nicolas, and our 50% joint venture
    with DSV A/S,TNT DFDS Transport Logistics) contributed 7.1% to the increase.
    A 3.8% increase was primarily revenue-related and reflected organic growth,
    especially in our express and logistics divisions. Favourable changes in foreign
    exchange rates offset these cost increases by  8 million (-1.6%). Total work
    contracted out and other external expenses increased by  210 million
    (4.6%) in 2002 compared to 2001. Acquisitions in 2001 (including Advanced
    Logistics, Circular Distributors and Lason) and 2002 (including Bleckmann
    Group,Transports Nicolas and TNT DFDS Transport Logistics) contributed 
    133 million (2.9%) to the increase.The remaining  159 million increase
    (3.5%) was primarily revenue related and reflected organic growth, especially
    in our express and logistics divisions. Favourable changes


in foreign exchange
    rates offset these cost increases by  82 million (-1.8%). Salaries and social
    security contributions increased by  191 million (5.0%) in 2002 compared
    to 2001. Acquisitions contributed
    60 million (1.6%) to the overall increase. Organic growth contributed 
    182 million (4.7%) to the increase and was mainly due to a 3.5% increase in
    the average number of full-time employee equivalents together with wage increases
    required under our various collective labour agreements. Favourable changes
    in foreign exchange rates offset these cost increases by  51 million
    (-1.3%). Depreciation,
    amortisation and impairments in 2002 increased by  53 million (12.1%)
    compared to 2001. Of this increase,  37 million (8.5%) was due to an
    increase in regular depreciation charges, as a result of additional investments
    in property, plant and equipment and other intangibles. During the year we
    recognised various small impairments totalling  1 million (0.2%). An
    additional  15 million (3.4%) was due to higher amortisation of goodwill
    from acquisitions.The higher amortisation of goodwill was primarily related
    to the acquisitions of Cerilly, Bleckmann Group, and Transports Nicolas as
    well as our TNT DFDS Transport Logistics joint venture. In addition, amortisation
    of goodwill was higher in 2002 as a result of several 2001 acquisitions (Directview,Advanced
    Logistics, Circular Distributors and Lason) as this expense in 2001 included
    less than a full year of amortisation charges for these acquisitions.The first-time
    consolidation of acquisitions accounted for a  6 million (1.4%) increase
    in depreciation. Changes in foreign exchange rates offset these cost increases
    by  6 million (-1.4%). Other operating
    expenses increased by  22 million (2.7%) in 2002 compared to 2001 due
    primarily to the  111 million (13.6%) impact of acquisitions, offset
    by other operating expenses in our existing operations, which were 
    79 million (-9.7%) lower than in 2001 due to continued efforts to reduce our
    costs. Favourablechanges
    in foreign exchange rates mitigated the increase by  10 million (-1.2%).


|                                               |                                 |  
|---------------------------------------------- | ------------------------------- | -
|Group operating
      income                   | Year
      ended at 31 December |  
|                                               |                                 |  
|                                               | **2003**                        |  
|                                               |                                 |  
|                                               | **US$**                         |  
|Mail                                           | 965                             |  
|Express                                        | 281                             |  
|Logistics                                      | (256                            | )
|Non-allocated
      operating income (expense) | (24                             | )
|                                               |                                 |  
|Total
      operating income                   | **966**                         |  
|                                               |                                 |  
|(in millions,
      except percentages)        |                                 |  

|1 | Figures for 2001
      and 2002 have been restated to reflect the transfer of Innight services
      from express to logistics.
|- | -------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                

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        annual report | 13
| | -------------------------- | --

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Chapter 2 Information
  on the company

|
|

2003In 2003, non-allocated
    operating income amounted to a loss of  19 million.This loss includes
    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 is a release of an insurance provision of  9 million. Acquisitions
    effective in 2002 (including DIMAR Sro, Cerilly, Bleckmann Group,Transports
    Nicolas, and our 50% joint venture TNT DFDS Transport Logistics) and 2003
    (including DocVision B.V., Blitzpunkt GmbH,Werbeagentur Fischer GmbH, Full
    Service Srl. and Archive and Data Storage Ltd.) had a negative effect on our
    operating income of  14 million. Foreign currency movements during the
    year had a negative  29 million effect on our operating income.




2002In 2002, non-allocated
    operating income amounted to a gain of  5 million.The largest element
    was the net profit on the sale of non-core businesses ( 14 million),
    offset by  4 million of net costs for business initiatives in China
    and  5 million of other costs. Included in other costs is a release
    of a  10 million accrual with respect to various claims and litigations
    that were either settled without cost or for a lower amount. Acquisitions
    effective in 2001 (including Advanced Logistics, Circular Distributors, Directview
    and Lason) and 2002 (including DIMAR, Cerilly, Bleckmann Group,Transports
    Nicolas, and our TNT DFDS Transport Logistics joint venture) had a positive
    effect on our 2002 operating income of  34 million. Foreign currency
    movements during the year had a negative  10 million effect on our operating
    income.




|                                          |                                   |       |  |         |       |  |                         |   |      |   |                         |   |     
|----------------------------------------- | --------------------------------- | ----- |  | ------- | ----- |  | ----------------------- | - | ---- | - | ----------------------- | - | ----
|Group financial
      income and expenses | Year
        ended at 31 December |       | 
|                                          |                                   |       |  |         |       |  |                         |   |      |   |                         |   |     
|                                          | 2003                              |       |  | 2003    |       |  | %
      
      variance |   | 2002 |   | %
      
      variance |   | 2001
|                                          |                                   |       |  |         |       |  |                         |   |      |   |                         |   |     
|                                          | US$                               |       |  |        |       |  |                         |  |      |   |                        |   |     
|Interest and similar
      income         | 23                                |       |  | 18      |       |  | (10.0                   | ) | 20   |   | (23.1                   | ) | 26  
|Interest and similar
      expenses       | (139                              | )     |  | (110    | )     |  | 14.1                    |   | (128 | ) | (7.6                    | ) | (119
|                                          |                                   |       |  |         |       |  |                         |   |      |   |                         |   |     
|Net financial
      expense               | **(116**                          | **)** |  | **(92** | **)** |  | 14.8                    |   | (108 | ) | (16.1                   | ) | (93 
|                                          |                                   |       |  |         |       |  |                         |   |      |   |                         |   |     
|(in millions,
      except percentages)   |                                   |       |  |         |       |  |                         |   |      |   |                         |   |     
|                                          |                                   |       |  |         |       |  |                         |   |      |   |                         |   |     

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 USD, Canadian dollars
    and British pound sterling 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.




2002In 2002, net
    financial expense amounted to  108 million, a 16.1% increase compared
    to  93 million in 2001.This  15 million increase was due to higher
    financial expense by  9 million and lower financial income by 
    6 million.The  9 million increase in interest and similar expenses in
    2002 compared to 2001 included  7 million due to the replacement of
    short-term, variable-rate funding by the issuance of long-term fixed-rate
    debt,  2 million due to an increase in average net debt and  2
    million of other smaller items.These factors were partly offset by a 
    2 million reduction in financial expense due to lower short-term interest
    rates.


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|Group income
      taxes                | Year
        ended at 31 December | 
|--------------------------------------- | --------------------------------- | 
|                                        |                                   | 
|                                        | **2003**                          | 
|                                        |                                   | 
|                                        | **US$**                           | 
|Current tax expense                     | 237                               | 
|Changes in deferred
      taxes         | 227                               | 
|                                        |                                   | 
|Total
      income taxes                | **464**                           | 
|                                        |                                   | 
|(in millions,
      except percentages) |                                   | 

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 divisionsand
    the effect of € 59 million to cover our estimate of liability to the
    UK Inland Revenue, including interest and penalties, following investigations
    conducted by our audit committee. The independent investigations conducted
    by our audit committee related to representations to the UK Inland Revenue
    and to our auditor 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 are available for carry forward at 31 December 2003
    amounted to750 million (2002:836 million).With
    these losses carried forward, future tax benefits of248 million could be recognised (2002:278 million).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 (2002:133 million).We established valuation allowances and have therefore effectively
    not recognised138 million (2002:145 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. 2002For 2002,
    income taxes amounted to341 million (2001:335
    million), or 35.9% (2001: 36.3%) of income before income taxes.88
    million (48
    million in 2001) of our total income taxes related to tax authorities outside
    the Netherlands. Income before income taxes amounted to713 million earned in the Netherlands and237 million earned outside the Netherlands. In 2002,
    the statutory corporate income tax rate in theNetherlands
    decreased to 34.5% from 35.0% in 2001.The lower 2002 statutory corporate income
    tax rate decreased total income




taxes
    by approximately4 million. Our 35.9%
    effective income tax rate in 2002 was 1.4% higher than the statutory corporate
    income tax rate of 34.5% in the Netherlands.The
    total accumulated losses that were available for carry-forward at the end
    of 2002 amounted to836 million (2001:762 million). With these losses carried forward, future tax benefits of278 million (2001:256 million) could
    have been recognised.With respect to these losses carried forward, we recorded
    deferred tax assets of133 million at the
    end of 2002 (2001:97 million). Group
    net income2003Net 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. 2002In 2002, net
    income increased by14 million (2.4%) to599 million compared to585 million in 2001.The increase was primarily the result of the increase
    in operating income of41 million (4.0%) partially offset by an increase in income taxes (6 million), an increase in net financial expense (15 million) and an increase in losses from investments in affiliated companies
    (4 million). Income attributable to our minority shareholders increased by2 million.The higher net financial expense was mainly due to the replacement
    of short-term, variable-rate funding with long-term, fixed-rate debt. In 2002,
    unfavourable foreign exchange effects accounted for negative3 million of net income. ProspectsCurrent customer
    volumes do not indicate any material pick up in the markets in which we operate.
    Nevertheless we believe we are well positioned in all three of our businesses
    to benefit from any upturn that may occur. For TPG
    as a whole, the Board of Management is confident that further improvements
    in earnings from operations and net income will be achieved in 2004.


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        annual report | 15
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|Chapter
      3 The mail division
|---------------------------------



Mail
    business descriptionOur 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 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 maintain
  market share in the Netherlands, and to achieve growth through the provision
  of data and document management services and international expansion. 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.
    Potential growth in traditional mail services is limited in the Netherlands
    by the size of the Dutch domestic mail market, growing competition and the
    substitution of other methods of delivering information for mail and, in other
    countries, by regulatory barriers to entry as well as competition and substitution.Therefore,
    key elements of our mail strategy are reducing costs and achieving growth
    through developing 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 mandatory 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 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 data and document
        management services, such as direct and interactive marketing services
        and services for managing physical and electronic information flows. In 2003, our mail
  division earned revenues of3,915 million, a
  2.2% decrease over the previous year. Mail accounted for 33.0% of our operating
  revenue, 99.9% of our operating income and 73.2% 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 2003:




|Mail
      operating revenues      | Year
      ended at 31 December | 
|---------------------------------- | ------------------------------- | 
|                                   |                                 | 
|                                   | 2003                            | 
|                                   |                                 | 
|                                   | US$                             | 
|Mail Netherlands                   | 3,400                           | 
|Cross-border mail                  | 758                             | 
|European Mail
      Networks       | 515                             | 
|Data and document
      management | 259                             | 
|                                   |                                 | 
|Total
      operating revenues     | 4,932                           | 
|                                   |                                 | 

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



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Mail
    division overview by business line Mail
    NetherlandsOur Mail Netherlands
  business line collects, sorts, transports and delivers postal items, including
  letters, direct mail, printed matter and parcels within the Netherlands. Mandatory and reserved
  postal services provided in the Netherlands are included
  within Mail Netherlands. Our subsidiary Royal TPG Post B.V. performs these mandatory
  and reserved postal services. We are required to
  provide mandatory postal services.These services include the delivery in the
  Netherlands of single items of correspondence and single items of printed matter
  of a certain size with a maximum individual weight of two kilograms and single
  postal parcels with a maximum individual weight of 10 kilograms. It furthermore
  includes the delivery of letters in bulk up to an individual maximum weight
  of 100 grams, which are conveyed against separately agreed rates. For international
  inbound and outbound mail, 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 kilograms. Postal parcels with
  a maximum individual weight of 20 kilograms are also included.These services
  are subject to regulation under the Dutch Postal Act and General Postal Regulations
  Decree.These regulations are primarily concerned with uniform terms and conditions
  for customers in similar circumstances, service levels and quality, tariffs
  and separate accounting for mandatory postal services and other activities,
  as more fully described in chapter 13  Regulatory environment.
  These regulations do not cover all aspects of our Mail Netherlands business
  line.Therefore, our business operations in the Netherlands are generally subject
  to the same regulations as other businesses in the Netherlands. Tariffs for mandatory
    postal services have to be transparent, non-discriminatory and uniform. However,
    we may grant volume discounts and negotiate specific prices and conditions
    with high volume users.We have to submit proposed tariff changes for mandatory
    postal services to the Supervisory Authority for Post and Telecommunications,
    which is commonly called by its Dutch acronym OPTA. Further, on 21 September
    2003 the Dutch Ministry of Economic Affairs froze all tariffs for mandatory
    postal services until 1 January 2005. Other than the mandatory postal services
    and reserved postal services, none of our postal services is subject to governmental
    control.The Dutch Minister of Economic Affairs has proposed significant changes
    to the regulatory scheme governing our mandatory and reserved postal services.
    See chapter 13 Regulatory environment. We have the exclusive
    right under the Dutch Postal Act to provide specified reserved postal services.These
    services include the




collection, transport
    and delivery of letters weighing up to 100 grams within the Netherlands and
    from countries outside 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.This exclusive right does
    not extend to courier services or services where the letters are delivered
    by an operator more quickly than our standard delivery time and the rate charged
    for the service is more than three times the basic rate of0.39.The exclusive
    right also does not extend to the conveyance of parcels, letters weighing
    in excess of 100 grams and printed materials such as advertising, newspapers
    and magazines. In addition, 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. In 2003, approximately
  28.8% of our mail operating revenue and approximately 9.5% of our companys
  total operating revenues (2002: 29.0% and 9.9%) 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 which
  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 2003, through our
  Mail Netherlands business line, we delivered on average approximately 18 million
  addressed postal items per day, six days a week, to approximately 7.4 million
  households and businesses, and collected, sorted and delivered approximately
  5.4 billion addressed items of mail (excluding inbound international items).The
  number of working days in a year is an important driving factor of our mail
  volumes in that year. Except for
          those services falling within reserved postal services, we compete in
          all areas of our mail division. Depending on the type of service, we
          face direct competition from three primary sources:dedicated companies
        specialising in a particular type of postal service,specialised
        distribution units of large Dutch companies, andlocal 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.




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      annual report | 17
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Chapter 3
  The mail division

|****
|----



Competition is increasing
  in the postal markets, and traditional mail volumes in the Netherlands have
  continued to decrease in recent years.This is partly due to the internationalisation
  and liberalisation of the postal business leading to a change in the postal
  markets away from being protected by regulations designed to uphold service
  standards for all citizens and thus to more competition. Increased competition
  is also partly due to the rise in alternative communication methods made possible
  by new technology. See chapter 10  Risk factors. We anticipate that
  numerous business opportunities within the European Union will exist as a result
  of the further liberalisation of the postal sector there.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 3,718 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 525 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 43,710 mailmen. In the coming years the process of manually arranging
  the mail according to street and house number will be taken over by sorting
  machines, partly in the main sorting centres, but mostly in the distribution
  depots. The first group of these decentralised sequence sorting machines were
  installed in the last quarter of 2003. 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 mail at an overall
  price that  when corrected for inflation  has actually decreased
  by 16% since the privatisation of our business in 1989. In 2003 Mail Netherlands
  addressed volumes dropped by 2.5%. The decline was due in part to substitution
  by electronic media as a cost saving measure by customers, accelerated by competition
  and reduced demand for direct mail as a result of the slow economy.This trend
  was not only seen in the Netherlands but




across most other
    European countries as well.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. To ensure that we
    maintain a stable operating margin in this environment, we have initiated
    a comprehensive cost flexibility programme that includes a wide range of efficiency
    measures designed to offset the declines in volumes.While our prior automation
    project (Briefpost 2000) focused on implementing an efficient automatic sorting
    process, our cost flexibility programme focuses mainly on achieving efficiencies
    in our distribution process. In addition to optimising our sales and marketing
    activities, we will redesign our mail production chain with particular emphasis
    on refining our distribution activities and distribution points throughout
    the Netherlands.We began this programme in 2001 with works council discussions
    and initial pilots, and carried out extensive pilot projects in 2003. In 2003, we also
    installed the first of several new sequence sorting machines and began using
    new software to improve their automatic reading rates. Fewer employees now
    perform the same tasks with a higher efficiency. In 2003, we 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 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. 1100 new employees joined TPG
    Post as part-time mail deliverers in 2003, and the number continues to grow.Through
    natural attrition, up to 9,000 full-time equivalent mailman positions will
    be replaced by 21,000 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. 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 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. Starting in 2002 and continuing
    in 2003, a decline in direct marketing expenditures due to slow economic growth
    negatively affected our direct mail volumes.We believe that better targeted
    direct mailings, which have a more limited circulation, may decrease future
    growth in direct mail volumes.




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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 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
  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. By 2005, through
  this joint venture, we intend to operate 800 post offices. Further, we 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 in total
  we will offer the market 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 following mandatory postal services
  and reserved postal services: 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 cross-border mail 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. See chapter
    13 Regulatory environment. We provide two distinct
  cross-border mail services.The first of these is a mandatory postal service.We
  are required to collect, sort and distribute letters, addressed printed materials
  and parcels up to a certain size that are either inbound or outbound from the
  Netherlands.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. 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
    Spring subsidiary, of which Royal Mail Group plc and Singapore Post Pte Ltd
    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. Currently Spring is in negotiation with Royal
    Mail Group plc about the extension of the agreement under which Royal Mail
    sells Springs services. 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 addition, the development of media such
    as e-mail and the Internet make product innovation and proper positioning
    essential. Growth in this market is mainly driven by globalisation and liberalisation.
    Through networks across Europe,Asia and the Americas, Spring also pursues
    growth opportunities outside traditional mail markets. Spring expects to strengthen
    further its position as global market leader in this segment and expect to
    benefit from liberalisation. 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 Brussels, New York and Singapore. 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 that approaches addressed mail in its ability to target consumers. We strengthened
    our position in 2003 in several markets through acquisitions. In Italy, we
    acquired 100% of the outstanding shares of print and mail company Full Service
    Srl. In Germany, we acquired unaddressed mail companies Werbeagentur Fischer
    GmbH and Blitzpunkt GmbH. By integrating these networks into our existing
    networks in Germany, we increased our coverage in Europes largest mail
    market. In December 2003, we acquired the remaining 49% shares in Olaf Jepsen
    GmbH, part of the German unaddressed network. In 2002, the UK postal
    regulator announced it would extend the percentage of its bulk mail market
    open to competition from 10%




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Chapter 3 The mail
  division

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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. Following successful pilot tests during the
    course of 2003,TPG Post UK hopes to commence commercial service in the first
    half of 2004.These services will be aimed at large companies, publishers,
    mailing houses and direct marketers who send mailings of more than 4,000 items
    and who need reliable, competitively priced services.We expect this will give
    us the opportunity to offer addressed distribution services and to grow our
    existing unaddressed mail and data and document management services in Europes
    second-largest mail market. On10
    February 2004 Royal Mail announced the signing of its first agreement with
    a holder of a license regarding access to Royal Mails local sorting
    and delivery network.We are currently studying the terms and conditions of
    this agreement, since these will have an impact on our market entry strategy. Data
    and document managementIn 2003, the
  sluggish economic environment in the Netherlands and the rest of Europe resulted
  in low organic growth in our data and document management business, which we
  branded Cendris in 2002. The 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. We continued to grow
  our data and document management business abroad by offering data and document
  management services in 2003. Cendris operates in the Netherlands, the UK, Germany
  and the Czech Republic. In 2003, we started to offer call centre services in
  Germany through our German subsidiary and successfully integrated the acquired
  mail room company Doc Vision B.V. in the Netherlands. During the year we
  had to take a goodwill impairment of20 million in Cendris
  UK (formerly Lason UK Ltd, a company acquired in May 2001).The goodwill impairment
  was the result of the deteriorating situation in the market for computer output
  on microfiche, resulting in lower cash generating opportunities and a lower
  market value for this business. On 13 February 2004,
    we have acquired the remaining 40% of the shares in DIMAR group. DIMAR is
    one of the leading providers of full-service direct marketing activities in
    the Czech Republic and Slovakia.We had already acquired a 60% stake in DIMAR
    in 2002.




Mail
  financial review

|Mail
      operating revenues      | Year
      ended at 31 December | 
|---------------------------------- | ------------------------------- | 
|                                   |                                 | 
|                                   | 2003                            | 
|                                   |                                 | 
|                                   | US$                             | 
|Mail Netherlands                   | 3,400                           | 
|Cross-border mail                  | 758                             | 
|European Mail
      Networks       | 515                             | 
|Data and document
      management | 259                             | 
|                                   |                                 | 
|Total
      operating revenues     | 4,932                           | 
|                                   |                                 | 

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



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|Mail
      operating income                   | Year
      ended at 31 December |    
|--------------------------------------------- | ------------------------------- | ---
|                                              |                                 |    
|                                              | 2003                            |    
|                                              |                                 |    
|                                              | US$                             |    
|Earnings from
      operations                | 1,033                           |    
|*%
      of mail operating revenues*          | *20.9*                          | *%*
|Amortisation and
      impairment of goodwill | (68                             | )  
|                                              |                                 |    
|Total
      operating income                  | 965                             |    
|                                              |                                 |    
|(in millions,
      except percentages)       |                                 |    





|Mail
      productivity statistics                                                                | Year
      ended at 31 December |  |     
|------------------------------------------------------------------------------------------------- | ------------------------------- |  | ----
|                                                                                                  |                                 |  |     
|                                                                                                  | 2003                            |  | 2002
|Addressed postal
      items delivered by Mail Netherlands 1 (millions)                           | 5,384                           |  |     
|per
      Netherlands delivery address (items)                                                    | 724                             |  |     
|per
      Mail Netherlands FTE2
      (thousands of items)                                        | 156                             |  |     
|per
      Netherlands inhabitant (items)                                                          | 331                             |  |     
|Postal items delivered
      per delivery day (millions)                                          | 18                              |  |     
|Total operating
      revenues per FTE 2 (thousands of)                                          | 89                              |  |     
|Average percentage
      of national mail sorted automatically (%)                                | 82                              |  |     
|                                                                                                  |                                 |  |     
|1 Excluding international mail items per delivery day (millions).                                 |                                 |  |     
|2This
      FTE (full-time employee equivalent) definition is based on a 37-hour work
      week. |                                 |  |     



|Cross-border
      mail productivity statistics                | Year
      ended at 31 December |  |     
|-------------------------------------------------------------- | ------------------------------- |  | ----
|                                                               |                                 |  |     
|                                                               | 2003                            |  | 2002
|Total
      cross-border mail volumes (thousands of kilograms) | 94,467                          |  |     
|                                                               |                                 |  |     



Mail
    overviewOperating revenues
  of our mail division declined by 2.2% in 2003. Our mail divisions operating
  income decreased by 1.0% due primarily to the20 million goodwill
  impairment realised in the third quarter for our UK data and document management
  business. Under-performance of the UK data and document managements microfiche
  business and a change in local management triggered the goodwill impairment
  review. Earnings from operations increased by 2.0%.This increase was achieved
  primarily through continued progress in improving productivity and cost control
  while expanding our European Mail Networks and data and document management
  businesses organically and through small acquisitions.The improvements in earnings
  from operations were achieved despite a 2.5% decline in addressed postal items
  delivered in the Netherlands and29 million in additional
  pension costs compared to 2002. In 2003, we concluded
  a strategic partnership with China Post which we consider an important step
  in our international strategy given the potential size of the Chinese market
  for postal services.




Mail
    operating revenues2003In 2003,
    operating revenues from our mail division decreased by90 million (-2.2%)
    compared to the full year 2002.The organic operating revenues decreased by81 million (-2.0%),
    while acquisitions effective in 2002 (including Cerilly and DIMAR) and in
    2003 (including DocVision B.V., Blitzpunkt GmbH,Werbeagentur Fischer GmbH
    and Full Service Srl.) contributed positively. Including the effect of the
    disposal of our 50% share in Geldnet B.V., an armoured cash transit business,
    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,11million (-0.4%),
  was the result of the disposal of Geldnet.The continued and accelerating decline
  in addressed postal item volumes was due




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Chapter 3 The mail
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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 of competition in the non-mandatory area is starting to show in the
  addressed mail volume development.We expect these trends to continue. 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 are the effects from the SARS virus
    during 2003, the global economic slowdown, fierce international competition
    and partly due to 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 the growth is still affected by local
  environmental taxes, contributed to this growth. Since the second quarter of
  this year, EP Europost AG & Co. KG, our addressed mail joint venture with
  the Otto Hermes group in Germany, now also distributes cross-border mail in
  Germany.The acquisitions of Full Service Srl. in Italy during the third quarter
  of 2003 and unaddressed mail companies Blitzpunkt GmbH and Werbeagentur Fischer
  GmbH 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 under the brand name Cendris, operating revenues in 2003
  increased by4 million (2.0%)
  compared to 2002.The 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 B.V. in the Netherlands earlier this year 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%).




2002In 2002, operating
    revenues for our mail division increased by109 million (2.8%)
    compared to 2001.The organic operating revenues increased by40 million (1.1%)
    and acquisitions contributed79 million (2.0%)
    to the growth in revenues. Foreign exchange effects partly offset this growth
    by10 million (-0.3%). Mail Netherlands operating
  revenues increased by25 million (0.9%)
  compared to 2001.This increase was due to organic growth as a result of positive
  price, product mix, and other effects, partly offset by a decline in addressed
  Mail Netherlands volumes. Positive price and product mix movements during the
  year contributed54 million (1.9%)
  to operating revenue growth in Mail Netherlands.This was partly offset by a12
  million (-0.4%) decline in operating revenues that arose from the combination
  of fewer real estate transactions and the revenues from distributing euro coins.
  In 2002, the volume of total postal items delivered in the Netherlands decreased
  by 3.5%. Declining volumes of addressed and unaddressed postal items accounted
  for 0.6% and 3.0%, respectively, of the total decrease of postal items delivered
  in the Netherlands, partly offset by 0.1% higher volumes of international receipts.The
  decline in postal item volumes was due primarily to the continued substitution
  by electronic media, the 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 the slow economic growth. According to the Bureau Budget Controle
  in the Netherlands, expenditures on printed media in the Netherlands declined
  between 2% and 7% in 2002. Addressed Mail Netherlands volumes dropped by 41
  million to 5,521 million (0.7%) in 2002, causing an adverse17 million (-0.6%)
  effect on Mail Netherlands operating revenues. Included in the addressed Mail
  Netherlands volumes of 2002 is election mail and other new one-off business.
  Excluding this one-off business, addressed Mail Netherlands volumes decreased
  by 3.0% in 2002 compared to a decrease of 0.8% in 2001. Cross-border mail
  operating revenues fell by 0.6% compared to 2001, caused primarily (-1.4%) by
  unfavourable foreign exchange movements in the US dollar and British pound against
  the euro. Our 51%-owned subsidiary Spring, with Royal Mail Group plc and Singapore
  Post Pte Ltd. achieved positive revenue growth of 8.4%, while our Royal TPG
  Post international mail business suffered a loss of volumes partly due to competition
  from electronic alternatives.The organic operating revenues of our cross-border
  mail businesses declined7 million (-1.0%),
  but was offset by the acquisition revenues related to the acquisition effect
  of Spring, which added12 million (1.8%). In 2002, European
  Mail Networks operating revenues increased by53 million (17.4%).The
  organic operating revenues increased by19 million (6.3%),
  but was adversely affected by developments in Belgium, where local environmental
  taxes on unaddressed mail have resulted in volume decreases, and in Austria,
  as a result of fierce competition from the Austrian Post in the unaddressed




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business. All other
  countries showed solid volume and price development. Acquisitions accounted
  for an increase of34 million (11.1%)
  in operating revenues due mainly to Circular Distributors in the UK, Cerilly
  in Italy, and Redmail in Austria. Our data and document
  management operating revenues increased by35 million (21.0%).
  Organic operating revenues increased by3 million (1.8%),
  but were wholly offset by the decline in direct mail volumes in Europe, which
  reduced the demand for data management activities. Our mailroom management activities
  continued to show good revenue growth. The acquisition effect of Lason, which
  was only included in our results for part of 2001, and the acquisition of DIMAR
  in the Czech Republic accounted for revenue growth of33 million (19.8%).
  Overall operating revenue growth was further affected by a negative foreign
  exchange effect of1 million (-0.6%). Mail
    operating income2003The 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., which is 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,
    adding up to100 million in accumulated
    savings from the start in 2002.When fully implemented by 2013, the cost flexibility
    programme aims to achieve aggregate cost savings of265 million in our
    sorting and distribution activities and55 million in our
    marketing and sales activities, compared to our cost level of 2001. 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. 2002The mail divisions
    operating income increased in 2002 by 1.6% to774 million. Amortisation
    of goodwill in 2002 increased by 57.9% to30 million primarily
    due to the acquisition of Cerilly in 2002 (2 million) and
    the full year impact of the prior years acquisitions, including Lason
    UK Ltd. (3 million), Redmail
    (2 million) and
    Circular Distributors (1 million).The
    mail divisions earnings from operations increased in 2002 by23 million (2.9%)
    to804 million.The
    organic earnings from operations improved by14 million (1.8%)
    through revenue growth and tighter cost controls. In addition, we recorded
    a number of provisions during the year, the cost of which was more than offset
    by the release of an accrual of terminal dues. Redundancy costs of14 million were
    incurred in respect of restructuring our marketing and sales departments in
    the Netherlands and restructuring our parcels business.Acquisitions accounted
  for an increase of9 million (1.1%)
  due mainly to Circular Distributors in the UK, Cerilly in Italy, and Redmail
  in Austria. Overall earnings from operations as a percentage of mail operating
  revenues increased from 20.0% in 2001 to 20.1% in 2002.




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|Chapter
      4 The express division
|------------------------------------



Express
    business descriptionOur 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
    strategyOur ambition
  is to be the most successful global business-to-business express delivery company.We
  define most successful as producing the highest rate of profit growth
  in the industry by providing the most reliable express delivery services. Our global strategy
  is to build upon the leading position of TNT Express in the European door-to-door
  express delivery market and achieve profitable growth in the rest of the world. The
      most important elements of our strategy are to:Provide high-quality
      and cost-effective intra-European services through connecting strong domestic
      businesses.Develop and maintain
      profitable global accounts in carefully selected market sectors through
      a highly qualified sales team.




Increase revenue
      from small- to medium-sized users of express delivery services, thereby
      increasing the number of profitable customers.Create and profitably
      exploit unique on-demand door-to-door express delivery products such as
      TNT Sameday.Become the employer
      of choice in the door-to-door express industry working everywhere with the
      Investors in People standard and our uniform best practice processes.Develop and implement
      world-class systems, including easy-to-use customer interfacing technologies
      that enable us to provide friendly, fault-free service.Use the European
      Foundation for Quality Management (EFQM) excellence model as a framework
      for managing our businesses around the world. In 2003, our express
  division earned revenues of4,251 million. Express
  accounted for 35.8% of our operating revenue, 29.1% of our operating income
  and 24.6% of our earnings from operations. The following table
  sets forth operating revenues for the European 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 2003.




|Express
      operating revenues | Year
      ended at 31 December | 
|-------------------------------- | ------------------------------- | 
|                                 |                                 | 
|                                 | 2003                            | 
|                                 |                                 | 
|                                 | US$                             | 
|Express Europe                   | 4,353                           | 
|Express Rest of
      the World  | 1,002                           | 
|                                 |                                 | 
|Total
      operating revenues   | 5,355                           | 
|                                 |                                 | 

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



Express
    division overviewOur express business
  produced a strong performance in 2003 despite a relatively stagnant world-wide
  economy, the adverse effects of the SARS outbreak in Asia and the Iraq war.Through
  concerted efforts and a consistent focus on service quality and strong commercial
  policy, our express employees continue to deliver impressive margin improvements. The driving factors
    behind our continued profit improvements were our consistently positive revenue
    quality yield. Underlying this achievement is the fact that our express employees
    are united in the common mission of making TNT Express the most reliable express
    delivery provider. Our employees are achieving 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. The cornerstone of
  our approach is a global commercial policy aimed at winning more small- and
  medium-sized customers through the use of simplified no-discount tariffs. Our
  customer-friendly, straightforward rate structure, combined with excellent service
  quality, is particularly popular with smaller companies, which often have little
  time to devote to shipping processes but still require fast and reliable service.We
  support our no-discount tariff system with proven sales and customer relationship
  management processes throughout the world.




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Technology has always
  been central to our operations and customer service activities. Our approach
  to the use of technology includes extensive use of Internet services and direct
  connections to customer systems.We continue to develop new revenue-generating
  services and introduce innovative business models based on smart use of technology. All our international
    technology services are driven by the TNT Express Global Link system that
    facilitates our mission-critical operations and customer interface technology
    throughout the world. Global Link tracks cross-border consignments from collection
    to delivery and provides customers and our express division staff with instant,
    web-based access to real-time information.We believe the fully integrated
    high-performance Global Link system is unique in the express delivery industry
    and provides us with a competitive edge. In 2003, we began
  to implement the e-Back Office System utilising SAP software.This system will
  help us deploy our uniform best practice processes throughout our express division
  in the areas of finance and administration, purchasing and human resources.
  It should enable us to obtain better information to support our customers, which
  we believe will help us to improve our profits. In 2002, our express
  business became one of only 90 organisations in the world to be awarded the
  British standard 7799:2 certificate, which is an important benchmark for information
  security that is becoming a key requirement for international companies dealing
  with outside suppliers.The certification signals that we have attained the highest
  standards of systems security and awareness amongst our employees. Our express
  business was re-accredited under this standard in 2003. In 2003, the common
  systems strategy was started with the objective of implementing a standard common
  system for domestic and international business globally.This will create one
  powerful integrated system, based on platform-independent technology supporting
  the TNT Express business throughout the world. In 2003, we introduced
  a worldwide customs imaging system that improved our service to the customer
  through improved customs clearance using image technology. We continued the upgrading
  of our customer interface technology portfolio, by introducing new web-based
  functionality, a complete new website (www.tnt.com) and new shipping software
  for use on a personal computer that can be installed directly via the Internet. In May 2003, we entered
  into an alliance with the Brazilian State Post Office to distribute consignments
  throughout that organisations new international express service.We view
  strategic alliances with postal operators as a way to grow our business and
  expand the global reach of our express business. Our express division now has
  partnerships with more than 30 postal operators




around the world,
  including those in Belgium, Luxembourg, Sweden, Switzerland, Indonesia, South
  Korea, China, Chile and Portugal. In 2003, we acquired
  100% of the shares in Archive and Data Storage Limited to provide the express
  division with a strategically important presence in the physical records storage
  market in London, England.Through this product we provide transportation and
  storage of customers physical records.This market has an estimated size
  of630 million in the
  United Kingdom. On 1 January 2004,
  Marie-Christine Lombard, managing director of our express business in France
  took over the management position of the express division from Alan Jones and
  was appointed as a member of our Board of Management. Express
    EuropeThe 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 give us a strong position in the European market and
    are an important strategic asset with dense coverage in 32 European countries.We
    expanded our European network in 2003 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 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.




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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 shipment has been received by the consignee. 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. In 2003, we introduced
  two new Boeing 737-3007s to our European Air network and plan to introduce a
  further two Boeing 737-3007s during 2004.We introduced Bucharest in Romania
  as a new airport connection in June 2003 and Florence and Naples in Italy in
  September 2003, which gives our express business a market leadership position
  in Italy. In response to a continued
  18% growth of both import and export volumes in Romania, we introduced a BAE146
  aircraft on the night flight connection between Liège and Bucharest.This
  improved the departure time by three hours and the arrival time in Bucharest
  by 90 minutes making TNT Express the fastest express operator to and from Romania. We began servicing
  Prague with a BAE146, which improved the scheduled arrival times by 90 minutes
  and the scheduled departure times by 60 minutes.We introduced a cross-border
  connection Lugano-Milan that reduced transit times by 24 hours. In March, we
  introduced a direct connection between Shanghai and Liège that reduced transit
  times by 24 hours. With respect to our
  European road network, we added a road service to Serbia in 2003 and plan to
  extend our road network to one additional country in 2004.We intend to make
  further investments to improve the sorting facilities at our hubs at Liège
  and Arnhem. We intend to expand
    our European air network further and plan to serve 10 more airports, which
    should increase the number of airports our express division serves in Europe
    from 57 to 67 by 2007.To this end, on 8 January 2004, we announced plans to
    introduce a further five Boeing 737-300 aircraft to the European air network.The
    five aircraft, leased for five years by TNT Airways from GE Capital Aviation
    Services, will replace chartered aircraft




currently operating
    in the TNT Express air network.The new B737s
    will be phased in over the next four years.Two will join the fleet in 2004,
    with further aircraft added in 2005, 2006 and 2007. Express
    Rest of the WorldThe
    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 is expanding through organic growth and co-operative
    ventures such as our alliance with China State Post. After the expiry of our
    joint venture with Sinotrans in May 2003, we reconfirmed our ongoing commitment
    to serving the Chinese market through the appointment of an exclusive agent. We have set out a
  three-year expansion plan for China. Based on continued implementation of our
  global strategy, the plan includes introducing new value-added services and
  increasing the number of our outlets in China from 12 to 25 and the number of
  international gateways from three cities to seven.We have already established
  our own new depots with employees contracted directly to us, introduced new
  vehicles and IT systems, and launched a national toll-free customer service
  hotline to give customers more convenient access to us. 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 line-haul
  transportation links. In Australia, where
  our business was under-performing, we began implementing our global commercial
  policy and key best practice processes in May 2001. Our business in Australia
  started to turn around in the latter part of 2001, following the appointment
  of an experienced new management team, and returned to profitability in 2003. 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 DHL. See chapter 10 Risk factors.




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Express
  financial review

|Express
      operating revenues | Year
      ended at 31 December | 
|-------------------------------- | ------------------------------- | 
|                                 |                                 | 
|                                 | 2003                            | 
|                                 |                                 | 
|                                 | US$                             | 
|Express Europe                   | 4,353                           | 
|Express Rest of
      the World  | 1,002                           | 
|                                 |                                 | 
|Total
      operating revenues   | 5,355                           | 
|                                 |                                 | 

(in millions, except
  percentages)1Figures
  for 2001 and 2002 have been restated to reflect the transfer of Innight services
  from express to logistics.

|Express
      operating revenues              | Year
      ended at 31 December |  
|--------------------------------------------- | ------------------------------- | -
|                                              |                                 |  
|                                              | 2003                            |  
|                                              |                                 |  
|                                              | US$                             |  
|Earnings from
      operations                | 348                             |  
|%
      of express operating revenues         | 6.5                             | %
|Amortisation and
      impairment of goodwill | (67                             | )
|                                              |                                 |  
|Total
      operating revenues                | 281                             |  
|                                              |                                 |  

(in millions, except
  percentages)1 Figures
  for 2001 and 2002 have been restated to reflect the transfer of Innight services
  from express to logistics.

|Express
      operating statistics         | Year
      ended at 31 December | 
|------------------------------------------ | ------------------------------- | 
|                                           |                                 | 
|                                           | 2003                            | 
|Number of consignments(in
      thousands) | 170,782                         | 
|Total number of
      tons carried         | 3,203,138                       | 
|Average number
      of working days       | 250                             | 
|Number of depots/hubs                      | 836                             | 
|Number of vehicles
      2                 | 18,308                          | 
|Number of aircraft
      2                 | 43                              | 
|                                           |                                 | 

1Figures
  for 2001 and 2002 have been restated to reflect the transfer of Innight services
  from express to logistics.2A
  substantial number of vehicles and aircraft are not owned by TPG but are leased
  or subcontracted.

Express
    overviewDuring 2003,
  our express division realised higher operating revenues and improved earnings
  as a percentage of operating revenues by continuing to focus on providing simplified,
  no-discount tariffs to all new small- and medium-sized business-to-business
  customers and achieving further customer and operational service excellence.
  Operating efficiencies were achieved by continuing to share best operating practices
  throughout our business and investing in operation and information systems aimed
  at further improving our service quality. 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. 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 kilogram compared to the previous year. Some of the other
  key performance indicators used to monitor the business as part of our best
  practice processes include on time delivery, customer satisfaction and employee
  satisfaction. We continue to enhance
  our European air and road networks to match a shift by our customers toward
  our road express services and to be able to offer the most reliable service
  to our customers. As described earlier, we added two Boeing 737s to our air
  fleet in




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June and December
  and significantly expanded services to Eastern Europe.We expect further network
  improvements from the introduction of new airport connections in Florence and
  Naples, Italy and Bucharest in Romania earlier this year. Growth in Asia continued
  at a rapid pace and we plan further expansion in China. Almost all our express
  business units achieved improvements in their earnings from operations. Improvements
  were most significant in the Benelux countries, France, Germany, Spain,Austria,
  Eastern Europe and Australia. Express
    operating revenues2003Operating
    revenues of our express division for 2003 increased by76 million (1.8%)
    compared to the prior year. The organic growth in operating revenues of our
    business was265 million (6.3%).The
    combination of last years disposal of our Mistral Air business and the
    2003 acquisition of Archive and Data Storage Ltd., 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 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 relates 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 Ltd.The negative foreign exchange effects
    of110 million (-3.2%)
    relates 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.




2002Operating revenues
    of our express division increased by265 million (6.8%)
    compared to 2001.The operating revenue attributable to organic growth was241 million (6.2%).
    Acquisitions accounted for a further83 million (2.1%)
    in operating revenue growth, and unfavourable foreign exchange effects accounted
    for negative59 million (-1.5%). In Europe operating
  revenues increased by263 million (8.4%)
  compared to 2001.The organic growth in operating revenues from our business
  in Europe was197 million (6.3%)
  in 2002 and most business units contributed to the increase in revenue, which
  is a creditable achievement in the difficult economic conditions that prevailed
  for most of the year.This was achieved through a focus on higher margin small-
  and medium-sized customers despite the volumes in this mature market being relatively
  stable. Acquisition effects in Europe accounted for81 million (2.6%)
  of the increase in revenue due primarily to the Bleckmann Group acquisition
  in 2002 which contributed83 million to the
  year-on-year revenue growth and the SDO acquisition in 2001 that increased revenue
  growth by a further6 million.These
  amounts were partly offset by8 million from the
  decrease of revenues through the sale of our Mistral Air business in 2002. Unfavourable
  foreign exchange effects amounted to15 million (-0.5%)
  mainly due to the weakening of the UK pound against the euro. Rest of the World
  operating revenues increased by2 million (0.3%)
  compared to 2001.This was achieved through a combination of pricing initiatives
  on loss-making large customers and focusing on higher margin small- and medium-sized
  customers. We eliminated much of our unprofitable volume in Australia as part
  of the turnaround process that occurred in 2002.Total organic operating revenue
  growth from our business in the rest of the world outside Europe was44 million (5.7%)
  but excluding Australia the organic operating revenue growth amounted to78 million (21.4%),
  largely due to successful operations in the developing Asian market where our
  existing operations grew by48 million.The Americas
  contributed16 million to the
  organic growth in operating revenue and the Middle East14 million. Acquisitions
  contributed2 million (0.3%)
  to the total operating revenue growth outside Europe. Unfavourable foreign exchange
  effects amounted to44 million (-5.7%)
  mainly due to the weakening of the Argentine peso, Brazilian real, and various
  Asian currencies against the euro. Express
    operating income2003The 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 commercialpolicies that concentrate on providing simplified, no-discount tariffs




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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. 2002The
    express division's operating income increased in 2002 by 82.9% to192 million. Amortisation
    of goodwill in 2002 increased by 3.8% to54 million primarily
    due to the acquisition of Bleckmann Group in 2002 (1 million) and the
    full year impact of the prior year's acquisitions.The express division's earnings
    from operations increased in 2002 by89 million (56.7%)
    to246 million.The 2002
    organic growth amounted to85 million (54.1%),
    due primarily to continued focus on increasing the volume of business with
    higher margin small- and medium-sized customers together with effective cost
    management.The most notable improvements in operating income came from the
    return of our Australian operations to profitability in the final weeks of
    the year and positive pricing initiatives in our France, Benelux and various
    smaller international operations. Acquisitions and the restructuring of our
    air network operations resulted in a6 million (3.8%) increase
    in earnings that was partly offset by negative foreign exchange fluctuations
    which amounted to2 million (-1.2%).
    Earnings from operations included a12 million final settlement
    on the termination of a major contract. Overall earnings from operations as
    a percentage of Express operating revenues increased from 4.0% in 2001 to
    5.9% in 2002.






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|Chapter
      5 The logistics division
|--------------------------------------



Logistics
    business descriptionWith operations in some
  36 countries, our logistics division provides services focused on supply chain
  management. 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.This objective
  comes on top of the traditional approach towards logistics, which is 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. 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 five industry sectors: automotive, tyres, high-tech
  electronics, publishing and media and fast-moving consumer goods.With a few
  exceptions in certain segments, we believe we have achieved critical mass in
  terms of market presence and customer base in every market we serve.We are now
  working to fill the few remaining gaps in our global services offered and to
  further apply our sector expertise. We provide logistics
  services mainly under the TNT brand.Where appropriate, we subcontract specific
  services, such as deliveries between certain destinations and repair services.
  Control over and responsibility for the subcontracted services is ensured through
  our 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:stock management,order picking
        and information systems management to control production and parts supply;data and documentation
        management services,sub-assembly
        and installation upon delivery,repair-returns,sequencing,systems integration,kitting,




inventory control,global materials
      management, andsupply chain management
      consulting. Logistics
    strategyOur 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. In response
          to operational difficulties combined with continued sluggish economic
          conditions in 2003, we recalibrated our long-term logistics strategy
          to encompass 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, inbound customer electronics, media and publishing, fast-moving
        consumer goods/retail and computing spare parts.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 and by optimising
        our costs. By overseeing the total supply chain, coupled with control
        over assets and strong expertise in managing operations, we believe our
        logistics division can both capitalise on economies of scale and optimise
        the utilisation of assets and networks to the benefit of our customers.Expand our areas
        of operation in those parts of the globe that our key customers consider
        important to the growth of their business. In 2003, our logistics
    division earned revenues of3,735 million. Logistics
    accounted for 31.5% of our operating revenue, a negative 26.5% of our operating
    income and 2.1% 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 2003.




|Logistics
      operating revenues | Year
      ended at 31 December | 
|---------------------------------- | ------------------------------- | 
|                                   |                                 | 
|                                   | 2003                            | 
|                                   |                                 | 
|                                   | US$                             | 
|Total
      operating revenues     | 4,705                           | 
|                                   |                                 | 

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



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|Logistics
      operating revenues per geographic region | Year
      ended at 31 December
|-------------------------------------------------------- | -------------------------------
|                                                         |                                
|                                                         | 2003                           
|Europe                                                   | 2,794                          
|North America                                            | 630                            
|Rest of world                                            | 311                            
|                                                         |                                
|Total                                                    | 3,735                          
|Number of countries
      of operation                   | 36                             
|                                                         |                                

|(inmillions, except
      number of countries and precentages)
|---------------------------------------------------------------
|1                                                              





Logistics
          division overviewOur logistics
          division faced operational difficulties in 2003 aggravated by the economic
          slowdown. In addition to reduced volumes in many of our contracts, the
          division faced operational performance issues and a need for more stringent
          financial control.These issues were particularly evident in our French,
          Italian non-automotive and German operations, where recently acquired
          companies had not been well integrated.To address these issues, a reorganised
          management team headed by Dave Kulik (formerly head of TNT Logistics
          North America) was put in place to spearhead the Transformation through
          Standardisation programme.Transformation through Standardisation is
          a comprehensive programme to standardise operating and business development
          practices across the entire logistics division. It consists of five
          process improvement modules:ProcurementCapture
        financial savings through a centralised approach to procurement of key
        product and service categories and through standardisation of the items
        purchased.Transportation
        and distributionIntegrate
        and optimise existing transportation and distribution networks to reduce
        inefficiencies and related costs.WarehousingReduce
        the cost base in our warehouse operations through standardising operational
        processes, implementing best practices based on sector benchmarking and
        reducing excess capacity.Information
        technologyAchieve
        efficiencies in the IT area by rationalising our hardware set-up across
        business units and the ongoing standardisation of our global IT systems.To
        a large extent this will be based on our Matrix IT system. Our Matrix
        technology manages inbound just-in-time logistics and outbound logistics,
        and handles transportation, inventory management, order fulfilment, financial
        settlement and e-commerce applications. By implementing consistent technology
        solutions around the globe, we believe we are creating efficiencies not
        only for our own business, but more importantly for our customers.Contract
        portfolio rationalisationAdopt
        a more stringent set of commercial guidelines and evaluate all our logistics
        contracts in light of them.Where necessary, plans to rectify the situation
        or to terminate the




contract are executed.This
    includes mandatory compliance with the divisions commercial guidelines. We achieved progress
    in all these areas in 2003. In the under-performing business units, we installed
    new general and financial management teams.The changes brought fresh resolve
    for regaining customer and investor confidence. Market
    trendsCompetitionThe logistics industry
  continues to be fragmented in a competitive market. Global industry leaders
  are competing not only with each other but also with a number of small local
  specialists. In 2003, the top 10 logistics players were estimated to control
  about 15% of the total market (source: Bear Stearns).This has not changed significantly
  compared to the previous year. The
    global nature of customers demands drove logistics companies in the past
    few years to grow quickly through mergers and acquisitions. However, in 2003,
    the difficult
    economic climate, integration problems and falling profit margins slowed down
    the trend for acquisitions. Most companies became focused on improving internal
    efficiencies and launched various savings and consolidation programmes. For
    example, in France, where local players are relatively strong, a number of
    large
    international logistics companies reduced their operations in that country. As
      the logistics industry develops, a two-tier provider trend is emerging in
      the industry. 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 forwarding. Delivering services
  either through their own capabilities or by subcontracting in part to second-tier
  providers focused on warehousing, transportation and freight forwarding, lead
  logistics providers serve as a single point of contact for the customer 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. Customers for which we are a lead logistics provider include
  FIAT SpA and BMW North America.






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Chapter 5 The logistics
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Customer
    trendsOriginally, 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 segments 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. 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
    significantly changes some of logistics processes.The 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.The technology is widely
    expected to improve efficiency in the warehouse operations and enhance visibility
    and tracking, which overall translates into better responsiveness in the supply
    chain. Our logistics division is already co-operating with different technology
    specialists: it launched pilots during 2003 and will continue this development
    in 2004. Logistics companies
    are driven by their clients in terms of service offering and geographic expansion.Two
    areas that deserve particular attention in this respect are China and Eastern
  Europe. Logistics industry
    investment in China 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. Global logistics
    players have started reinforcing their presence in the country.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. For similar reasons,
    in 2003, the development of the logistics industry in Eastern Europe accelerated
    ahead of the expansion of the European Union in 2004. A number of global players
    have announced new contracts and operations throughout the region and particularly
    in Poland, Hungary and the Czech Republic. Through the reinforcement of our
    management team in Central Europe during 2003 and our existing operations in
    Poland, Hungary and the Czech Republic, we expect to benefit from the outsourcing
  trends in these markets in the years to come. As logistics providers
    become more experienced, more manufacturers decide to outsource their logistics
    activities.We believe approximately 30% of logistics in Europe was outsourced
    at the end of 2003.This percentage is expected to grow further. European clients
    tend to outsource a greater proportion of their supply chain relative to their
    global peers. Different surveys indicate that the rates of logistics penetration
    in North America and Asia are likely to catch up with Europe over time. Both
    the North American and the Asian markets have shown growth during 2003 and
    current outsourcing rates there are estimated at 12% and 5%, respectively
    (source: Bear Stearns).




Logistics
  financial review

|Logistics
      operating revenues | Year
        ended at 31 December | 
|---------------------------------- | --------------------------------- | 
|                                   |                                   | 
|                                   | 2003                              | 
|                                   |                                   | 
|                                   | US$                               | 
|Total
      operating revenues     | 4,705                             | 
|                                   |                                   | 

|(inmillions, except precentages)
|--------------------------------
|1                               





|Logistics
      operating income              | Year
        ended at 31 December |  
|--------------------------------------------- | --------------------------------- | -
|                                              |                                   |  
|                                              | 2003                              |  
|                                              |                                   |  
|                                              | US$                               |  
|Earnings from
      operations                | 30                                |  
|%
      of logistics operating revenues       | 0.6                               | %
|Amortisation and
      impairment of goodwill | (286                              | )
|                                              |                                   |  
|Total
      operating income (loss)           | (256                              | )
|                                              |                                   |  

|(inmillions, except precentages)
|--------------------------------
|1                               



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|
|



|Logistics
      operating revenues per industry | Year
        ended at 31 December | 
|----------------------------------------------- | --------------------------------- | 
|                                                |                                   | 
|                                                | 2003                              | 
|                                                |                                   | 
|                                                |                                  | 
|Automotive                                      | 1,428                             | 
|Fast moving consumer
      goods                | 635                               | 
|Hi-tech and electronics                         | 499                               | 
|Publishing and
      media                      | 229                               | 
|Tyres                                           | 221                               | 
|Other                                           | 723                               | 
|                                                |                                   | 
|Total                                           | 3,735                             | 
|                                                |                                   | 

|(inmillions, except precentages)
|--------------------------------
|1                               



|Logistics
      operating revenues per geographic region | Year
        ended at 31 December | 
|-------------------------------------------------------- | --------------------------------- | 
|                                                         |                                   | 
|                                                         | 2003                              | 
|                                                         |                                   | 
|                                                         |                                  | 
|Europe                                                   | 2,794                             | 
|North America                                            | 630                               | 
|Rest of world                                            | 311                               | 
|                                                         |                                   | 
|Total                                                    | 3,735                             | 
|Number of countries
      of operation                   | 36                                | 
|                                                         |                                   | 

|(inmillions, except precentages)
|--------------------------------
|1                               



|Logistics
      productivity statistics              | Year
        ended at 31 December | 
|---------------------------------------------------- | --------------------------------- | 
|                                                     |                                   | 
|                                                     | 2003                              | 
|Number of warehouses                                 | 506                               | 
|Number of square
      metres managed (in thousands) | 7,092                             | 
|                                                     |                                   | 

|1 | Figures
      for 2001 and 2002 have been restated to reflect the transfer of Innight
      services from express to logistics.
|- | -------------------------------------------------------------------------------------------------------------------------------

Logistics
  overviewDuring 2003,
  despite increased operating revenues compared to 2002, our logistics division
  incurred an operating loss of203 million. Included
  in this loss were163 million of non-cash
  costs for goodwill impairments,10 million of non-cash
  costs for asset impairments and69 million of various
  costs associated with the Transformation through Standardisation programme. As a result of weak
    economic conditions in some of the markets in which we operate, we experienced
    significant declines in operating income for some of our businesses during the
    first half of 2003.These declines prompted us to revise our long-term forecasts
    for them and perform goodwill impairment tests on these businesses based on
    our revised forecasts.




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Chapter 5 The logistics
  division

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The result of the
  impairment review was that the carrying amounts of our France, Italy non-automotive,
  Germany, Nordics and Spain businesses exceeded their estimated recoverable amounts
  by173 million.This
  led to a pre-tax, non-cash163 million reduction
  in the carrying value of our goodwill and a pre-tax, non-cash impairment of10
  million on the carrying value of assets.The impairments were allocated to these
  businesses as indicated below:






|                           | Goodwill   |  | Asset      |    |       |  |    
|-------------------------- | ---------- |  | ---------- | -- | ----- |  | ---
|                           | impairment |  | impairment |    | Total | 
|France                     | 76         |  |            | 6  |       |  | 82 
|Italy
      non-automotive | 48         |  |            |   |       |  | 48 
|Germany                    | 24         |  |            |   |       |  | 24 
|Nordics                    | 15         |  |            |   |       |  | 15 
|Spain                      |           |  |            | 4  |       |  | 4  
|                           |            |  |            |    |       |  |    
|Total
      impairment     | 163        |  |            | 10 |       |  | 173
|                           |            |  |            |    |       |  |    

(inmillions)

We expect our Transformation
    through Standardisation programme will have a positive effect on operating income
    of approximately55 million expected
    to be fully realised by 2005, the majority of which will benefit 2004.The first
    phase of our Transformation through Standardisation programme focuses on realising
    savings in the areas of procurement and contract rationalisations, together
    with co-ordinated actions for the operations in the under-performing countries.The
    second phase of actions brings in the standardised solutions in warehouse and
    transportation management. In addition to focussing
  on the efficiency of our operations, we also manage our contract portfolio.
  In this process, we utilise a number of non-financial key performance indicators,
  notably our contract retention rates (the rate at which contracts due for renewal
  in any given period are successfully closed, defined as annualised revenue of
  contracts renewed divided by annualised revenue of contracts due for renewal)
  and 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). Logistics
    operating revenues2003Our 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 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 and Volkswagen
    in Germany, Telecom Italia 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, Mitsubishi
    North America and Interline Brands.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
    NorthAmericas
    operating revenue in 2003 by109 million (-15.5%)
    compared to 2002.




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Operating revenues
    in Rest of world grew by49 million (18.7%)
    in 2003, compared to 2002. Organic operating revenues in Rest of 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 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 have 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 have
    remained focussed on our existing contract base and held contract retention
    rates (the rate at which contracts due for renewal in any given period are
    successfully closed, defined as annualised revenue of contracts renewed divided
    by annualised revenue of contracts due for renewal) at approximately 70% in
    2003. 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 Ikea and Land Rover in
    the UK, Delphi in Spain and Goodyear in North America. 2002The logistics
    operating revenues increased by257 million (7.7%) compared to 2001, despite the adverse economic environment. The organic operating
  revenue increased by164 million (4.9%),
  primarily due to the start of our new joint venture in China and new contracts
  in Asia and the UK. Acquisitions of Advanced Logistics Services and Cargotech
  in 2001 and Transports Nicolas and the TNT DFDS Transport Logistics joint venture
  in 2002 contributed190 million to the
  growth (5.7%).The termination of an automotive contract and related joint venture
  resulted in a gain of15 million. Unfavourable
  foreign exchange effects were97 million (-2.9%),
  as a result of the appreciation of the euro against other currencies especially
  in the Americas, United Kingdom and Asia. North American revenues
    fell by 8.2% during 2002, although much of the lost revenue related to the
    reduction of low-margin freight management business (-2.6%), coupled with
    unfavourable foreign exchange effects (-5.6%). In line with our
    strategic objectives, the proportion of our logistics revenue generated from
    the automotive sector moved from 42.0% in 2001 to 38.2% in 2002, with new
    business in other sectors,




particularly fast-moving
    consumer goods, diversifying our customer base. Logistics
    operating income2003The 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.These
    impairment charges are described in more detail in note 1 to our financial
    statements. The logistics
          division's earnings from operations in 2003 decreased by133 million
          (-84.7%) compared to 2002. The decrease in operating income consists
          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 throughStandardisation
        programme of69 million.These
        costs can be 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.
      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 division's 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 coststhat
        could not








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Chapter 5 The logistics
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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 Negative foreign exchange
  rate effects on the earnings from operations of15 million (-9.6%)
  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 above-mentioned Transformation through Standardisation
  initiatives are aimed at reversing this trend. 2002The logistics division's
  operating income decreased in 2002 by 28.7% to87 million. Amortisation
  of goodwill in 2002 increased by 2.9% to70 million primarily
  due to the acquisition of Transports Nicolas and TNT DFDS Transport Logistics
  in 2002 (2 million) and the
  full year impact of the prior year's acquisitions.The logistics division's earnings
  from operations in 2002 decreased by33 million to157 million (-17.4%).The
  decrease in organic earnings from operations was44 million (-23.2%)
  and included the write-down of some assets and the recognition of provisions
  for onerous contracts. Unfavourable foreign exchange effects of8 million (-4.2%)
  arose mainly from the Americas,Asia and the UK, and were partly offset by19 million (10.0%)
  positive earnings contributions from acquisitions including the termination
  of a specific automotive contract and the related joint venture that resulted
  in a gain of15 million. Overall
  earnings from operations as a percentage of Logistics operating revenues decreased
  from 5.7% in 2001 to 4.3% in 2002.




In 2002, the decline
  in earnings and margin can be attributed to several factors including unfavourable
  economic conditions, specifically in Europe, that resulted in some large customers
  delaying outsourcing decisions and a decline in trading volumes with existing
  customers in which a portion of our costs are fixed. Another factor contributing
  to the decline was a combination of the recognition of unforeseen expenses,
  but these were largely offset by the positive impact of one-off gains and lower
  estimated future payments to settle current obligations. Lower utilisation of
  warehouse capacity on multi-user networks in the UK, France and Italy has also
  adversely affected trading results by reducing revenues without proportionately
  reducing costs. Despite the slowdown in the economy, operating margins have
  improved in North America due to the implementation of cost-control measures
  coupled with contract profitability management.




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|Chapter
      6 Corporate governance
|------------------------------------



IntroductionWe comply or will
  comply in the course of 2004 in all respects with the Dutch Corporate Governance
  Code, issued on 9 December 2003, except
  when specifically stated as shown in the grid below: Dutch
        Corporate Governance Code provision
      pageII.2.3 Shares
        granted to members withoutfinancial consideration
        to be retained for aperiod of at
        least five years or until at leastthe end of employment
      50II.2.7 Maximum
        remuneration in the eventof dismissal
        of members of the Board ofManagement
      51,
          58 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. We are not subject
    to any other corporate governance code. Large
    company regimePursuant
    to the Enabling Act as currently in force, we are subject to the full large company
    regime.
    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. It would
    then be possible to exempt TPG N.V., as the parent company of the group, from
    the large company regime rules, which would substantially improve the rights
    of shareholders of our company. The large company rules would then be required
    to apply to the subholding company that will hold our Dutch interests.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. 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 chairman and 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 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.The implementation of
    the divisional structure across countries and regions was completed in 2002.Value-based
    management was implemented and 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.The 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, our
    company will be represented by




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Chapter 6 Corporate
  governance

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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
    committeeThe 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. The integrity
    committeeThe aim
    of the integrity committee is to ensure full compliance with our code of business
    principles, our whistleblower policy and other internal procedures.The committee
    reports to our Board of Management.The terms of reference of the integrity
    committee will be made available for public inspection on our website. The
    TPG Code of Business PrinciplesOur 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, our whistleblower procedure and the terms
    of reference of our integrity committee, 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 of a general, operational and financial nature in the
    company to management, the group compliance officer, the integrity 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.




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
    control and risk managementThe Board of Management
  is responsible for our systems of internal control and risk management and for
  reviewing the effectiveness of those systems. Such systems are designed to manage,
  rather than eliminate, the risk of failure to achieve business objectives; any
  system can provide only reasonable and not absolute assurance against material
  misstatement or loss. Our Board of Management
  successfully completed the implementation of its new company-wide risk management
  framework and risk assessment processes in 2003.We have established processes
  for identifying, evaluating and managing the significant risks faced by our
  company as a whole. Risk assessment takes place as an integral part of our companys
  annual financial reporting cycle. Our current key risks are summarised in chapter
  10 of this document. The key features
          of the risk management process comprise the following procedures:Responsibilities
        and accountabilities for risk management are clearly defined.Senior members
        of management, led by the chief internal auditor and the group controller,
        review our companys key risks and have created a group risk register.Our companys
        internal auditors carry out continuing assessments of the quality of risk
        management and control. They also promote effective risk management in
        the lines of business operations.Our company
        has a half-yearly self-assessment process in place, which requires the
        internal certification through a letter of representation by all managing
        and finance directors of our group companies, divisional directors and
        corporate directors on their responsibilities amongst others towards the
        risk assessment process, effectiveness of internal controls procedures
        and financial reporting process. The Board of Management
      reviews the companys key risks and ensures the mitigating actions
      are taken through the strategic and budget processes.The disclosure
      committee, on behalf of the Board of Management, considers the effectiveness
      of the operation of internal controls procedures in the group during the
      financial year and reports on this to the Board of Management. Joint ventures
      and associates that the company does not control, have not been dealt with
      as part of the group for the purpose of this internal control assessment.




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Controls
    and procedures/audit committee investigationUnder the supervision and with the participation of our Board of Management,
    we evaluated the effectiveness of the design and operation of our disclosure
    controls and procedures as of 31 December 2003. Based on that evaluation and
    in light of the audit committee investigations described below, our Board
    of Management concluded that our disclosure controls and procedures, while
    generally effective, should be strengthened in the manner directed by the
    audit committee on behalf of the Supervisory Board. 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 we believe will increase their efficiency and reliability. In
    February and March 2004, (after the period covered by this annual report)
    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 audit committee has directed the Board of Management to make organisational
    and personnel changes with respect to certain UK subsidiaries. We will also
    formalise and strengthen internal lines of communication and the monitoring
    of the tax and financial reporting functions around the group. These changes
    are being implemented, and the audit committee will continue to monitor progress. RemunerationFor
    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. Our remuneration policy will be submitted to the 2004 annual
    general meeting of shareholders for adoption. 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 of the Supervisory Board. The policy is incorporated in the by-laws of
    the Board of Management and Supervisory Board. We expect the policy will require
    that each member of the Board of Management and Supervisory Board give 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 will
    be exempted from compliance with these notification requirements. Contracts
    with members of the Board of
    ManagementAs
    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 re-appointed for successive terms of not more than four
    years. In case of a proposed re-appointment the performance of the candidate
    as a member of the Board of Management will be taken into account. Employment
    contracts for new members of the Board of Management will entitle the member
    to a maximum of one years salary in the event of dismissal, irrespective
    of the duration of the employment contract. If this maximum would be manifestly
    unreasonable for a Board of Management member who is dismissed during his
    or her first term of office, the member will be eligible for total severance
    pay not exceeding twice his or her annual salary. Contracts dating before
    September 2003 continue unaltered for the time being until the legislative
    climate is clearer and market practice has developed. We have no outstanding
    loans to any member of the Board of Management or the Supervisory Board or
    any executive officer, and we have not provided any guarantees for the benefit
    of any Supervisory Board members or any member of the Board of Management
    or any executive officer. 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 and 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 wife, registered partner or other life companion,
    foster child and relatives by blood or marriage up to the second degree. If
    the




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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 our company 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. Board
    of ManagementM.P. Bakker,CEO(1961)Peter Bakker has been
  Chief Executive Officer since 1 November 2001, on which date he succeeded Ad
  Scheepbouwer. He joined Royal TPG Post (then called PTT Post) in 1991 and was
  appointed financial director of its parcels business unit in 1993. He was appointed
  financial control director of TPG Post in 1996 and became a member of the board
  of management of TPG Post in 1997. Since the demerger
  of TPG N.V. from Koninklijke PTT Nederland NV until his appointment as CEO,
  he was Chief Financial Officer and a member of the TPG Board of Management.
  Before joining TPG Post, Mr. Bakker worked for TS Seeds Holdings.Shares
owned: 7,097 J.G.
    Haars,CFO(1951)Jan Haars has been
  Chief Financial Officer and a member of the TPG Board of Management since 1
  August 2002. Mr. Haars succeeded Mr. Bakker who was appointed Chief Executive
  Officer of TPG from 1 November 2001. Before joining the company, Mr. Haars worked
  for ABN Amro Bank,Thyssen Bornemisza Group, Royal Boskalis Westminster, Rabobank
  Nederland and most recently he worked for Unilever N.V., as worldwide Group
  Treasurer.Shares
  owned: 9,093 H.M.
    Koorstra,Group
    Managing Director Mail(1951)Harry Koorstra has
    been Group Managing Director Mail and a member of the TPG Board of Management
    since July 2000. He




joined TPG Post
    in 1991 as managing director of its then Media Service business unit and became
    a member of its board of management in 1997. Before joining the company, Mr.
    Koorstra worked for 15 years at the Netherlands largest publisher,VNU
    N.V., most recently as general director of its Admedia/VNU Magazine Group.Shares
    owned: 5,566 D.G.
    Kulik,Group
    Managing Director Logistics(1948)David
    Kulik has been Group Managing Director Logistics and member of the Board of
    Management since 1 September 2003. As Group Managing Director Logistics he
    is responsible for all our global logistics activities. Mr. Kulik joined the
    company in 2000 as Managing Director of TNT Logistics North America. Before
    joining the company, Mr. Kulik was president and chief executive officer of
    CTI Logistx Inc. since 1994. He was employed by the parent company CSX Corporation
    since 1988.Shares
    owned: 3,910 M.C.
    Lombard,Group
    Managing Director Express(1958)Marie-Christine Lombard
    is Group Managing Director Express as of 1 January 2004. She joined our express
    division in France in 1993. From the acquisition of Jet Services in 1999,
    Ms. Lombard was the Managing Director of the domestic express business and
    since March 2001 also of our international express business in France.Shares
  owned: 0 Mr. Bakker is an advisory
  board member of ABN Amro Bank N.V.. Mr. Haars is a member of the supervisory
  board of Meljak B.V.. Mr. Koorstra is a member of the supervisory board of Hermans
  Holding B.V.. He is also member of the executive committee and general board
  of the Verbond van Nederlandse Ondernemingen. The members of our Board of Management
  have no other board positions other than those reflected above. Two members of the
  Board of Management have a change of control provision in their contracts.This
  provision does not exceed two years salary plus two times the average
  of the bonuses paid in respect of the three consecutive financial periods of
  the company completed before termination and two years pension contribution. The business address
  of all members the Board of Management is TPG N.V., Neptunusstraat 41-63, Hoofddorp,
  2132 JA, the Netherlands. Supervisory
    BoardThe 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


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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 acts in accordance with the interests of our
    company and the business connected with it and, to that end, considers 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. Appointment,
    expertise and compositionDue to the
    fact that we are subject to the large company regime, our Supervisory Board
    appoints its own members.The Supervisory Board consists of a minimum of seven
    and a maximum of 12 members. At present, our Supervisory Board has nine members.
    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 the profile annually. 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 two members of the Supervisory Board,
  Mr. R.J.N. Abrahamsen and Mr. J.H.M. Hommen that were previously appointed by
  the Minister of Transport. Mr.
  R.J.N. Abrahamsens
  term expires in 2004 and 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 2003, 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, who is also our general counsel. 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 for maintaining compliance with all applicable rules and regulations.The
  corporate secretary is required to, either on the recommendation of the Supervisory
  Board or otherwise, be 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 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.






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Chapter 6 Corporate
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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 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.H.M. 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 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 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        |  | Term
        expires |  |  | Committee
        membership      
|----------------------- | ----------- |  | ---------------- |  | -------------------- |  |  | ----------------------------------
|                        |             |  |                  |  |                      |  |  |                                   
|R.J.N.
      Abrahamsen | Dutch       |  | May
      2000   |  | 2004                 |  |  | Audit,
      Nomination           
|F.
      Bernabè        | Italian     |  | May
      2000   |  | 2004                 |  |  | Audit                             
|J.M.T.
      Cochrane   | British     |  | June
      1998  |  | 2006                 |  |  | Remuneration                      
|R.
      Dahan          | Dutch       |  | April
      2003 |  | 2007                 |  |  | Audit                             
|V.
      Halberstadt    | Dutch       |  | June
      1998  |  | 2007                 |  |  | Remuneration,
      Public Affairs
|J.H.M.
      Hommen     | Dutch       |  | June
      1998  |  | 2005                 |  |  | Audit                             
|W.
      Kok            | Dutch       |  | April
      2003 |  | 2007                 |  |  | Nomination,
      Public Affairs  
|R.W.H.
      Stomberg   | German      |  | June
      1998  |  | 2006                 |  |  | Remuneration,
      Nomination    
|M.Tabaksblat            | Dutch       |  | June
      1998  |  | 2005                 |  |  | Nomination,
      Public Affairs  
|                        |             |  |                  |  |                      |  |  |                                   

RemunerationThe remuneration of
  our Supervisory Board members is not dependent on our results. A Supervisory
  Board member may not be granted any shares and/or rights to shares by way of
  remuneration.The shares held by a Supervisory Board member in us are long-term
  investments.


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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 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 to conduct once every three years 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 20 to the
  financial statements for the fees paid to PricewaterhouseCoopers Accountants
  N.V..




ShareholdersOur 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.




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|Chapter
      7 Report of the Supervisory Board
|-----------------------------------------------

The year 2003 was
    a busy year for the Supervisory Board, because there were many meetings and
    many issues of major importance. The Supervisory Board
  met seven times with the Board of Management and five times privately with the
  CEO; it also had a number of conference calls. In addition to the Supervisory
  Board meetings, the chairman of the Supervisory Board and the CEO met on a monthly
  basis.There was no frequent absence of any of the members of the Supervisory
  Board. The Supervisory Board
  devoted again considerable time to discussions on our strategic plan.The Supervisory
  Board discussed with the Board of Management our objectives, strategy, associated
  risks and the mechanisms for controlling the financial risks. In view of the
  Sarbanes Oxley Act in the United States and corporate governance developments
  in Europe and the Netherlands, our corporate governance was reviewed. Although
  some of the terms of reference of the Supervisory Board committees had been
  amended early 2003, a more complete review of all by-laws and terms of reference
  took place in December 2003, and was finalised early 2004.The remuneration of
  the Board of Management was discussed in the remuneration committee and private
  meetings of the Supervisory Board, as were the management equity plans and the
  grant of options and shares to the Board of Management. The Supervisory Board
  adopted our 2002 annual results and approved the final dividend in February
  2003. In August 2003 the Supervisory Board reviewed our dividend policy and
  approved a proposal to increase the dividend pay-out ratio over time. In April
  2003 the Supervisory Board approved the first quarter results, in August 2003
  the half-year results and the interim dividend and in October 2003 the third
  quarter results. In December 2003 the Supervisory Board discussed the 2004 budget
  with the Board of Management. During the year, the
  Supervisory Board frequently discussed the developments in the logistics division
  with the Board of Management, at which occasions it also received an update
  on the Transformation through Standardisation programme.The Supervisory Board
  approved a request by our express division for capital expenditure to replace
  certain aircraft with more modern and fuel-efficient aircraft. It also approved
  a capital expenditure request for the e-backoffice of the express division.
  Other topics discussed by the Supervisory Board were the regulatory environment
  in mail, growth areas for the divisions, our equity position and the impact
  of foreign exchange developments. In private meetings
  with the chief executive officer, the Supervisory Board discussed the composition
  of the Board of Management. In September 2003, Mr. R.A.S. Rossi stepped down
  as member of the Board of Management.The Supervisory Board approved his severance
  payment and appointed Mr. D.G. Kulik as group managing director logistics and
  member of the Board of




Management effective
  1 September 2003. In December 2003 the Supervisory Board accepted the resignation
  of Mr. A.D. Jones approving his severance payment and appointing Mrs. M-C Lombard
  as group managing director express and member of the Board of Management effective
  1 January 2004. In a private meeting
  in December 2003, which was partly attended by the chief executive officer,
  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
  and its individual members and its relationship with the Board of Management.
  It discussed the composition of the Supervisory Board and its committees.The
  profile of the Supervisory Board Profile was reviewed and discussed (see our
  website www.tpg.com). The committees of
    the Supervisory Board met separately throughout the year.The audit committee
    met five times and discussed our annual, half-year and quarterly results with
    the external auditors, PricewaterhouseCoopers Accountants N.V., in attendance.The
    audit committee also dealt with the proposal for the final dividend over 2002
    as well as the proposal to change the dividend policy and to increase the
    pay-out ratio. In December 2003, the audit committee discussed our budget
    for 2004, and the pension coverage and accounting treatment thereof. Other
    issues dealt with by the audit committee were its terms of reference, auditor
    independence, whistleblower procedures, the internal audit charter, the strategy
    and scope for 2003 of the external audit, the external auditors fees for 2003,
    the Statement on Auditing Standards No.99 dealing with consideration of fraud
    in financial statements audit and the performance of the logistics division.
    In February and March of 2004, the audit committee conducted an investigation
    regarding representations made to the UK Inland Revenue and PricewaterhouseCoopers
    Accountants with respect to certain UK tax matters. See chapter 6 - "Corporate
    Governance - Controls and procedures/ audit committee investigation". In 2003, the remuneration
    committee met seven times and had several telephone conferences dealing with
    compensation for the Board of Management, long-term incentive plans and share
    option plans, bonuses and the consequences of the Dutch corporate governance
    code. Other items were the remuneration of the Supervisory Board, the severance
    payments for Mr. R.A.S. Rossi and Mr. A.D. Jones and the remuneration policy. The nominations committee
  met two times and had several telephone conferences. Subjects discussed were
  the resignation of Mr. R.A.S. Rossi and his succession as group managing director
  logistics as well as the resignation of Mr. A.D. Jones and his succession as
  group managing director express. The public affairs
  committee met twice and discussed public affairs in general, the most relevant
  regulatory issues and liberalisation of the European postal market.


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At the time of our
    general meeting of shareholders on 7 April 2004, Mr. R.J.N. Abrahamsen and
    Mr. F. Bernabè will reach the end of their tenure.The Supervisory Board
    intends to reappoint Mr.Abrahamsen as member of the Supervisory Board for
    a term of four years Mr.Bernabè is not available for re-appointment.
    Our central works council has been consulted with regard to this nomination
    and it has been established that the council will not use its right to submit
    objections to the proposed appointment. 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 BoardAll 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 Management of our company,receives personal
        financial compensation from our company or an associated company other
        than the compensation received as Supervisory Board member,has had a important
        business relationship with our company or a company associated with it,
        in the year prior to the appointment,is a member
        of the management board of a company in which a member of the Board of
        Management of our company is a supervisory board member,holds at least
        ten percent of the shares in our company,is a member
        of the management board or supervisory board of a legal entity which hold
        at least 10% of the shares in our company, orhas temporarily
        managed our company during the pervious twelve months. Remuneration
    policyFor the remuneration
  policy as drawn-up by the remuneration committee and the remuneration of members
  of the Board of Management over 2003 see chapter 8. Financial
    statementsIn its meeting of
    16 March 2004, the Supervisory Board adopted the financial statements on the
    recommendation of the Board of Management under the condition of completion
    of the examination by external auditor PricewaterhouseCoopers Accountants
    N.V. PricewaterhouseCoopers
    report can be found on page 85.




The Supervisory
    Board recommends that the general meeting of shareholders approve the 2003
    financial statements of our company.The shareholders will be asked to approve
    separately the Board of Managements execution of company affairs in
    2003 and the supervision exercised by the Supervisory Board.The appropriation
    of net income approved by the Supervisory Board can be found in chapter 12,
    under Other information. Subject to approval
  of the financial statements, a dividend of0.48 per ordinary
  share of0.48 par value will
  be paid in respect of the 2003 financial year. An interim dividend of0.18 has already
  been paid in 2003, thus the final dividend per ordinary share will be0.30. Finally, the Supervisory
  Board wishes to thank the Board of Management and all our employees for their
  contributions to our company in 2003. On behalf of the Supervisory
  Board,  M.Tabaksblat
  Chairman
  Amsterdam, 18 March
    2004  Supervisory
    Board M.Tabaksblat(1937)Mr.Tabaksblat is chairman
  of the Supervisory Board. He was initially appointed member of the Supervisory
  Board on 28 June 1998 and his term was extended for four years, until 2005,
  at the Annual Shareholders Meeting held in 2001. He was appointed as chairman
  of the Supervisory Board on 30 August 2001.Mr.Tabaksblat is chairman
  of the supervisory boards of AEGON N.V., Reed Elsevier N.V. and Reed Elsevier
  plc. He was formerly chairman and CEO of Unilever N.V. Shares
  owned: 0 J.M.T.
    Cochrane(1944)Mr. Cochrane has been
  vice chairman of the Supervisory Board since 2 November 2001. He was appointed
  member of the Supervisory Board on 28 June 1998 and his term was extended 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. He is a former director of Glaxo Wellcome plc, responsible
  for international operations, and a former executive director of Wellcome plc.
  Shares
  owned: 0


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      annual report | 45
| | ------------------------ | --

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Chapter 7 Report
  of the Supervisory Board

|****
|----



R.J.N.
    Abrahamsen(1938)
    Mr. Abrahamsen was
    appointed as a member of the Supervisory Board by the Minister of Transport
    on 9 May 2000. His term expires in 2004. Mr. Abrahamsen is member of the supervisory
    boards of Fluor Daniel B.V., PON Holdings B.V., Havenbedrijf Rotterdam N.V.,
    Optimix Vermogensbeheer N.V., ANP, Madurodam B.V., Royal BAM Group, SNT Group
    N.V,Trans Link Systems and Vitens N.V. He is a former member of the management
    board and chief financial officer of KLM Royal Dutch Airlines N.V. and senior
    executive vice-president of ABN AMRO Bank N.V. Shares owned: 0 F.
    Bernabè(1948)Mr. Bernabè
  was appointed as a member of the Supervisory Board on 9 May 2000. His term expires
  in 2004. Mr. Bernabè is vice chairman of H3G SpA, chairman of Franco
  Bernabè Group and chairman of Le Biennale di Venezie. Mr. Bernabè was
  formerly senior economic advisor to the OECD in Paris and director of Economic
  Studies at FIAT. He has held several positions and most recently was chief
  executive
  officer of ENI and chief executive officer of Telecom Italia SpA. He is a member
  of the supervisory boards of Petrochina,Tiscali and ACEA. Shares
  owned: 516 R.
    Dahan(1941)
    Mr. Dahan was appointed
  as a member of the Supervisory Board on 1 April 2003. His term expires in 2007.
  Mr. Dahan is a member of the supervisory board of VNU N.V., a member of the
  International Advisory Board of the Instituto de Empresa Business School in
  Madrid, a member of the International Advisory Board CVC Capital Partners in
  London and a member of the Advisory Board of the Guggenheim Group in New York.
  He was formerly Executive Vice President and Director of Exxon Mobil Corporation
  and held various positions with its subsidiaries. Shares
  owned: 0 V.
    Halberstadt(1939)
    Mr. Halberstadt was
  appointed as a member of the Supervisory Board on 28 June 1998 and re-appointed
  in 1999 and in 2003. His term expires in 2007. Mr. Halberstadt is a professor
  of public finance at Leiden University. Mr. Halberstadt is a Crown-member of
  the Social and Economic Council, international advisor of Goldman Sachs Group
  Inc., a 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, Royal KPN N.V. and Concertgebouw N.V. Shares
  owned: 0




J.H.M.
    Hommen(1943)Mr. Hommen was appointed
  to the Supervisory Board on 28 June 1998 and in 2001 he was re-appointed for
  four years by the Minister of Transport. Mr. Hommen is vice-chairman of the
  board of management (since 28 March 2002) and chief financial officer of Royal
  Philips Electronics N.V.. Mr. Hommen was formerly executive vice president and
  chief financial officer of the Aluminum Company of America (Alcoa). He is a
  member of the supervisory board of Atos Origin and Royal Ahold N.V., chairman
  of the supervisory board of the Academisch Ziekenhuis Maastricht, chairman of
  the college van beheer of Philips Pension Fund and chairman of the board of
  directors of MedQuist, USA. Shares
  owned: 0 W.
    Kok(1938)
    Mr. Kok was appointed
  as a member of the Supervisory Board on 1 April 2003. His term expires in 2007.
  Mr. Kok is member of the supervisory boards of Royal Dutch Petroleum Company
  N.V., ING Group N.V. and KLM Royal Dutch Airlines N.V.. Mr. Kok was formerly
  Prime Minister of the Netherlands, Minister of Finance, Member of Parliament,
  chairman of the Confederation of Dutch Trade Unions and the European Trade Union
  Confederation. Shares
  owned: 0 R.W.H.
    Stomberg(1940)Mr. Stomberg was appointed
  as a member of the Supervisory Board on 28 June 1998 and his term was extended
  for four years, until 2006, at the annual shareholders meeting held in 2002.
  Mr. Stomberg is chairman of Management Consulting Group plc and a non-executive
  director of Smith & Nephew plc, Reed Elsevier N.V. and Reed Elsevier plc.
  Mr. Stomberg is also member of the supervisory board of Scania AB, chairman
  of the supervisory board of Deutsche BP AG and chairman of the Advisory Board
  of Hoyer GmbH in Hamburg. Mr. Stomberg was formerly a managing director of
  British
  Petroleum Company plc and the chief executive of BP Oil International.
  Shares
  owned: 0 The business address
  of all members the Supervisory Board is TPG N.V., Neptunusstraat 41-63, Hoofddorp,
  2132 JA, the Netherlands.




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|Chapter
      8 Remuneration report
|-----------------------------------



IntroductionIn 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 has to be adopted by the annual general meeting of shareholders.The
    remuneration committee is appointed by our Supervisory Board to draft the
    proposal for 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 2003 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 2003, the remuneration committee met seven 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 the following independent external
          advisors:Allen &
        Overy provided legal advice on employment related matters,Towers Perrin
        advised on remuneration market practice and equity based compensation,Petercam Bank
        Nederland B.V. advised on our total shareholder return performance compared
        to our peer group,Ernst &
        Young provided tax advice relating to the employment of the UK- and US-based
        members of the Board of Management, andKPMG advised
        on matters relating to the pensions of the 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. It also contains the disclosure of the
  remuneration paid to individual members of the Board of Management. Remuneration
    policy for the Supervisory BoardThe 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 compensation of the
    members of the Supervisory Board is reviewed regularly. Recent benchmark studies
    by external consultants made clear that there is a discrepancy between market
    practice and the current remuneration of the Supervisory Board. It is apparent
    that the current remuneration of the members of the Supervisory Board is below
    market practice.The Supervisory Board will reconsider this issue in 2005. Remuneration
    policy for the Board of ManagementThe 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 shareholders
    meeting for adoption on 7 April 2004. Term
    of appointment and employment contractsThe 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 re-appointed for successive
    terms of not more than four years. 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




|                                |                     |  |                          |  | Date
      of appointment |  |                   
|------------------------------- | ------------------- |  | ------------------------ |  | ------------------------- |  | ------------------
|                                | Employed            |  |                          |  | as
      Board            |  | Eligible
      for
|                                | with
      us since |  | Term
      of employment |  | member
      / CEO        |  | re-appointment    
|                                |                     |  |                          |  |                           |  |                   
|Peter
      Bakker 1            | 14
      Oct. 1991  |  | Indefinite               |  | 1
      Nov. 2001         |  | 2004,
      2008  
|Harry
      Koorstra            | 1
      Oct. 1991   |  | Indefinite               |  | 1
      July 2000         |  | 2005              
|Jan Haars                       | 1
      Aug. 2002   |  | Indefinite               |  | 1
      Aug. 2002         |  | 2006              
|Dave Kulik                      | 4
      Sept. 2000  |  | Four
      years         |  | 1
      Sept. 2003        |  | 2007              
|Marie-Christine
      Lombard 2 | 15
      Dec. 1998  |  | Four
      years         |  | 1
      Jan. 2004         |  | 2008              
|                                |                     |  |                          |  |                           |  |                   

|1 | Peter
      Bakker was appointed CFO of the Board of Management effective 28 June 1998.                                                                                                                                                                                                                   
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2 | For
      the purpose of the policy part of the remuneration report, Marie-Christine
      Lombard is included in the tables instead of Alan Jones, although Marie-Christine
      Lombard was appointed group managing director express and member of the
      Board of Management as of 1 January 2004.



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Chapter 8 Remuneration
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down
    and be eligible for re-appointment for a new four-year term according to the
    following re-appointment plan: 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
    elementsThe
    remuneration for members of our Board of Management comprises the following
    elements: a base salary and other periodically paid compensation (together
    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- to third-quartile level 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
      Reference
        marketThe Netherlands
      AEXUnited Kingdom
      FTSE
        100Germancy
      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
    salaryThe 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 the 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 compensationMembers 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
    compensationWe 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. Short-term
    incentive: cash bonusThe
  members of the Board of Management are eligible to participate in a short-term
  incentive programme that provides 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. The 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 chosen
  because it best reflects our commitment towards our shareholders in the form
  of the announced outlook range.The targets for a divisional member of the Board
  of Management consist 50% of targeted earnings per share growth from continuing
  operations of the company as a whole and 50% 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.




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|
|



|                              | Earnings
      per share growth target |  | Economic
      profit target |  |                
|----------------------------- | -------------------------------------- |  | ---------------------------- |  | ---------------
|                              |                                        |  |                              |  |                
|                              | At
      target                        |  | Bonus
      range            |  | At
      target
|                              |                                        |  |                              |  |                
|Peter Bakker                  | 60%                                    |  | 50%
      - 75%              |  |               
|Jan Haars                     | 60%                                    |  | 50%
      - 75%              |  |               
|Harry Koorstra                | 30%                                    |  | 25%
      - 37.5%            |  | 30%            
|Dave Kulik                    | 30%                                    |  | 25%
      - 37.5%            |  | 30%            
|Marie-Christine
      Lombard | 30%                                    |  | 25%
      - 37.5%            |  | 30%            
|                              |                                        |  |                              |  |                



The bonus based on
  the realised earnings per share from continuing operations will be calculated
  using a sliding scale with a bonus equal to the at-target bonus
  percentage (60% or 30%) of annual salary payable on achievement of the midpoint
  percentage earnings per share from continuing operations growth. A bonus of
  50% or 25% of annual salary will be paid on the achievement of the lowest percentage
  earnings per share from continuing operations as mentioned in the outlook range.
  A bonus of 75% or 37.5% of annual salary will be paid on the achievement of
  earnings per share from continuing operations percentage on the topside of the
  outlook range or more. If the earnings per share from continuing operations
  growth is below the minimum of the outlook range no bonus is payable in relation
  to this target. The same sliding scale
  methodology is also applicable for the determination of the part of the bonus
  for the divisional Board Members based on the divisional economic profit results.The
  at-target bonus of 30% of annual salary will be payable on achieving
  100% of targeted economic profit.The minimum bonus of 25% of annual salary is
  payable on achieving 90% of targeted economic profit and the maximum bonus is
  payable on achieving 120% of targeted economic profit or more. No bonus will
  be paid for the economic profit results if the economic profit results are below
  90% of 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 (2004 onwards: 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 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 bonus or
    matching shares before the earlier of five years from the date of grant or
    the end of the employment relation. 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 sharesThe long-term
    incentive for the members of the Board of Management comprises two elements:
    the TPG share option scheme and the TPG performance share scheme. Both long-term
    incentives 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 are awarded to Board of Management members.The options
  exercise price equals the average market price on Euronext Amsterdam on the
  date of grant (2004 onwards: 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 date of grant (2004
    onwards: the day following the announcement of first quarter results). Please
    refer to the paragraph on the TPG performance share scheme for more information. The allocation keys
    of both the share option scheme and the performance share scheme are benchmarked
    on a yearly basis. Both the number of options on shares and rights on performance
    shares granted and the total compensation including the value of the long-term
    incentive are benchmarked 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 allocation of options and rights on performance
    shares to the members of the Board 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




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Chapter 8 Remuneration
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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 option
          grant and the grant of performance shares are divided into two equal
          parts.The two parts will vest as follows: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         |  |                                                                 |  | Proportion
      of     
|performance
      period within |  | TSR
      ranking                                               |  | the
      base          
|AEX
      peer group            |  | in
      quartiles                                              |  | allocation
      vesting
|                                |  |                                                                 |  |                         
|1
      - 6                     |  | 1stquartile                                                     |  | 75%
      / 60%2        
|7
      - 12                    |  | 2ndquartile                                                     |  | 50%                     
|13
      - 18                   |  | 3rdquartile                                                     |  | 25%                     
|19
      - 25                   |  | 4thquartile                                                     |  | 0%                      
|                                |  |                                                                 |  |                         

|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 share options or 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, Exel and
  Hays (until 31 October 2003; for the performance schedule attached to the grants
  of 2004 onwards the Supervisory Board will decide on a replacement for Hays).




|                                |  | TSR
      performance against direct competitors (DC) |  |                         
|------------------------------- |  | ----------------------------------------------------- |  | ------------------------
|                                |  |                                                       |  |                         
|TSR
      ranking after         |  |                                                       |  | Proportion
      of     
|performance
      period within |  | TSR
      ranking                                     |  | the
      base          
|DC
      peer group             |  | in
      quartiles                                    |  | allocation
      vesting
|                                |  |                                                       |  |                         
|1                               |  | 1stquartile                                           |  | 75%
      / 60%2        
|2
      - 3                     |  | 2ndquartile                                           |  | 50%                     
|4
      - 5                     |  | 3rdquartile                                           |  | 25%                     
|6                               |  | 4thquartile                                           |  | 0%                      
|                                |  |                                                       |  |                         

|1 | Calculated
      using a base allocation of 1000 option/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 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.




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PensionOur
    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 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.


SeveranceIn
      relation to contracts with members of the Board of Management we aim to
      set the severance payments at one-year of base salary. Contracts entered
      into before September 2003 will remain unaltered for the time being until
      the legislative climate is clearer and market practice has developed. LoansWe
    do not grant personal loans to any of our Board of Management and Supervisory
    Board members. Remuneration
    of members of the Supervisory Board in 2003Over 2003,
    the accrued remuneration of the members of the Supervisory Board, excluding
    VAT, amounted to361,889 (2002:
    359,051; 2001: 360,752).The remuneration of the individual members of the
    Supervisory Board is set out in the table below:




|Supervisory
      Board compensation          | Base         |  | Other            |        | Total        | 
|--------------------------------------------- | ------------ |  | ---------------- | ------ | ------------ | 
|                                              | compensation |  | payments
      1 |        | remuneration | 
|                                              |              |  |                  |        |              | 
|R.J.N. Abrahamsen                             | 36,302       |  |                  | 2,836  |              | 
|F. Bernabè                                    | 36,302       |  |                  | 1,702  |              | 
|J.M.T. Cochrane                               | 36,302       |  |                  | 4,538  |              | 
|R. Dahan2                                     | 27,227       |  |                  | 2,269  |              | 
|V. Halberstadt                                | 36,302       |  |                  | 4,538  |              | 
|J.H.M. Hommen                                 | 36,302       |  |                  | 2,836  |              | 
|W. Kok2                                       | 27,227       |  |                  | 1,134  |              | 
|R.W.H. Stomberg                               | 36,302       |  |                  | 4,538  |              | 
|M.Tabaksblat                                  | 45,378       |  |                  | 1,702  |              | 
|                                              |              |  |                  |        |              | 
|Total
      current Supervisory Board members | 317,644      |  |                  | 26,093 |              | 
|                                              |              |  |                  |        |              | 
|W. Dik                                        | 9,076        |  |                  |       |              | 
|A. Maas                                       | 9,076        |  |                  |       |              | 
|                                              |              |  |                  |        |              | 
|Total
      former Supervisory Board members  | 18,152       |  |                  |       |              | 
|                                              |              |  |                  |        |              | 
|Total
      Supervisory Board compensation    | 335,796      |  |                  | 26,093 |              | 
|                                              |              |  |                  |        |              | 

|1 | Payments
      relating to number of Supervisory Board committee meetings attended.
|- | -----------------------------------------------------------------------------------
|2 | Mr.
      R. Dahan and Mr.W. Kok joined the Supervisory Board as of 1 April 2003.  



No options or shares
  are granted to members of the Supervisory Board, and none of the members of
  the Supervisory Board has accrued any pension rights with our company. Remuneration
    of members of the Board of Management in 2003During 2003,
    the Board of Management consisted of five members. Per 1 September 2003 the
    group managing director logistics Roberto Rossi stepped down and per the same
    date Dave Kulik was appointed group managing director logistics. As of 1 January
    2004 Marie Christine Lombard succeeded Alan Jones as group managing director
    express. Roberto Rossi received
    a severance payment of2.0 million.This amount
    represented three years of base salary and was a contractu-




ally agreed
    severance arrangement as specified in his employment contract. Alan Jones
    was paid an amount of0.7 million in settlement
    of the notice period under his employment contract. A further3.9 million pension
    obligation has been funded in settlement of an old
    pension claim and the contractual funding obligations during the notice period
    of Mr. Jones contract. Total
    remunerationIn
    2003, the remuneration, including pension and social security contributions,
    of the current and the former members of the Board of Management amounted
    to13,923,698 (in
    2002:7,243,908; 2001:9,877,168). Included
    is8,873,421 (in
    2002:14,266; 2001:4,260,653) with
    respect of former members of the Board of Management.




| | 2003
    annual report | 51
| | ---------------------- | --

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Chapter 8 Remuneration
  report

|
|



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






|                                |              |  |                 |         |           |  |                  |               |                  |           |                  |  |            |  | 
|------------------------------- | ------------ |  | --------------- | ------- | --------- |  | ---------------- | ------------- | ---------------- | --------- | ---------------- |  | ---------- |  | 
|Compensation
      & benefits   |              |  |                 |         |           |  |                  | Pension       |                  |           |                  |  |            |  | 
|Board
      of Management       | Periodic     |  | Profit          |         |           |  |                  | contributions |                  |           |                  |  |            |  | 
|                                | paid         |  | share
      and |         | Severance |  | for
      future |               |                  |           |                  |  |            | 
|                                | compensation |  | bonus           |         | payments  |  | payments         |               | 2003
      total |           | 2002
      total | 
|                                |              |  |                 |         |           |  |                  |               |                  |           |                  |  |            |  | 
|Peter Bakker                    | 943,154      |  |                 | 21,674  |           |  |                 |               |                  | 488,201   |                  |  | 1,453,029  |  | 
|Jan Haars                       | 528,330      |  |                 | 162,502 | 2         |  |                 |               |                  | 480,957   |                  |  | 1,171,789  |  | 
|Harry Koorstra                  | 634,313      |  |                 | 208,951 |           |  |                 |               |                  | 1,132,049 |                  |  | 1,975,313  |  | 
|Dave Kulik1                     | 245,570      |  |                 | 11,942  |           |  |                 |               |                  | 192,634   |                  |  | 450,146    |  | 
|                                |              |  |                 |         |           |  |                  |               |                  |           |                  |  |            |  | 
|Total
      current             |              |  |                 |         |           |  |                  |               |                  |           |                  |  |            |  | 
|Board
      of Management       | 2,351,367    |  |                 | 405,069 |           |  |                 |               |                  | 2,293,841 |                  |  | 5,050,277  |  | 
|                                |              |  |                 |         |           |  |                  |               |                  |           |                  |  |            |  | 
|                                |              |  |                 |         |           |  |                  |               |                  |           |                  |  |            |  | 
|Ad Scheepbouwer                 |             |  |                 |        |           |  |                 |               |                  |          |                  |  |           |  | 
|John Fellows                    |             |  |                 | 33,891  |           |  |                 |               |                  |          |                  |  | 33,891     |  | 
|Carel Paauwe                    |             |  |                 |        |           |  |                 |               |                  |          |                  |  |           |  | 
|Bert van Doorn                  |             |  |                 | 52,139  |           |  |                 |               |                  |          |                  |  | 52,139     |  | 
|Alan Jones                      | 1,047,143    |  |                 | 292,718 |           |  | 747,665          |               |                  | 4,162,574 |                  |  | 6,250,100  |  | 
|Roberto Rossi                   | 458,760      |  |                 |        |           |  | 1,967,449        |               |                  | 111,082   |                  |  | 2,537,291  |  | 
|                                |              |  |                 |         |           |  |                  |               |                  |           |                  |  |            |  | 
|Total
      former              |              |  |                 |         |           |  |                  |               |                  |           |                  |  |            |  | 
|Board
      of Management       | 1,505,903    |  |                 | 378,748 |           |  | 2,715,114        |               |                  | 4,273,656 |                  |  | 8,873,421  |  | 
|                                |              |  |                 |         |           |  |                  |               |                  |           |                  |  |            |  | 
|Total
      Board of Management | 3,857,270    |  |                 | 783,817 |           |  | 2,715,114        |               |                  | 6,567,497 |                  |  | 13,923,698 |  | 
|                                |              |  |                 |         |           |  |                  |               |                  |           |                  |  |            |  | 

|1 | From
      1 September 2003.      
|- | ----------------------------------
|2 | Includes150,000 moving allowance.

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 | Base
      salary |                           | Other
      periodic |              | 2003
      Periodic paid | 
|----------------------------- | ----------------- | ------------------------- | -------------------- | ------------ | ------------------------ | 
|Board
      of Management     |                   | paid
      compensation 1 |                      | compensation |                         
|                              |                   |                           |                      |              |                          | 
|Peter Bakker                  | 900,000           |                           | 43,154               |              | 943,154                  | 
|Jan Haars                     | 500,000           |                           | 28,330               |              | 528,330                  | 
|Harry Koorstra                | 600,000           |                           | 34,313               |              | 634,313                  | 
|Dave Kulik2                   | 224,972           |                           | 20,598               |              | 245,570                  | 
|                              |                   |                           |                      |              |                          | 
|Total
      current           |                   |                           |                      |              |                          | 
|Board
      of Management     | 2,224,972         |                           | 126,395              |              | 2,351,367                | 
|                              |                   |                           |                      |              |                          | 

|1 | Includes
      company costs related to tax and social security.
|- | ----------------------------------------------------------------
|2 | From
      1 September 2003.                                    



Short-term
  incentiveSince 2002, we
  account for bonus payments on the basis of the accrued bonuses for the performance
  of the year reported. In 2003, an amount of1,557,970 was paid
  to the members of the Board of Management for performance over 2002 (2002 profit
  share and bonus of2,191,216 minus633,246*).
  In the table below the amount of191,952 reflects
  the accrued bonuses for




performance over 2003
  and the amount of63,117 reflects
  the accrued costs for the rights on matching shares that were granted in 2003. All economic profit
  targets for 2003 except for our logistics division were met.The 2003 earnings
  per share target was not met. *The
    2002 bonus amount for Jan Haars of858,246 consisted
    of225,000 bonus and
    a sign on bonus of  633,246.




|52 | 2003
      annual report | 
|-- | ------------------------ | 

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|
|



The 2003 profit share
  and bonus amounts accrued for the members of the Board of Management are as
  set out below:






|                                        |                |  |                     |     |                     |  |                   |   |                    |        |  |  |         |  | 
|--------------------------------------- | -------------- |  | ------------------- | --- | ------------------- |  | ----------------- | - | ------------------ | ------ |  |  | ------- |  | 
|Compensation
      & benefits           |                |  |                     |     |                     |  |                   |   |                    |       
|Board
      of Management               | Accrued        |  | 2003
      bonus as |     | Other
      bonus / |  | Accrued
      for |   |                    |       
|                                        | for
      2003 |  | percentage
      of |     | special             |  | matching          |   | Profit
      share |       
|                                        | performance    |  | base
      pay      |     | payments            |  | shares            |   | and
      bonus    |       
|                                        |                |  |                     |     |                     |  |                   |   |                    |        |  |  |         |  | 
|Peter Bakker                            |               |  |                     |    |                     |  |                  |   |                    | 21,674 |  |  | 21,674  |  | 
|Jan Haars                               |               |  |                     |    |                     |  | 150,000           | 1 |                    | 12,502 |  |  | 162,502 |  | 
|Harry Koorstra                          | 191,952        |  |                     | 32% |                     |  |                  |   |                    | 16,999 |  |  | 208,951 |  | 
|Dave Kulik                              |               |  |                     |    |                     |  |                  |   |                    | 11,942 |  |  | 11,942  |  | 
|                                        |                |  |                     |     |                     |  |                   |   |                    |        |  |  |         |  | 
|Total
      current Board of Management | 191,952        |  |                     |    |                     |  | 150,000           |   |                    | 63,117 |  |  | 405,069 |  | 
|                                        |                |  |                     |     |                     |  |                   |   |                    |        |  |  |         |  | 
|1Moving
      allowance                 |                |  |                     |     |                     |  |                   |   |                    |        |  |  |         |  | 
|                                        |                |  |                     |     |                     |  |                   |   |                    |        |  |  |         |  | 

Share-matching
  schemeIn 2003,
  a total bonus amount of1,557,970 related
  to company results was paid to the members of the Board of Management. Of this
  amount, 75% (1,168,478) was paid
  in cash and 25% (389,493) 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 and none of the acquired shares
  were sold during their Board membership. Current holdings of bonus-related shares
  (including shares from reinvested dividends) and matching entitlement is set
  out in the following two tables below:






|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |       | 
|------------------------- | ----- |  |  | -------- |  | ----------------- | ------------------------------------ | ---------------- |  | -------------- |  | ----------------- | ----- | 
|                          |       |  |  |          |  |                   | Number
      of bonus related shares |                 
|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |       | 
|                          |       |  |  |          |  |                   |                                      | Granted
      or |  | Sold
      or  |  |                   |      
|                          |       |  |  |          |  | Shares
      held |                                      | acquired         |  | transferred    |  | Shares
      held |      
|                          |       |  |  |          |  | as
      of       |                                      | during
      the |  | during         |  | as
      of       |      
|                          | Year  |  |  |          |  | 1
      Jan 2003  |                                      | year             |  | the
      year |  | 31
      Dec 2003 |      
|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |       | 
|Board
      of Management |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |       | 
|Peter Bakker              | 2003  |  |  | Bonus    |  |                   |                                     |                  |  | 7,042          |  |                   |      | 
|                          |       |  |  | Dividend |  |                   |                                     |                  |  | 55             |  |                   |      | 
|Jan Haars                 | 2003  |  |  | Bonus    |  |                   |                                     |                  |  | 4,062          |  |                   |      | 
|                          |       |  |  | Dividend |  |                   |                                     |                  |  | 31             |  |                   |      | 
|Harry Koorstra            | 2003  |  |  | Bonus    |  |                   |                                     |                  |  | 5,523          |  |                   |      | 
|                          |       |  |  | Dividend |  |                   |                                     |                  |  | 43             |  |                   |      | 
|Dave Kulik                | 2003  |  |  | Bonus    |  |                   |                                     |                  |  | 3,880          |  |                   |      | 
|                          |       |  |  | Dividend |  |                   |                                     |                  |  | 30             |  |                   |      | 
|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |       | 
|Current
      members     | total |  |  |          |  |                   |                                     |                  |  | 20,666         |  |                   |      | 
|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |       | 
|Former
      members      | total |  |  |          |  |                   |                                     |                  |  | 11,586         |  |                   | 2,575 | 
|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |       | 
|Total                     |       |  |  |          |  |                   |                                     |                  |  | 32,252         |  |                   | 2,575 | 
|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |       | 

The shares granted during the year in the table above represent 25% of the remuneration costs of the bonuses of 2002 as reported in 2002.








| | 2003
    annual report | 53
| | ---------------------- | --

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Chapter 8 Remuneration report

|
|

|                              |       |  |                      | Number
          of matching rights on shares |                   
|----------------------------- | ----- |  | -------------------- | --------------------------------------------- | ------------------
|                             
|                              |       |  |                      |                                               |                   
|                              |       |  |                      | Outstanding                                   |                   
|                              |       |  |                      | as
          of                               |                   
|                              | Year  |  | 1
          Jan 2003 |                                               | the
          year
|Board
          of Management |       |  |                      |                                               |                   
|Peter Bakker                  | 2003  |  |                      |                                              |                   
|Jan Haars                     | 2003  |  |                      |                                              |                   
|Harry Koorstra                | 2003  |  |                      |                                              |                   
|Dave Kulik                    | 2003  |  |                      |                                              |                   
|                              |       |  |                      |                                               |                   
|Current
          members     | total |  |                      |                                              |                   
|                              |       |  |                      |                                               |                   
|Former
          members      | total |  |                      |                                              |                   
|                              |       |  |                      |                                               |                   
|Total                         |       |  |                      |                                              |                   
|                              |       |  |                      |                                               |                   

The number of matching rights on shares granted on 21 February and active per 28 April 2003 have been accrued as part of the remuneration costs of 2003 on a lineair basis. 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).


|54 | 2003
      annual report | 
|-- | ------------------------ | 

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|
|

Long-term
  incentive: share
  option schemeThe
  table below summarises the status of the options granted to
  the members of the
Board of Management:

|                      |       |   |                | Number
      of options |                  | Amounts
      in |                |            |                |          
|--------------------- | ----- | - | -------------- | ----------------------- | ---------------- | ----------------- | -------------- | ---------- | -------------- | ---------
|                      |       |   |                |                         |                  |                   |                |            |                |          
|Board
      of        |       |   |                | Outstan-                |                  |                   |                |            |                |          
|Management            |       |   |                | ding                    |                  | Granted           |                | Excercised |                | Forfeited
|                      |       |   |                | as
      of 1           |                  | during            |                | during     |                | during   
|                      | year  |   | Jan
      2003 |                         | the
      year 2 |                   | the
      year |            | the
      year |          
|Peter Bakker          | 1998  |   |                | 24,000                  |                  |                   |               |            |                |         
|                      | 1999  |   |                | 20,000                  |                  |                   |               |            |                |         
|                      | 2000  |   |                | 20,000                  |                  |                   |               |            |                |         
|                      | 2001  |   |                | 20,000                  |                  |                   |               |            |                |         
|                      | 2002  |   |                | 60,000                  |                  |                   |               |            |                |         
|                      | 2003  |   |                |                        |                  |                   | 60,000         |            |                |         
|                      |       |   |                |                         |                  |                   |                |            |                |          
|Jan Haars             | 1998  |   |                | N/a                     |                  |                   |               |            |                |         
|                      | 1999  |   |                | N/a                     |                  |                   |               |            |                |         
|                      | 2000  |   |                | N/a                     |                  |                   |               |            |                |         
|                      | 2001  |   |                | N/a                     |                  |                   |               |            |                |         
|                      | 2002  |   |                | 30,000                  |                  |                   |               |            |                |         
|                      | 2003  |   |                |                        |                  |                   | 30,000         |            |                |         
|                      |       |   |                |                         |                  |                   |                |            |                |          
|Harry Koorstra        | 1998  |   |                | N/a                     |                  |                   |               |            |                |         
|                      | 1999  |   |                | N/a                     |                  |                   |               |            |                |         
|                      | 2000  | 1 |                | 9,000                   |                  |                   |               |            |                |         
|                      | 2001  |   |                | 20,000                  |                  |                   |               |            |                |         
|                      | 2002  |   |                | 30,000                  |                  |                   |               |            |                |         
|                      | 2003  |   |                |                        |                  |                   | 30,000         |            |                |         
|                      |       |   |                |                         |                  |                   |                |            |                |          
|Dave Kulik            | 1998  |   |                | N/a                     |                  |                   |               |            |                |         
|                      | 1999  |   |                | N/a                     |                  |                   |               |            |                |         
|                      | 2000  |   |                | N/a                     |                  |                   |               |            |                |         
|                      | 2001  |   |                | N/a                     |                  |                   |               |            |                |         
|                      | 2002  |   |                | N/a                     |                  |                   |               |            |                |         
|                      | 2003  | 1 |                |                        |                  |                   | 18,000         |            |                |         
|                      |       |   |                |                         |                  |                   |                |            |                |          
|                      |       |   |                |                         |                  |                   |                |            |                |          
|Current
      members | Total |   |                | 233,000                 |                  |                   | 138,000        |            |                |         
|                      |       |   |                |                         |                  |                   |                |            |                |          
|Former members        | 1998  |   |                | 60,000                  |                  |                   |               |            |                |         
|                      | 1999  |   |                | 81,000                  |                  |                   |               |            |                |         
|                      | 2000  |   |                | 80,000                  |                  |                   |               |            |                |         
|                      | 2001  |   |                | 40,000                  |                  |                   |               |            |                |         
|                      | 2002  |   |                | 60,000                  |                  |                   |               |            |                |         
|                      | 2003  |   |                |                        |                  |                   | 60,000         |            |                |         
|                      |       |   |                |                         |                  |                   |                |            |                |          
|Former
      members  | Total |   |                | 321,000                 |                  |                   | 60,000         |            |                |         
|                      |       |   |                |                         |                  |                   |                |            |                |          
|Total                 |       |   |                | 554,000                 |                  |                   | 198,000        |            |                |         
|                      |       |   |                |                         |                  |                   |                |            |                |          

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



No member of the Board of Management has exercised any
  granted options.

| | 2003
    annual report | 55
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Chapter 8 Remuneration report

|
|

Long-term incentive: performance share schemeThe table below summarises the status of the rights awarded
  under the performance share scheme to the members of the
  Board of Management:

|                          |       |  |                  | Number
      of rights on performance shares |                 
|------------------------- | ----- |  | ---------------- | -------------------------------------------- | ----------------
|                         
|                          |       |  |                  |                                              |                 
|                          |       |  |                  | Outstanding                                  |                 
|                          |       |  |                  | as
      of                                  |                 
|                          | Year  |  | 1
      Jan 2003 |                                              | the
      year 1
|Board
      of Management |       |  |                  |                                              |                 
|Peter Bakker              | 2002  |  |                  | 8,938                                        |                 
|                          | 2003  |  |                  |                                             |                 
|Jan Haars                 | 2002  |  |                  | 5,958                                        |                 
|                          | 2003  |  |                  |                                             |                 
|Harry Koorstra            | 2002  |  |                  | 5,958                                        |                 
|                          | 2003  |  |                  |                                             |                 
|Dave Kulik                | 2002  |  |                  |                                             |                 
|                          | 2003  |  |                  |                                             |                 
|                          |       |  |                  |                                              |                 
|Current
      members     | total |  |                  | 20,854                                       |                 
|                          |       |  |                  |                                              |                 
|                          |       |  |                  |                                              |                 
|Former members            | 2002  |  |                  | 11,916                                       |                 
|                          | 2003  |  |                  |                                             |                 
|                          |       |  |                  |                                              |                 
|Former
      members      | total |  |                  | 11,916                                       |                 
|                          |       |  |                  |                                              |                 
|Total                     |       |  |                  | 32,770                                       |                 
|                          |       |  |                  |                                              |                 

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

Long-term incentives: performance scheduleThe
graph in chapter 14 shows our total shareholder return, assuming dividends were
reinvested, compared to the AEX companies and our peer group competitors. 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 totalshareholder Vesting percentages
  as per 31 December 2003
  according to TSR performance schedules




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 options and granted rights on performance shares were
to vest on 31 December 2003, our total shareholder return through 31 December
2003 would lead to the following vesting percentages for the granted share options
and granted rights on performance shares:


|                  |                     |  |                  |                     |                     |            |        |             |         |    |   | 
|----------------- | ------------------- |  | ---------------- | ------------------- | ------------------- | ---------- | ------ | ----------- | ------- | -- | - | 
|                  |                     |  |                  | Relative
      TSR  |                     |            |        |             | Vesting |   
|                  |                     |  |                  | position
      when |                     | Vesting    |        | percentage  |        
|                  |                     |  |                  | compared
      with |                     | percentage |        | performance |        
|                  | Year
      of grant |  | peer
      group |                     | share
      options |            | shares |            
|                  |                     |  |                  |                     |                     |            |        |             |         |    |   | 
|Peer
      groups |                     |  |                  |                     |                     |            |        |             |         |    |   | 
|AEX companies     | 2002                |  |                  | 2ndquartile         |                     |            | 50     | %           |         | 50 | % | 
|Peer competitors  | 2002                |  |                  | 3ndquartile         |                     |            | 25     | %           |         | 25 | % | 
|                  |                     |  |                  |                     |                     |            |        |             |         |    |   | 
|Total
      2002  |                     |  |                  |                     |                     |            | 75     | %           |         | 75 | % | 
|                  |                     |  |                  |                     |                     |            |        |             |         |    |   | 
|                  |                     |  |                  |                     |                     |            |        |             |         |    |   | 
|AEX companies     | 2003                |  |                  | 2ndquartile         |                     |            | 50     | %           |         | 50 | % | 
|Peer competitors  | 2003                |  |                  | 3ndquartile         |                     |            | 25     | %           |         | 25 | % | 
|                  |                     |  |                  |                     |                     |            |        |             |         |    |   | 
|Total
      2003  |                     |  |                  |                     |                     |            | 75     | %           |         | 75 | % | 
|                  |                     |  |                  |                     |                     |            |        |             |         |    |   | 
|                  |                     |  |                  |                     |                     |            |        |             |         |    |   | 

|56 | 2003
        annual report | 
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|
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If the granted share options were to vest on 31 December 2003,
the following share options would have vested based on the total
shareholders return vesting percentages as showed in the previous
vesting table.

|Vesting
      share options as per  |      |  |             | Outstanding         |      | Base                |          |                   |            |                   |   |  |        
|----------------------------------- | ---- |  | ----------- | ------------------- | ---- | ------------------- | -------- | ----------------- | ---------- | ----------------- | - |  | -------
|31 December
      2003 according to |      |  |             | share
      options |      | allocation          |          | Vesting           |            | Vesting           |  
|TSR performance
      schedules     |      |  |             | as
      of 1 Jan   |      | outstanding         |          | percentage        |            | as
      per      |  
|                                    |      |  |             | (maximum,           |      | share
      options |          | relating
      to |            | 31
      Dec 2003 |  
|                                    |      |  |             | 150%
      of base  |      | as
      of 31 Dec  |          | performance       |            | per
      vesting |  
|                                    | Year |  | allocation) |                     | 2003 |                     | schedule |                   | percentage |                  
|Board
      of Management           |      |  |             |                     |      |                     |          |                   |            |                   |   |  |        
|Peter Bakker                        | 2002 |  |             | 60,000              |      |                     | 40,000   |                   |            | 75                | % |  | 30,000 
|                                    | 2003 |  |             | 60,000              |      |                     | 40,000   |                   |            | 75                | % |  | 30,000 
|Jan Haars                           | 2002 |  |             | 30,000              |      |                     | 20,000   |                   |            | 75                | % |  | 15,000 
|                                    | 2003 |  |             | 30,000              |      |                     | 20,000   |                   |            | 75                | % |  | 15,000 
|Harry Koorstra                      | 2002 |  |             | 30,000              |      |                     | 20,000   |                   |            | 75                | % |  | 15,000 
|                                    | 2003 |  |             | 30,000              |      |                     | 20,000   |                   |            | 75                | % |  | 15,000 
|Dave Kulik                          | 2002 |  |             |                    | 1    |                     |         |                   |            |                  |   |  |       
|                                    | 2003 |  |             | 18,000              |      |                     | 12,000   |                   |            | 75                | % |  | 9,000  
|                                    |      |  |             |                     |      |                     |          |                   |            |                   |   |  |        
|Total                               |      |  |             | 258,000             |      |                     | 172,000  |                   |            |                  |   |  | 129,000
|                                    |      |  |             |                     |      |                     |          |                   |            |                   |   |  |        

1 The options of the members of the Board of Management only include the options granted as of the year of appointment to the Board of Management.

If the granted rights were to vest on 31 December 2003, the
following rights on performance shares would have vested based 
on the total shareholders return vesting percentages as showed in
the previous vesting table.

|Vesting
      performance shares as  |      |  |             | Outstanding
      rights |                   | Base
      allocation |          |                   |                   |              |  
|------------------------------------ | ---- |  | ----------- | ------------------------ | ----------------- | --------------------- | -------- | ----------------- | ----------------- | ------------ | -
|per 31
      December 2003 according |      |  |             | on
      performance     |                   | outstanding           |          | Vesting           |                   |              |  
|to TSR
      performance schedules   |      |  |             | shares
      as of 1 Jan |                   | rights
      on       |          | percentage        |                   |              |  
|                                     |      |  |             | 2003
      (maximum,     |                   | performance           |          | relating
      to |                   | Vesting      |  
|                                     |      |  |             | 120%
      of base       |                   | shares
      as of    |          | performance       |                   | as
      per |  
|                                     | Year |  | allocation) |                          | 31
      Dec 2003 |                       | schedule |                   | 31
      Dec 2003 |             
|Board
      of Management            |      |  |             |                          |                   |                       |          |                   |                   |              |  
|Peter Bakker                         | 2002 |  |             | 8,938                    |                   |                       | 7,448    |                   |                   | 75           | %
|                                     | 2003 |  |             | 11,795                   |                   |                       | 9,829    |                   |                   | 75           | %
|Jan Haars                            | 2002 |  |             | 5,958                    |                   |                       | 4,965    |                   |                   | 75           | %
|                                     | 2003 |  |             | 7,863                    |                   |                       | 6,553    |                   |                   | 75           | %
|Harry Koorstra                       | 2002 |  |             | 5,958                    |                   |                       | 4,965    |                   |                   | 75           | %
|                                     | 2003 |  |             | 7,863                    |                   |                       | 6,553    |                   |                   | 75           | %
|Dave Kulik                           | 2002 |  |             |                         |                   |                       |         |                   |                   |             |  
|                                     | 2003 |  |             |                         |                   |                       |         |                   |                   |             |  
|                                     |      |  |             |                          |                   |                       |          |                   |                   |              |  
|Total                                |      |  |             | 48,375                   |                   |                       | 40,313   |                   |                   |             |  
|                                     |      |  |             |                          |                   |                       |          |                   |                   |              |  
|                                     |      |  |             |                          |                   |                       |          |                   |                   |              |  

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Chapter 8 Remuneration
  report

|
|

Variable compensationIn the table below the total variable compensation of 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 by Towers Perrin using the Black-Scholes
formula and a weighted probability analysis.

|                        |                 |  |                 |         |         |  |                 |  |           |         |                   |  |                     |                     |  |           |  |       |    |    | 
|----------------------- | --------------- |  | --------------- | ------- | ------- |  | --------------- |  | --------- | ------- | ----------------- |  | ------------------- | ------------------- |  | --------- |  | ----- | -- | -- | 
|Compensation
      &    |                 |  |                 |         |         |  |                 |  |           |         |                   |  | Total               |                     |  |           |  | Total |   
|benefits
      Board of | Bonus
      for |  | Rights
      on |         |         |  | Rights
      on |  | variable  |         |                   |  |                     | variable
      com- | 
|Management              | 2003            |  | matching        |         | Share   |  | performance     |  | compensa- |         |                   |  |                     | pensation
      as  | 
|                        | performance     |  | shares          |         | options |  | shares          |  | tion      |         | Base
      salary |  | %
      of base pay |                    
|Peter Bakker            |                |  |                 | 89,015  |         |  | 127,549         |  |           | 77,053  |                   |  | 293,617             |                     |  | 900,000   |  |       | 33 | %  | 
|Jan Haars               |                |  |                 | 51,346  |         |  | 63,775          |  |           | 51,363  |                   |  | 166,484             |                     |  | 500,000   |  |       | 33 | %  | 
|Harry Koorstra          | 191,952         |  |                 | 69,814  |         |  | 63,775          |  |           | 51,363  |                   |  | 376,904             |                     |  | 600,000   |  |       | 63 | %  | 
|Dave Kulik1             |                |  |                 | 49,045  |         |  | 38,265          |  |           |        |                   |  | 87,310              |                     |  | 224,972   |  |       | 39 | %1 | 
|                        |                 |  |                 |         |         |  |                 |  |           |         |                   |  |                     |                     |  |           |  |       |    |    | 
|Total                   | 191,952         |  |                 | 259,220 |         |  | 293,364         |  |           | 179,779 |                   |  | 924,315             |                     |  | 2,224,972 |  |       | 42 | %  | 
|                        |                 |  |                 |         |         |  |                 |  |           |         |                   |  |                     |                     |  |           |  |       |    |    | 
|                        |                 |  |                 |         |         |  |                 |  |           |         |                   |  |                     |                     |  |           |  |       |    |    | 

1From
  1 September 2003.



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

|                     |                        |  | Compensation
      related    |  |                               | 
|-------------------- | ---------------------- |  | ----------------------------- |  | ----------------------------- | 
|                     | Notice
      period as |  | to
      the change in        |  | Other
      severance         | 
|                     | Board
      member     |  | control
      clause          |  | arrangements                  | 
|Peter
      Bakker   | Six
      months       |  | Two
      years compensation1 |  | None                          | 
|Jan Haars            | Six
      months       |  | Two
      years compensation1 |  | Two
      years compensation1 | 
|Harry
      Koorstra | Six
      months       |  | None                          |  | None                          | 
|Dave Kulik2          |                        |  |                               |  |                               | 
|                     |                        |  |                               |  |                               | 

1 Compensation is defined as base compensation, average bonus over the last three years and pension contribution.2 The employment contract is not finalised yet.

LoansThe amount of outstanding loans made by the company and any of
its subsidiaries to members of the Board of Management is set out
in the table below:

|               | Total
      outstanding loans |  |                              |           | Total
      outstanding loans | 
|-------------- | ----------------------------- |  | ---------------------------- | --------- | ----------------------------- | 
|               | at
      1 Jan 2003           |  | Repaid
      during the year |           | at
      31 December 2003     | 
|Peter Bakker   | 93,861.72                     |  |                              | 93,861.72 |                               | 
|Harry Koorstra | 16,348.79                     |  |                              | 16,348.79 |                               | 
|               |                               |  |                              |           |                               | 

In the Netherlands in 1998 and 1999 tax was levied at the time of
grant of the option rights and the loans were offered to the Dutch
members of the Board of Management in order to pay this tax.
During 2003, all loans were paid back by the members of the
Board of Management.

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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).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 62.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/         |           |                  |  |                 |  |                   |         |                  |  |         |  |  |       
|-------------- | ------------ |  | ------------- | -- | ----------------- |  | ----------------- |  | ----------------- | --------- | ---------------- |  | --------------- |  | ----------------- | ------- | ---------------- |  | ------- |  |  | ------
|               |              |  |               |    |                   |  | value
      of    |  | fund
      value  |           |                  |  |                 |  |                   |         |                  |  |         |  |  |       
|               |              |  |               |    |                   |  | accrued           |  | of
      accrued  |           | Changes
      in |  | Accrued         |  | Accrued           |         | Changes
      in | 
|               | Age
      at |  | Type
      of |    | benefits
      at |  | benefits
      at |  | transfer          |           | benefits         |  | benefits        |  | accrued           |        
|               | 31
      Dec |  | pension       |    | 31
      Dec      |  | 31
      Dec      |  | value             |           | at
      31 Dec  |  | at
      31 Dec |  | benefits          |        
|               | 2003         |  | scheme1       |    | 20022             |  | 20032             |  | during
      2003 |           | 2002             |  | 2003            |  | during
      2003 |        
|               |              |  |               |    |                   |  |                   |  |                   |           |                  |  |                 |  |                   |         |                  |  |         |  |  |       
|Name           |              |  |               |    |                   |  |                   |  |                   |           |                  |  |                 |  |                   |         |                  |  |         |  |  |       
|Peter Bakker   | 42           |  |               | DB |                   |  | 993,468           |  |                   | 1,339,456 |                  |  | 345,988         |  |                   | 166,658 |                  |  | 216,609 |  |  | 49,951
|Jan Haars      | 52           |  |               | DB |                   |  | 1,749,106         |  |                   | 2,163,517 |                  |  | 414,411         |  |                   | 147,007 |                  |  | 173,530 |  |  | 26,523
|Harry Koorstra | 52           |  |               | DB |                   |  | 1,842,917         |  |                   | 2,631,497 |                  |  | 788,580         |  |                   | 206,795 |                  |  | 287,191 |  |  | 80,396
|Dave Kulik     | 55           |  |               | DB |                   |  | 1,428,639         |  |                   | 1,727,774 |                  |  | 299,135         |  |                   | 154,535 |                  |  | 191,120 |  |  | 36,585
|               |              |  |               |    |                   |  |                   |  |                   |           |                  |  |                 |  |                   |         |                  |  |         |  |  |       

|1 | DB = Defined benefit,
      DC = Defined contribution (money purchase).                                                                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2 | Transfer value
      in respect of individual directors represents a liability in respect of
      the pensions entitlement of the member of the Board of Management, and is
      not an amount paid or payable to the executive.

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. In addition, we contributed12,287 for Mr. Kulik under a defined contribution scheme.




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|Chapter
      9 Code of business principles & corporate social responsibility
|-----------------------------------------------------------------------------



TPG
    Code of Business PrinciplesThe 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 nine
    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


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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 does not permit facilitating payments
    to civil servants. Only in exceptional and unavoidable circumstances and subject
    to prior consultation with TPGs integrity committee, facilitating payments
    can be made to persons other than civil servants. In such cases facilitating
    payments can only be made to ascertain and to expedite routine activities
    not resulting in any specific commercial benefit.TPG companies will do their
    utmost to prevent those payments, also in countries where such payments are
    legally permitted. 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 PolicyThe 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. Our
          initiativesTPG
          is taking a variety of initiatives to support our aspirations and values:Implementing
        a global management system to develop and enhance our activities in sustainable
        development and environmental management.Encouraging
        operating units to achieve international standards including Investors
        in People, ISO 9001:2000, ISO 14000, EMAS and OHSAS 18001.Training
        employees on the social and environmental dimensions of their roles.Encouraging
        our suppliers to introduce programmes that support our own objectives
        and targets because we take responsibility for the effects of our entire
        supply chain in line with the TPG Code of Business Principles.Benchmarking
        our policies, strategies and programmes internally and externally to encourage
        continuous improvement in all areas of our activities.






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Chapter 9 Corporate
  social responsibility & code of business principles

|
|



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. Partnership
    with United Nations World Food ProgrammeThe United
    Nations World Food Programme and our company 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, which in 2003 fed nearly 110 million people in 82 countries, including
    most of the worlds refugees and internally displaced people. As the
    United Nations logistics arm for humanitarian aid, the World Food Programme
    coordinates with other United Nations agencies, governments and non-governmental
    organisations to deliver food on a timely basis where it is most needed.We
    are committed to sharing our resources and know-how with them in order to
    make a lifesaving difference. This partnership
    with the World Food Programme has become a cornerstone of our commitment to
    corporate sustainability on a global scale.The dedication and enthusiasm of
    our employees is enabling us to take on the greatest logistical challenge
    of all: helping to feed the world. Our
          support of the World Food Programme has five work areas:Joint
        logistics supply chain-
        applying our core logistics strengths to increase the efficiency and effectiveness
        of World Food Programmes logistics capacity.Emergency
        response-
        providing organisational expertise, logistical assistance and air operations
        training to support World Food Programmes crisis response capabilities.Private
        sector fund-raising-
        identifying new corporate partners who can offer services or goods appropriate
        to World Food Programmes needs and activities.Transparency
        and accountability-
        assisting World Food Programme in the areas of accounting, auditing, and
        human resource management.School
        feeding support-
        our employees are raising funds and volunteering to support World Food
        Programmes school feeding campaign.




We have
    been acknowleged by United Nations secretary general Kofi Annan who referred
    to the partnership as an excellent example of the way private corporations
    can cooperate with United Nations agencies to do vital, life saving work.




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|Chapter
      10 Cautionary statements regarding forward looking statements / risk factors
|------------------------------------------------------------------------------------------



Cautionary
    statement regarding forward-looking statementsExcept
    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 SEC, 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 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 information for our mail and express
        services,-
      regulatory
        developments and changes, including with respect to the levels of tariffs,
        the scope of mandatory and reserved services, quality standard, liberalisation
        in the Dutch and European postal markets and the outcome of pending regulatory
        proceedings,-
      competition
        in the mail, express and logistics businesses,-
      decisions
        of competition authorities regarding proposed joint ventures or acquisitions,-
      costs
        of complying with governmental regulations,-
      general
        economic conditions, government and regulatory policies and business conditions
        in the markets served by us, including adverse effects of terrorist attacks,
        use of our delivery capabilities by criminals, anthrax incidents, war
        or the outbreak of hostilities or epidemic diseases,




-
      higher
        costs of or the impossibility to get insurance coverage for future claims
        caused by acts of war, terrorism, sabotage, hijacking or other similar
        perils,-
      the
        effect of an economic downturn and other risks and trends in the world
        economy and the timing, speed and magnitude of any economic recovery,-
      our
        ability to achieve cost savings and realise productivity improvements
        and the success of investments, joint ventures and alliances,-
      fluctuations
        in fuel costs,-
      our
        ability to increase our fuel surcharge in response to rising fuel prices
        due to competitive pressures,-
      increased
        price transparency resulting from the adoption of the euro, - changes
        in currency and interest rates,-
      changes
        in our credit rating and their impact on our financing costs 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 in employee costs,-
      costs
        of completing acquisitions or divestitures and integrating newly acquired
        businesses,-
      changes
        to the international conventions regarding the limitation of liability
        for the carriage of goods,-
      significant
        changes in the volumes of shipments transported through our network, the
        mix of services purchased by our customers 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 operations and on demand for
        our services,-
      disruptions
        to our technology infrastructure, including our computer systems and website,-
      our
        ability to maintain aviation rights in important international markets,-
      adverse
        weather conditions,-
      if our
        subcontractors employees were to be considered our employees, and-
      decisions
        of tax and other authorities with respect to our tax liabilities. 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, 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


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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 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. 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 2003 represented
    33.0% of our total operating revenue and 99.9% 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 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,
          in 2006 the restrictions that reserve the provision of certain postal
          services exclusively to us (the reserved postal services) will be reduced.
          On 22 January 2004, the Dutch Minister of Economic Affairs published
          his vision on the postal market in the Netherlands. Among other things,
          this vision includes:a price freeze
        until 1 January 2007 on the mandatory postal services we are required
        to provide by law,a reduction,
        yet to be fully defined, in the scope of the mandatory postal services,




from 2007, a
        price cap system for those reduced mandatory postal services, based on
        an inflation or consumer price index, andfrom 2007, an
        obligation for us to deliver bulk mail letters up to 50 grams will remain
        mandatory for an undefined transitional period, without any rights for
        our company to offset this obligation. If the Dutch
    parliament adopts this vision, it may adversely affect our business, revenues
    and profitability. 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. 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 continue to erode due to the continuing liberalisation of the Dutch
    mail regulatory regime. In Europe, we face heightened competition in our express
    business. Our express 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
    2003, 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




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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 decline in the automotive industry
    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 the automotive companies may have
    a material adverse effect on our logistics business. In addition, a continued
    economic downturn could lead to our customers asking for price reductions
    that could adversely affect our margins.The 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-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 Pte Ltd. 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. As an example, in 2002 we installed x-ray machines in all
    major locations to ensure cargo was safe to transport. In the United States,
    regulations instituted in November 2001 in respect of the carriage of cargo
    from unknown shippersrequire that we carry that cargo only in all-cargo aircraft,
    which may increase our 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 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.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,




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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 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 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 2 April
    2003,




Standard
    & Poors affirmed our A long-term and A-1
    short-term corporate credit ratings, but the long-term rating was placed on
    negative outlook. 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
    34.8% 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
    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 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




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facilities and operations
    could not be transferred 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 centres, 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.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. We
    may not accurately forecast our future infrastructure 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.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 65,000 employees in the Netherlands is subject to a renewal
    in May 2004. 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, 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 in recent years, particularly
    in the logistics division, has resulted in significant challenges and costs
    in the areas of accounting, finance, operations, IT, strategy and human




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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 14  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 successful, our operating expenses
    would rise and our net income would suffer. We
    are exposed to changes in tax laws or their application, which may adversely
    affect our reported results.We operate
    around the globe and and our earnings are subject to taxation in many differing
    jurisdictions and at differing rates.




We seek
    to organise our affairs in a tax efficient manner, taking account of the jurisdictions
    in which we operate. Tax laws that apply to our business may be amended by
    the relevant authorities, for example as a result of changes in fiscal circumstances
    or priorities. Such amendments, or their application to our business, may
    adversely affect our reported results. Our
    ongoing discussions with the UK Inland Revenue could lead to material additional
    expense, which would adversely affect our net income.Our audit
    committee, on behalf of the Supervisory Board, has 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. We are preparing 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 relevant information
    to the UK Inland Revenue. Although we believe we have adequately accrued in
    our financial statements for the potential taxes, interest and penalties in
    relation to these matters, we are in ongoing discussions with the UK Inland
    Revenue on these issues, upon completion of which the actual liability will
    be determined.There can be no assurance that the UK Inland Revenue will not
    assess taxes, penalties or interest on us that would exceed the amounts we
    have accrued in our financial statements. If the actual taxes, penalties or
    interest imposed significantly exceed the amounts that we have accrued, it
    could materially 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.We may from
    time to time restructure, redesign or integrate various aspects of our operations
    in order 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 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. Our restructurings of operations
    and other cost reducing measures may not achieve the results we




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intend and
  may invoke 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 by us
  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 the Independent Supervisory Authority
  for Pensions and Insurance, whether from declines in the overall equity markets
  or because the investments under-perform 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.




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



|Financial
      condition                       |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|----------------------------------------------- | ------------------------------- | - |  | ----- | - |  | --------- | - | ----- | - | --------- | - | ----- | -
|                                                | Year
      ended at 31 December |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|                                                | 2003                            |   |  | 2003  |   |  | %variance |   | 20021 |   | %variance |   | 20011 |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |  
|                                                | US$                             |   |  |      |   |  |           |  |       |   |          |  
|Fixed assets                                    | 6,370                           |   |  | 5,057 |   |  | (9.3      | ) | 5,573 |   | (0.3      | ) | 5,587 |  
|Current assets                                  | 3,601                           |   |  | 2,858 |   |  | 6.1       |   | 2,693 |   | (6.1      | ) | 2,867 |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|Total
      assets                              | 9,971                           |   |  | 7,915 |   |  | (4.2      | ) | 8,266 |   | (2.2      | ) | 8,454 |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|Group Equity                                    | 3,761                           |   |  | 2,986 |   |  | 0.2       |   | 2,979 |   | 14.0      |   | 2,613 |  
|Provisions                                      | 373                             |   |  | 296   |   |  | 0.7       |   | 294   |   | (3.3      | ) | 304   |  
|Pension liabilities                             | 656                             |   |  | 521   |   |  | (29.8     | ) | 742   |   | (14.6     | ) | 869   |  
|Long-term liabilities                           | 2,093                           |   |  | 1,661 |   |  |           |   | 1,661 |   | (7.2      | ) | 1,789 |  
|Current liabilities                             | 3,088                           |   |  | 2,451 |   |  | (5.4      | ) | 2,590 |   | (10.0     | ) | 2,879 |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|Total
      liabilities and group equity        | 9,971                           |   |  | 7,915 |   |  | (4.2      | ) | 8,266 |   | (2.2      | ) | 8,454 |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|Return on Assets2                               | 9.7                             | % |  | 9.7   | % |  |           |   | 12.8  | % |           |   | 12.0  | %
|Return on Average
      Total Capital3          | 9.5                             | % |  | 9.5   | % |  |           |   | 12.7  | % |           |   | 12.7  | %
|Net return on
      Equity4                     | 10.0                            | % |  | 10.0  | % |  |           |   | 20.1  | % |           |   | 22.4  | %
|Gearing at year
      end5                      | 26.4                            | % |  | 26.4  | % |  |           |   | 32.0  | % |           |   | 39.8  | %
|Interest cover
      (times)6                   | 8.3                             |   |  | 8.3   |   |  |           |   | 9.8   |   |           |   | 10.9  |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|Net cash provided
      by operating activities | 1,180                           |   |  | 937   |   |  | (9.2      | ) | 1,032 |   | 33.5      |   | 773   |  
|Net cash used
      in investing activities     | (470                            | ) |  | (373  | ) |  | 28.0      |   | (518  | ) | 25.8      |   | (698  | )
|Net cash used
      by financing activities     | (549                            | ) |  | (436  | ) |  | 27.1      |   | (598  | ) | (578.4    | ) | 125   |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|Changes
      in cash and cash equivalents7     | 161                             |   |  | 128   |   |  | 252.4     |   | (84   | ) | (142.0    | ) | 200   |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  
|Cash conversion
      efficiency8               | 7.9                             | % |  | 7.9   | % |  |           |   | 8.8   | % |           |   | 6.9   | %
|                                                |                                 |   |  |       |   |  |           |   |       |   |           |   |       |  

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



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Chapter 11 Other financial information on the company

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Cash
    flow dataCash and cash equivalents
    totalled470
    million at 31 December 2003, compared to357
    million at 31 December 2002. The following table provides a summary of cash
    flows for the years ended 31 December 2003 and 2002:




|                                                   | Year
      ended at 31 December |  
|-------------------------------------------------- | ------------------------------- | -
|                                                   |                                 |  
|                                                   | 2003                            |  
|                                                   |                                 |  
|                                                   | US$                             |  
|Net
      cash provided by operating activities    | 1,180                           |  
|                                                   |                                 |  
|                                                   |                                 |  
|Net
      cash used in investing activities        |                                 |  
|Net cash used
      for acquisitions and disposals | (84                             | )
|Net cash used
      for capital investments        |                                 |  
|and
      disposals                                | (389                            | )
|Net cash used
      for other investing activities | 3                               |  
|                                                   |                                 |  
|                                                   |                                 |  
|Net
      cash used by financing activities        |                                 |  
|Net cash used
      for dividends and              |                                 |  
|purchase
      of own shares                       | (257                            | )
|Net cash from
      debt financing activities      | (292                            | )
|                                                   |                                 |  
|Changes
      in cash and cash equivalents2        | 161                             |  
|                                                   |                                 |  

|(in
      millions, except percentages)
|---------------------------------------
|1                                      
|2                                      



Net cash provided by operating activities 2003 Net cash provided
    by operating activities was937
    million, which is 9% below last year. 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 is a non-cash item that is 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. The changes in pension liabilities of221 million reflects 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 fall under our collective labour agreement, plus our cash payment of79 million for pensions that fall under transitional plan of our Dutch collective labour agreement and that are directly paid by TPG (see note 10 to our financial statements). In total these payments are131 million higher than last year, in particular due to additional contributions totalling100 million as prescribed in




the new 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 prior year. Most of the increase in 2003 relates to the accounts
    receivable position that moved unfavourable 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 18 million included in current liabilities reflects
    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
    unfavourable with an improvement of 55 million last year. The improvement
    to our accounts receivable and trade payable position last year (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 unfavourable by10 million (74 million in 2002) caused by an increase of prepayments and accrued income.




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2002 Net cash
    provided by operating activities in 2002 totalled
    1,032 million, of which
    599 million was generated
    from net income. Furthermore, utilisation of provisions negatively affected
    cash flow mainly related to other provisions (
    14 million) and pension liabilities
    ( 111
    million). Changes in deferred taxes had a negative
    16 million impact on cash
    flow. A decrease in working capital of
    84 million had a positive
    impact on cash flow. Accounts
    receivable increased the cash flow by 136
    million mainly related to trade accounts receivable ( 94
    million) and other receivables. Other current assets utilised cash of 74
    million caused by an increase of prepayments and accrued income. Current
         liabilities increased the cash flow by 23
          million. The 55
           million increase in trade accounts payable and the 114
            million increase in income taxes, other taxes and social security
           contributions
    payable was partly offset by a 146
     million decrease in other and accrued liabilities. Income tax
    paid in the year amounted to
    276 million (2001:
    303 million) and interest
    paid amounted to
    117 million (2001:
    108 million). Net
    cash used for acquisitions and disposals2003
    In 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) with the largest
    being Blitzpunkt GmbH ( 7
    million), Olaf Jepsen GmbH ( 9
    million for remaining 49%) and DocVision B .V. ( 9
    million). Logistics acquired for an amount of  21
    million, mainly related to deferred considerations for Schrader, Barlatier
    and Mendy Developpement SAS ( 14
    million). Express acquired for an amount of  4
    million, related to the acquisition of Archive and Data Storage Ltd. The acquisition
    of affiliated companies ( 16
    million) reflects among others capital contributions in 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.. 2002
In 2002, we acquired
    several companies and affiliated companies for a total cost of 139
    million. In addition to several smaller acquisitions, our largest acquisitions
    effectively made in 2002 included Cerilly ( 9
    million), Bleckmann Group ( 12
    million), Transports Nicolas ( 38
    million), and TNT DFDS Transport Logistics (50%: 25
    million). In 2002, we
    disposed of a few small subsidiaries and interests in affiliated companies
    with a total net book value of 14
    million.


Net
  cash used for capital expenditures

| | Capital
      expenditures          | Year
      ended at 31 December | 
| | ----------------------------------- | ------------------------------- | 
| |                                     |                                 | 
| |                                     | 2003                            | 
| |                                     |                                 | 
| |                                     | US$                             | 
| | Investments                         |                                 | 
| | Property, plant
      and equipment | 362                             | 
| | Other intangible
      assets       | 85                              | 
| |                                     |                                 | 
| | Subtotal                            | 447                             | 
| |                                     |                                 | 
| | Disposals                           |                                 | 
| | Property, plant
      and equipment | 50                              | 
| | Other intangible
      assets       | 8                               | 
| |                                     |                                 | 
| | Subtotal                            | 58                              | 
| |                                     |                                 | 
| | Total                               | 389                             | 
| |                                     |                                 | 

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



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Chapter 11 Other financial information on the company

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Our capital expenditure on property, plant and equipment and other intangible assets by division for the three years 2000-2003 was as follows:


|              | Year
      ended at 31 December | 
|------------- | ------------------------------- | 
|              |                                 | 
|              | 2003                            | 
|              |                                 | 
|              | US$                             | 
|Mail          | 135                             | 
|Express       | 202                             | 
|Logistics     | 105                             | 
|Non-allocated | 5                               | 
|              |                                 | 
|Total         | 447                             | 
|              |                                 | 

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



In 2003, capital
    expenditures  on property, plant and equipment amounted to 287
     million. Of this amount,€ 82
      million related to mail,€ 124
       million to express,€ 77
        million to logistics and€ 4
         million to corporate. The capital expenditures on intangible assets
        of€ 67
         million mainly relate to software (€ 46
          million) with the remainder (€ 21
           million) being prepayments on intangible assets for the roll out of
          our e-back
  offices programmes in express and logistics and our sorting software in mail. In mail, capital expenditures
  mainly related to the construction and refurbishment of distribution sites,
  enlarged buildings and equipment for the sorting centres and new buildings with
  standardised construction. In express, capital expenditures included investments
  in depots, hubs and warehouses, fleet expansions 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. In 2003, non-cash
  investing activities totalled 26
  million (2002:€ 18
  million); this amount relates to additional finance leases. Mail2003 Capital 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 results 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. 2002
	 Capital expenditure
  by our mail division totalled 130
  million in 2002, a 5.1% decrease compared to 2001, due primarily to the completion
  of the reorganised sorting hub and distribution site structure in the Netherlands
  in 2001. Some of the larger capital expenditures in 2002 related to software
  (€ 21 million) the
  construction and refurbishment of distribution sites (€ 20
  million), enlarged buildings and equipment for sorting centres (€ 6
  million), and new buildings with standardised construction (€ 4
  million).The remaining€ 79
  million of capital expenditures are individually less than€ 1
  million and included building refurbishments, replacement of IT equipment and
  various maintenance-related capital expenditures. Express2003 Capital expenditure
    on property, plant and equipment and other intangible assets by our express
    division totalled
    160 million in 2003 which
    is 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 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. 2002
    Capital expenditure
    on property, plant and equipment and other intangible assets by our express
    division totalled
    178 million in




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2002,
    a 3.8% decrease compared to 2001 due primarily to the delay of capital expenditures
    due to uncertain economic conditions. Some of the larger capital expenditures
    in 2002 related to depots, hubs and warehouses (€ 60
    million), fleet expansions and replacements (€ 11
    million), information technology, communication and operational equipment
    including automated sorting systems (€ 31
    million). Other capital expenditure amounted to€ 36
    million largely made up of various investments that were individually less
    than€ 1 million.
    Of the total€ 138
    million capital expenditure on property, plant and equipment,€
    119 million (86%) was spent
    in Europe. During 2002, capital
  expenditures on other intangible assets totalled 40
  million and related primarily to the development of financial systems (e-back
  office) software and further enhancements to our international shared systems. Logistics
    2003 Capital 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. 2002 Capital expenditure
    on property, plant and equipment and other intangible assets by our logistics
    division totalled
    164 million in 2002, a 4.5%
    decrease compared to 2001 due primarily to delays in the implementation of
    new business contracts. The majority of these 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,€ 19 million
    was invested in warehouses and equipment. In continental Europe,€
    59 million was invested in
    warehouses and shared-user facilities.€ 2
    million was invested in warehouses andequipment
    for new and existing contracts in South America. In Australia
    4 million was invested in
    warehouses and equipment for new contracts and€ 24
    million was invested in Asia




predominantly
    as a result of the commencement of the joint venture with SAIC in China. In
    North America,€ 39
    million was invested in warehouses and information technology equipment for
    new contracts. Our container logistics business invested€ 4
    million for new rental fleet containers and equipment. During 2002, capital
  expenditures on other intangible assets included 6
  million in software and€ 7
  million in long-term prepayments. Net
    cash used for dividends2003 A 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 is estimated to result in an aggregate€ 142
  million payment to be made in April 2004. 2002
The final 114
  million cash dividend for 2001 and the€ 71
  million interim cash dividend for 2002 were paid in 2002. The proposed 2002
    final dividend of 0.25
    per share resulted in a€ 119
    million payment made in April 2003. Net
    cash from debt financing activities2003 New 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 (2002:€ 18
  million), this amount relates to additional finance leases. 2002 Net
    changes in long-term liabilities resulted in a cash outflow ofb4 million.
    A total of€ 67
    million in repayments of long-term liabilities related to finance leases (€
    16 million), other
    loans(19 million)
    and non-interest-bearing liabilities (32 million). The63 million
    of long-term liabilities obtained during the year




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Chapter 11 Other
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included additional
    finance leases (18 million), other loans (26 million) and non-interest bearing liabilities (19 million). In 2002, changes in short-term financing resulted in a cash outflow of410 million. Short-term financing decreased due to the repayment of an Australian dollar 220 million(127 million) facility in April 2002, British pounds 72 million(118 million) in loan notes associated with the 2000 acquisitions of Taylor Barnard and CD Marketing, an Italian loan(68 million),26 million in respect of a bilateral facility signed in 2001 and various other small loans. Liquidity and capital resourcesThe groups
capital resources include internally generated funds and capital raised in the
financial
markets. As regards the former, the group generates strong cashflows from operating
activities(937
million in 2003,1,032
million in 2002 and773
million in 2001). 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 cashflow effects will be. Although
    cash requirements for capital expenditure do fluctuate from year to year,
    depending on the extent of strategic capital projects, they are well covered
    by operating cashflows. Specifically, the ratio of operating cashflows to
    net capital expenditure was 3.0 times in 2003, 2.5 times in 2002 and 2.0 times
    in 2001. This ratio is calculated as follows: net cash provided by operating
    activities divided by the sum of capital expenditure on intangible assets,
    disposals of 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 cashflows 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 have600 million
    of undrawn committed credit lines to provide for unforeseen cash requirements.
    In order to mitigate against refinancing risk, the groups major borrowings
    and undrawn credit facilities are long-term. In particular, our1 billion Eurobond
    and600 million
    back-up facilities mature in 2008. These amounts are in addition to uncommitted
    facilities. We do not have
    any material undisclosed off-balance sheet arrangements.




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 15 to our 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 15 to our financial statements. Cash and net debtAt 31 December 2003, our net debt position was1,073 million (2002:1,404 million).This consisted of69 million of short-term debt (2002:238 million) and1,474 million (2002:1,523 million) of long-term debt, offset by470 million of cash and cash equivalents (2002:357 million). At 31 December 2003, short-term debt consisted of14 million of bank loans bearing variable interest rates that ranged from 2.4% to 3.2%,13 million representing the current portion of a bilateral loan agreement with a fixed interest rate of 5.85%,20 million of current portion of long-term finance leases and22 million of numerous other liabilities at fixed and variable rates. At 31 December 2003, long-term debt consisted of a1 billion Eurobond with a coupon of 5.125% issued in December 2001, a187 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,129 million in respect of the non-current portion of a bilateral facility signed in December 2001,100 million of finance lease obligations and58 million of other long-term liabilities. At 31 December 2003, our total cash position amounted to470 million, an increase of113 million compared to year-end 2002. Included in the470 million of total cash was167 million of restricted cash (2002:121 million) held mainly by consolidated joint venture entities.The cash held in these 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 facilitiesTo
    manage the fixed-to-variable ratio of our debt portfolio, we entered into
    the following transactions. On 7 January 2003, we entered into a USD 100 million
    interest rate swap (fair value at 31 December 2003:1 million)
    with a bank, whereby we receive a fixed interest rate and pay a variable interest
    rate until5
    December 2008. On 23 January 2003, we




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entered
    into a USD 100 million interest rate swap (fair value at 31 December 2003:
    nil million) with a bank, whereby we receive a fixed interest rate and pay
    a variable interest rate until 5 December 2008. At 31 December 2003,
    committed facilities with domestic and international banks amounted to787 million,
    of which600 million
    remained undrawn.The undrawn committed facilities consisted of a600 million
    revolving, syndicated facility signed on 15 October 2003, which supports our
    Euro Commercial Paper programme. In addition, at 31 December 2003, we had417 million
    of uncommitted facilities, of which351 million
    remained undrawn.




Our
    long-term credit ratings is A (negative outlook) by Standard & Poors
    and A1 (stable outlook) by Moodys. Cash
    obligationsAt 31 December
    2003, our gross interest-bearing borrowings, including capital lease obligations,
    totalled1,543 million
    (2002:1,760 million),
    of which 82% (2002: 78%) was at fixed rates of interest and1,474 million
    (2002:1,523 million)
    represented long-term debt.We had operating lease commitments of1,679 million
    (2002:1,653 million)
    and guarantees outstanding to third parties totalling263 million
    (2002:219 million). The following tables show the maturity of these amounts:




|                                               | Amounts
      of payment due by period          
|---------------------------------------------- | ------------------------------------------------
|                                               |                                                 
|                                               | Total                                           
|                                               | obligations                                     
|Total gross borrowings,
      excluding leases | 1,438                                           
|Financial leases                               | 105                                             
|Rent and operating
      lease commitments     | 1,679                                           
|                                               |                                                 
|Total
      contractual cash obligations       | 3,222                                           
|                                               |                                                 
|(in€millions)                                  |                                                 
|                                               |                                                 
|                                               |                                                 
|                                               |                                                 
|                                               |                                                 
|Guarantees                                     | Amount
      of commitment expiration per period
|                                               |                                                 
|                                               | Total                                           
|                                               | commitments                                     
|Guarantees                                     | 263                                             
|                                               |                                                 
|(in€millions)                                  |                                                 



Total financial guarantees at 31 December 2003 were263 million (2002:216 million) of which90 million (2002:90 million) related to guarantees issued to banks and other institutions and94 million (2002:54 million) related to corporate guarantees.These guarantees were issued in connection with our obligations under lease contracts, customs duty deferment and local credit lines. A further62 million that relates to a guarantee to fund potential additional costs in 2010 that may arise related to a former obligation for wage guarantees that was transferred to an insurance company as per 1 January 2001. In an arrangement with an insurance company, the company is obliged to pay for any annually determined shortfalls in the insurance underwriting reserve as a result of the annual calculation of the remaining wage guarantees. No amounts were payable in either 2003 or 2002 in respect of this arrangement.The likelihood of liabilities arising from these guarantees is considered remote and accordingly they have not been recognised in the balance sheet at 31 December 2003.The remaining17 million of financial guarantees in 2003 related to bank guarantees issued locally by group companies.




ContingenciesOur total operating lease commitments at the end of the year were1,679 million, of which real estate accounted for1,436 million, transport equipment for199 million and computer equipment for44 million. The total
    commitments as at 31 December 2003 relating to capital expenditure were58 million. At 31 December 2003 we had unconditional purchase commitments of100 million, which are primarily related to various service and maintenance contracts. On 30 June
    2003 TNT Logistics Holdings Italy Srl. (TNT), a group company of TPG, and
    Ecotrans Srl. acquired a company named TNT-Arvil in which TNT holds a share
    of 51% and Ecotrans 49%.The terms and conditions of the shareholders agreement
    provide TNT with the option to call on the shares of Ecotrans and for Ecotrans
    to put its shares to TNT.




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Chapter 11 Other
  financial information on the company

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For a further
    description of these contingencies see note 15 to our financial statements. Capital
    expenditures projection for 2004The total projected
    2004 capital expenditures on property, plant and equipment and other intangible
    assets for our divisions is estimated to be480 million,
    which we expect will be spent on similar types of property, plant and equipment
    and other intangible assets as in 2003.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 or fully 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 such undertakings, or
    such undertakings source supplies from us. During 2003, sales made by our
    group companies to our joint ventures amounted to136 million,
    compared to135 million
    in 2002. Purchases from our joint ventures for 2003 amounted to24 million,
    compared to22 million
    in 2002.The net amounts due from joint venture entities as at 31 December
    2003 totalled35 million,
    compared to18 million
    in 2002. Loans receivable from affiliated
companies are disclosed in notes 3 and 5 to our financial statements. As of 31
December 2003, 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 normal course of business and under normal arms length
commercial terms and conditions. For further
    discussion of the related party transactions and balances see note 28 to our
    financial statements. For information on our relationship with the State of
    the Netherlands please see chapter 14  Additional information
    and note 27 to our financial statements. Critical accounting policies and estimatesOur reported financial
    condition and results of operations are sensitive to accounting policies,
    assumptions and estimates that underlie 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.
    Management has discussed the development and selection of these critical accounting
    policies and estimates with our Board of Directors and with our independent
    auditors. In addition, our financial statements contain a summary of our significant
    accounting policies. 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. 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 in
our statements 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32 million to the following:




|                                         | Revised
      expected useful life
|---------------------------------------- | ----------------------------------
|                                         |                                   
|                                         | 5
      years                     
|Revised annual
      amortisation charge | 210                               
|                                         |                                   
|(in€millions)                            |                                   



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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 depreciated 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. An increase of 1% in the discount rate would have caused the impairment loss we recorded under Dutch GAAP to a higher loss of approximately47 million. A decrease
    of 1% in the discount rate would have caused the impairment loss we recorded
    under Dutch GAAP in the third quarter of 2003, to a lower loss of27
    million.Additionally,
    under US GAAP, we are required to make estimates regarding the fair values
    of assets and liabilities, including




unrecorded intangible assets, as part of the hypothetical purchase price allocation in the goodwill impairment test.We use valuation techniques to determine some of the fair values, which involve the same judgements mentioned above regarding cash flows and discount rates. 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 pensionsWe 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. Senior management of TPG participates in a separate pension fund
    in the Netherlands. 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 as per 1 January 2001.




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Chapter 11 Other financial
  information on the company

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The plan
    covers some 97,000 participants including approximately 12,000 pensioners
    and some 24,000 former employees. By law the
    plan is managed by an independent board that falls under the supervision of
    the Independent Supervisory Authority for Pensions and Insurance. 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 salary. 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 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 lastqualifying
    salary from age 62 to 65. Employees who are 42 years or older at December
    31, 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 new minimum funding requirements of the Independent
    Supervisory Authority for Pensions and Insurance.The total contribution to
    the main pension fund amounted to169
    million in 2003 (55
    in 2002) and
    is estimated to be163
    million in
    2004.The benefits arising from the transitional plan are directly paid by
    TPG.These payments amounted to79
    million in 2003 (67
    million in 2002) and are estimated at84
    million for 2004. The pension fund runs an actively
managed investment portfolio. The pension funds uses Asset and Liability Management
(ALM) studies that generate future scenarios to determine its optimal asset
mix. During 2003, the dynamic weight of equity investments increased to 43.6%,
the dynamic weight of fixed interest investments decreased to 46.9%, the weight
of real estate investments (including international) went up to 9.4% and the
cash and cash equivalents position ended at 0.1%. The table below shows the strategic asset mix applicable in 2003 and our actual asset mix of the main pension fund.




|               | Actual
      asset mix at31
      December 2003 |  | Strategic
      asset mix
|-------------- | ----------------------------------------------- |  | -------------------------
|               |                                                
|               |                                                 |  |                          
|Equities       | 43.6%                                           |  | 41.0%                    
|Fixed interest | 46.9%                                           |  | 50.0%                    
|Real estate    | 9.4%                                            |  | 9.0%                     
|Cash           | 0.1%                                            |  |                          
|               |                                                 |  |                          
|Total          | 100.0%                                          |  | 100.0%                   
|               |                                                 |  |                          



The assets of our major plan cover approximately 94% of our total pension assets and the liabilities described in the section above cover approximately 94% 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 2003, our
    net periodic pension cost was43 million (6 million in 2002). Our net periodic pension cost is expected to decrease
    to approximately20 million in
    2004, primarily as a result of26 million lower transition cost. Total cash
    contributions in 2003 amounted to264 million (133 million in 2002)
    and are expected to amount approximate270 million in 2004.The
    total liability at year-end 2004 is estimated to end at271 million.




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The table below shows the sensitivity of the net periodic pension cost to deviations in assumptions. Changes in
  assumptions




|                                     | %-change
      in assumptions |  | change
      in net periodic costs
|------------------------------------ | ----------------------------- |  | ----------------------------------
|                                     |                               |  |                                   
|Net
      periodic pension costs     |                               |  | (43)                              
|Discount rate                        | +0.5%                         |  | 14                                
|Expected return
      on plan assets | +0.5%                         |  | 15                                
|Rate of compensation
      increase  | +0.5%                         |  | (19)                              
|Rate benefit increase                | +0.5%                         |  | (45)                              
|                                     |                               |  |                                   
|                                     |                               |  |                                   
|Net
      periodic pension costs     |                               |  | (43)                              
|Discount rate                        | (0.5)%                        |  | (63)                              
|Expected return
      on plan assets | (0.5)%                        |  | (13)                              
|Rate of compensation
      decrease  | (0.5)%                        |  | 10                                
|Rate benefit decrease                | (0.5)%                        |  | 19                                
|                                     |                               |  |                                   

(inmillions,
  except percentages)



For further discussion see note 10 to our 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 assets 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138
    million,145
    million, and159 million at the end of 2003, 2002 and 2001, respectively. For further discussion
    on income taxes see note 22 of our financial statements. As a multinational group, we are exposed to varying degrees of uncertainty related to tax initiatives and regulatory reviews and audits.




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
    2003 and 2002, restructuring provisions were42 million and30 million, respectively. For a further discussion see note 9 to our financial statements.




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Chapter 11 Other
  financial information on the company

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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 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 reconciliation of our Dutch GAAP net income and shareholders equity
  to those under US GAAP, as presented in note 30 to our financial statements. Net income
    determined in accordance with US GAAP was332 million in 2003 (2002:717 million and 2001:484 million),
    which was32 million higher than net income determined in accordance




with
    Dutch GAAP (2002:118
    million higher and 2001:101
    million lower). The 10.6% higher US GAAP net income was primarily due to the
    effect of no longer amortising goodwill, which became effective for our company
    as from 1 January 2002, with the exception of goodwill acquired after 30 June
    2001, which was immediately subject to non-amortisation. Our shareholders
    equity determined in accordance with US GAAP was3,146
    million at 31 December 2003 (3,110
    million at 31 December 2002), which was177
    million higher (149
    million higher at 31 December 2002) than shareholders equity determined
    in accordance with 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:




Operating income

|                                  | Year
    ended at 31 December |  
|--------------------------------- | ----------------------------- | -
|                                  |                               |  
|                                  | Dutch GAAP                    |  
|                                  |                               |  
|                                  | 2003                          |  
|                                  |                               |  
|US$                               |                               | 
|Mail                              | 965                           |  
|Express                           | 281                           |  
|Logistics                         | (256                          | )
|Non-allocated                     | (24                           | )
|                                  |                               |  
|Total                             | 966                           |  
|                                  |                               |  
|(in millions, except percentages) |                               |  
|                                  |                               |  

The difference in 2003 between Dutch GAAP and US GAAP operating income on a divisional basis is 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. The following table indicates our 2002 operating income determined in accordance with Dutch GAAP, compared to that determined in accordance with US GAAP:




Operating
  income

|              | Year
    ended at 31 December | 
|------------- | ----------------------------- | 
|              |                               | 
|              | Dutch GAAP                    | 
|              |                               | 
|              | 2002                          | 
|              |                               | 
|              |                               | 
|Mail          | 774                           | 
|Express1      | 192                           | 
|Logistics1    | 87                            | 
|Non-allocated | 5                             | 
|              |                               | 
|Total         | 1,058                         | 
|              |                               | 

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




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The difference
    in 2002 between Dutch GAAP and US GAAP operating income on a divisional basis
    is 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.


The following table
    indicates our 2001 operating income determined in accordance with Dutch GAAP,
    compared to that determined in accordance with US GAAP:






Operating
  income

|              | Year ended at 31 December | 
|------------- | ------------------------- | 
|              |                           | 
|              | Dutch GAAP                | 
|              |                           | 
|              | 2001                      | 
|              |                           | 
|              |                           | 
|Mail          | 762                       | 
|Express1      | 105                       | 
|Logistics1    | 122                       | 
|Non-allocated | 28                        | 
|              |                           | 
|Total         | 1,017                     | 
|              |                           | 

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

The difference
  in 2001 between Dutch GAAP and US GAAP operating income on a divisional basis
  is primarily the result of timing differences related to settling future wage
  guarantees. Recent Dutch GAAP accounting pronouncementsThe major
    change in the Dutch guidelines for Annual Reporting, that will be effective
    as of 1 January 2005, relates to the change in accounting for pensions.The
    effect for the company of the implementation of IAS 19 as the basis for accounting
    for pensions will be limited since the company already accounts for pensions
    under the FAS 87 methodology, which is comparable to IAS 19. The other changes in Dutch guidelines
for Annual Reporting mainly relate to aligning Dutch GAAP to IFRS. From a presentation
of financial information point of view, the statement of comprehensive income
that includes direct equity movements and opening balance sheet adjustments,
will be required for the financial year starting 1 January
2004.The company already prepares such a statement as part of the US GAAP reconciliation
to Dutch GAAP. Recent US GAAP accounting pronouncementsIn January
    2003, the FASB,Financial Accounting Standards Board, issued 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 is effective
    immediately for all new variable interest entities created or acquired after
    31 January




2003.
    For variable interest entities created or acquired prior to 1 February 2003,
    the provisions of FIN 46 are effective for our company beginning after 1 January
    2004.We believe that the adoption
    of this standard
    will not have a material impact on our financial statements. In November
    2002, the Emerging Issues Task Force (EITF) reached a consensus
    on Issue No. 00-21 (EITF 00-21),Revenue
    Arrangements with Multiple Deliverables.
    EITF 00-21 addresses certain aspects of the accounting by a vendor for arrangements
    under which the vendor will perform multiple revenue generating activities.
    EITF 00-21 will be effective for our company beginning after 1 January 2004.We
    are currently evaluating the impact of adoption of EITF 00-21 on our financial
    position and results of operations. In August 2003, the FASB issued
SFAS 150.This standard requires certain financial instruments which, under previous
guidance could be accounted for as equity, be classified as liabilities.Three
types of free-standing financial instruments are affected: mandatorily redeemable
financial instruments, obligations to repurchase the issuers equity shares by transferring assets, and certain obligations to issue a specified number of shares. Additional disclosures are also required about alternative ways of setting instruments and the capital structure of entities  all
of whose shares are mandatorily redeemable. SFAS 150 is effective for all financial
instruments entered into or modified after 31 May 2003, and otherwise is effective
the first interim period beginning after 15 June 2003. However, the guidance
applying to mandatorily redeemable non-controlling interests has been deferred.




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Chapter 11 Other financial information on the company

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Quantitative
      and qualitative disclosures about market risk We 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 risk We 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, denominated in the local currency of each of our companies, are hedged. The main currencies of our operational exposures and related hedges are the British pound and the United States dollar.


Significant
    acquisitions are usually funded in the currency of the underlying assets. On 5 December
    2001, we entered into a cross-currency interest rate swap that provides a
    USD 435 million short position to hedge the groups US dollar assets.The
    market value of this instrument at31 December
    2003, was138
    million. Apart from
    currency contracts described in this section and the next section, no other
    foreign exchange related instruments were outstanding as of 31 December 2003. As of 31
    December 2003 and 2002, the net fair values of our foreign currency hedging
    instruments were approximately141 million and56 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87 million and157 million for 2003
    and 2002, respectively. At 31 December 2003, 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367 million for the
    year ending 31 December 2003.The comparable amount in the prior year was372 million. This
    calculation assumes that each exchange rate would change in the same direction
    relative to the euro. Interest
    rate risk We 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. At 31 December
    2003, we had two outstanding interest rate related derivative instruments
    apart from the cross-currency interest rate swap described above. On 7 January
    2003, we entered into a USD 100 million interest rate swap with a bank (fair
    value at 31 December 2003:1 million), whereby we receive a fixed interest rate and pay a variable interest
    rate until 5 December 2008. On 23 January 2003, we entered into a USD 100
    million interest rate swap with a bank (fair value at 31 December 2003: nil
    million), whereby we receive a fixed interest rate and pay a variable interest
    rate until 5 December 2008.The majority of our outstanding debt at 31 December
    had a maturity of more than one year and paid interest at predominantly fixed
    rates. 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  20 million and  24 million for 2003 and 2002, respectively.


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This analysis
    assumes a parallel shift in each currencys yield curve of interest rates. See notes
    11, 12 and 13 to our financial statements for more information about our outstanding
    debt. Commodity
    risk We lease or 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. We may use a combination of options, swaps and futures contracts to provide some protection from rising fuel and energy prices. At 31 December 2003, we had no outstanding fuel contracts but may enter into such contracts in the future. During the year ended 31 December 2003, contracts expired to purchase 7,500 metric tonnes of jet fuel at an average price of USD 330 per metric tonne. Credit
    risk Credit 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
    one counterparty.We continually monitor the credit standing of operational
    and financial counterparties and re-assess such exposures. Transition
    to International Financial Reporting Standards (IFRS)We will prepare
    our audited financial statements for the year ending 2005 in compliance with
    IFRS. The financial statements for 2004 will be the last annual financial
    statements to be prepared according to Dutch GAAP. The financial statements
    for the year ending 31 December 2005 will include comparative amounts that
    have been restated to comply with IFRS standards that will be in force at
    the year end. In 2003 we have begun
    to identify key differences in policies and have started to review our reporting
    routines and internal control processes in order to be able to compile the
    data required for IFRS-based reporting. These actions will continue during
    2004. During 2004 we will also compile the information that will be used for
    reporting the comparative amounts in the interim reports and in the financial
    statements for 2005. IFRS standards permit in certain circumstances a choice
    of accounting policies and IFRS 1 grants certain reliefs. We have not been
    able yet to determine our final position on these issues and not all of the
    standards that will


require to be applied
    at 31 December 2005 are issued by the IFRS Board or endorsed by the European
    Commission for use in Europe.Thus the final
    effect on accounting policies and disclosures cannot be determined at this
    time.




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

Report
    of the Independent Auditors to the Supervisory Board and the 
    General Meeting of Shareholders of TPG N.V. We have audited
    the accompanying consolidated balance sheets of TPG N.V. and its subsidiaries
    as of 31 December 2003 and 2002 and the related consolidated statements of
    income, cash flows and changes in shareholders' equity for each of the three
    years in the period ended 31 December 2003, as set out on pages 86-142. 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. The consolidated financial statements have
    been prepared in accordance with accounting principles generally accepted
    in the Netherlands. We conducted our
    audits in accordance with auditing standards generally accepted in the United
    States of America. 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
    as at 31 December 2003 and 2002, and the results of their operations and their
    cash flows for each of the three years in the period ended 31 December 2003
    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 30 to the consolidated financial statements.  Amsterdam, 18 March
    2004
    PricewaterhouseCoopers Accountants N.V.


| | 2003
    annual report | 85
| | ---------------------- | --

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Chapter
  12 Financial statements and other information

|
|

Consolidated
  balance sheetsBefore proposed
  appropriation of net income

|  | At
      31 December                             |         
|- | ------------------------------------------------ | --------
|  |                                                  |         
|  | 2003                                             |         
|  |                                                  | variance
|  |                                                  |         
|  | Assets                                           |         
|  | Fixed
      assets                               |         
|1 | Intangible
      assets                          |         
|  | Goodwill                                         | 2,309   
|  | Other
      intangible assets                    | 112     
|  |                                                  |         
|  | Total
      intangible assets                    |         
|  |                                                  |         
|2 | Property,
      plant and equipment              |         
|  | Land and
      buildings                         | 981     
|  | Plant
      and equipment                        | 469     
|  | Other
      property, plant and equipment        | 485     
|  | Construction
      in progress                   | 74      
|  |                                                  |         
|  | Total
      property, plant and equipment        |         
|  |                                                  |         
|3 | Financial
      fixed assets                     |         
|  | Investments
      in affiliated companies        | 79      
|  | Loans
      receivable from affiliated companies | 2       
|  | Other
      loans receivable                     | 158     
|  | Prepayments
      and accrued income             | 388     
|  |                                                  |         
|  | Total
      financial fixed assets               |         
|  |                                                  |         
|  | Total
      fixed assets                         |         
|  |                                                  |         
|  | Current
      assets                             |         
|4 | Inventory                                        | 49      
|5 | Accounts receivable                              | 1,977   
|6 | Prepayments and
      accrued income             | 362     
|7 | Cash and cash
      equivalents                  | 470     
|  |                                                  |         
|  | Total
      current assets                       |         
|  |                                                  |         
|  |                                                  |         
|  | Total
      assets                               |         
|  |                                                  |         
|  |                                                  |         

| | (inmillions,
    except percentages)
| | -------------------------------------
| |                                      
| |                                      



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        annual report | 
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|
|



|   |  |                                          | At
      31 December |         
|-- |  | ---------------------------------------- | -------------------- | --------
|   |  |                                          |                      |         
|   |  |                                          | 2003                 |         
|   |  |                                          |                      | variance
|   |  | Liabilities
      and group equity       |                      |         
|8  |  | Group
      equity                       |                      |         
|   |  | Shareholders
      equity               | 2,969                |         
|   |  | Minority
      interest                  | 17                   |         
|   |  |                                          |                      |         
|   |  | Total
      group equity                 |                      |         
|   |  |                                          |                      |         
|   |  |                                          |                      |         
|   |  | Provisions                               |                      |         
|22 |  | Deferred tax liabilities                 | 143                  |         
|9  |  | Retirement
      schemes                 | 23                   |         
|9  |  | Restructuring                            | 42                   |         
|9  |  | Other                                    | 88                   |         
|   |  |                                          |                      |         
|   |  | Total
      provisions                   |                      |         
|   |  |                                          |                      |         
|   |  |                                          |                      |         
|10 |  | Pension
      liabilities                | 521                  |         
|   |  |                                          |                      |         
|   |  | Long-term
      liabilities              |                      |         
|11 |  | Long-term debt                           | 1,474                |         
|11 |  | Accrued liabilities                      | 187                  |         
|   |  |                                          |                      |         
|   |  | Total
      long-term liabilities        |                      |         
|   |  |                                          |                      |         
|   |  |                                          |                      |         
|   |  | Current
      liabilities                |                      |         
|   |  | Trade
      accounts payable             | 687                  |         
|12 |  | State loans                              |                      |         
|13 |  | Other current
      liabilities          | 540                  |         
|14 |  | Accrued current
      liabilities        | 1,224                |         
|   |  |                                          |                      |         
|   |  | Total
      current liabilities          |                      |         
|   |  |                                          |                      |         
|   |  |                                          |                      |         
|   |  |                                          |                      |         
|   |  |                                          |                      |         
|   |  |                                          |                      |         
|   |  | Total
      liabilities and group equity |                      |         
|   |  |                                          |                      |         
|   |  |                                          |                      |         

| | (inmillions,
    except percentages)
| | -------------------------------------
| |                                      
| |                                      
| |                                      
| |                                      



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    annual report | 87
| | ---------------------- | --

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Chapter 12 Financial
statements and other information

|
|

Consolidated
  statements of income

|   |                                                                 | 2003   |   | %variance |   | 2002 |       | %variance |        | 2001 |        
|-- | --------------------------------------------------------------- | ------ | - | --------- | - | ---- | ----- | --------- | ------ | ---- | -------
|16 | Net sales                                                       | 11,785 |   |           |   |      |       |           | 11,662 |      |        
|17 | Other operating
      revenues                                  | 81     |   |           |   |      |       |           | 120    |      |        
|   |                                                                 |        |   |           |   |      |       |           |        |      |        
|   | Total
      operating revenues                                  |        |   | 11,866    |   |      | 0.7   |           |        |      | 11,782 
|   |                                                                 |        |   |           |   |      |       |           |        |      |        
|   | Cost of
      materials                                         | (546   | ) |           |   |      |       |           | (554   | )    |        
|   | Work contracted
      out and other external expenses           | (4,920 | ) |           |   |      |       |           | (4,810 | )    |        
|18 | Salaries and social
      security contributions                | (4,163 | ) |           |   |      |       |           | (4,027 | )    |        
|19 | Depreciation,
      amortisation and impairments                | (711   | ) |           |   |      |       |           | (490   | )    |        
|20 | Other
      operating expenses                                  | (759   | ) |           |   |      |       |           | (843   | )    |        
|   |                                                                 |        |   |           |   |      |       |           |        |      |        
|   | Total
      operating expenses                                  |        |   | (11,099   | ) |      | (3.5  | )         |        |      | (10,724
|   | Operating
      income                                          |        |   | 767       |   |      | (27.5 | )         |        |      | 1,058  
|   |                                                                 |        |   |           |   |      |       |           |        |      |        
|21 | Interest and similar
      income                               | 18     |   |           |   |      |       |           | 20     |      |        
|21 | Interest and similar
      expenses                             | (110   | ) |           |   |      |       |           | (128   | )    |        
|   |                                                                 |        |   |           |   |      |       |           |        |      |        
|   | Net financial
      (expense)/income                            |        |   | (92       | ) |      | (14.8 | )         |        |      | (108   
|   | Income
      before income taxes                                |        |   | 675       |   |      | (28.9 | )         |        |      | 950    
|   |                                                                 |        |   |           |   |      |       |           |        |      |        
|22 | Income taxes                                                    |        |   | (368      | ) |      |       |           |        |      | (341   
|   | Results
      from investments in affiliated companies          |        |   | (6        | ) |      |       |           |        |      | (5     
|   |                                                                 |        |   |           |   |      |       |           |        |      |        
|   | Net
      income before minority interests                      |        |   | 301       |   |      | (50.2 | )         |        |      | 604    
|   |                                                                 |        |   |           |   |      |       |           |        |      |        
|   | Minority
      interests                                        |        |   | (1        | ) |      |       |           |        |      | (5     
|   |                                                                 |        |   |           |   |      |       |           |        |      |        
|   | Net
      income                                                |        |   | 300       |   |      | (44.9 | )         |        |      | 599    
|   |                                                                 |        |   |           |   |      |       |           |        |      |        
|18 | Net income per
      ordinary share (incents)
      1          |        |   | 63.1      |   |      |       |           |        |      | 126.1  
|18 | Net income per
      diluted ordinary share (in cents)
      2 |        |   | 63.1      |   |      |       |           |        |      | 126.1  
|   |                                                                 |        |   |           |   |      |       |           |        |      |        

| | (in
      millions,
      except percentages)
| | ----------------------------------------------
| | 1                                             
| | 2                                             
| |                                               
| |                                               
| |                                               



|88 | 2003
      annual report | 
|-- | ------------------------ | 

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|
|

Consolidated
  cash flow statementsBefore
  proposed appropriation of net income

|   |                                                                | 2003 |   | %variance |   | 2002 |       | %variance |      | 2001 |      
|-- | -------------------------------------------------------------- | ---- | - | --------- | - | ---- | ----- | --------- | ---- | ---- | -----
|   | Net
      income                                               | 300  |   |           |   |      |       |           | 599  |      |      
|   | Depreciation,
      amortisation and impairments               | 711  |   |           |   |      |       |           | 490  |      |      
|   | Changes
      in provisions                                    | (7   | ) |           |   |      |       |           | (14  | )    |      
|   | Changes
      in pension liabilities                           | (221 | ) |           |   |      |       |           | (111 | )    |      
|   | Changes
      in deferred taxes                                | 180  |   |           |   |      |       |           | (16  | )    |      
|   | Changes
      in working capital:                              |      |   |           |   |      |       |           |      |      |      
|   | Inventory                                                      | 6    |   |           |   |      |       |           | (1   | )    |      
|   | Accounts
      receivable                                      | (37  | ) |           |   |      |       |           | 136  |      |      
|   | Other
      current assets                                     | (10  | ) |           |   |      |       |           | (74  | )    |      
|   | Current
      liabilities (excluding short-term financing)     | 15   |   |           |   |      |       |           | 23   |      |      
|   |                                                                |      |   |           |   |      |       |           |      |      |      
|23 | Net
      cash provided by operating activities                |      |   | 937       |   |      | (9.2  | )         |      |      | 1,032
|   |                                                                |      |   |           |   |      |       |           |      |      |      
|   | Acquisition
      of group companies                           | (59  | ) |           |   |      |       |           | (128 | )    |      
|   | Disposal
      of group companies                              | 6    |   |           |   |      |       |           | 4    |      |      
|   | Acquisition
      of affiliated companies                      | (16  | ) |           |   |      |       |           | (11  | )    |      
|   | Disposal
      of affiliated companies                         | 2    |   |           |   |      |       |           | 10   |      |      
|   | Capital
      expenditure on intangible assets                 | (67  | ) |           |   |      |       |           | (74  | )    |      
|   | Disposals
      of intangible assets                           | 6    |   |           |   |      |       |           | 10   |      |      
|   | Capital
      expenditure on property, plant and equipment     | (287 | ) |           |   |      |       |           | (398 | )    |      
|   | Disposals
      of property, plant and equipment               | 40   |   |           |   |      |       |           | 53   |      |      
|   | Changes
      in other financial fixed assets                  | (2   | ) |           |   |      |       |           | 12   |      |      
|   | Changes
      in minority interests                            | 4    |   |           |   |      |       |           | 4    |      |      
|   |                                                                |      |   |           |   |      |       |           |      |      |      
|24 | Net
      cash used in investing activities                    |      |   | (373      | ) |      | 28.0  |           |      |      | (518 
|   |                                                                |      |   |           |   |      |       |           |      |      |      
|   | Changes
      in shareholders equity:                         |      |   |           |   |      |       |           |      |      |      
|   | Dividends
      paid                                           | (204 | ) |           |   |      |       |           | (185 | )    |      
|   | Other
      changes in shareholders equity                    |      |   |           |   |      |       |           | 1    |      |      
|   | Long-term
      liabilities acquired                           | 70   |   |           |   |      |       |           | 63   |      |      
|   | Long-term
      liabilities repaid                             | (83  | ) |           |   |      |       |           | (67  | )    |      
|   | Changes
      in short-term bank debt                          | (219 | ) |           |   |      |       |           | (410 | )    |      
|   |                                                                |      |   |           |   |      |       |           |      |      |      
|25 | Net
      cash used in financing activities                    |      |   | (436      | ) |      | 27.1  |           |      |      | (598 
|   | Changes
      in cash and cash equivalents                     |      |   | 128       |   |      | 252.4 |           |      |      | (84  
|   |                                                                |      |   |           |   |      |       |           |      |      |      
|   | Cash
      and cash equivalents at beginning of financial year |      |   | 357       |   |      |       |           |      |      | 451  
|   | Exchange
      rate differences on cash items                  |      |   | (14       | ) |      |       |           |      |      | (18  
|   | Cash and
      cash equivalents from acquisition and disposal  |      |   |           |   |      |       |           |      |      |      
|   | of
      group companies                                       |      |   | (1        | ) |      |       |           |      |      | 8    
|   | Changes
      in cash and cash equivalents                     |      |   | 128       |   |      |       |           |      |      | (84  
|   |                                                                |      |   |           |   |      |       |           |      |      |      
|   | Cash
      and cash equivalents at the end of financial year   |      |   | 470       |   |      | 31.7  |           |      |      | 357  
|   |                                                                |      |   |           |   |      |       |           |      |      |      

(inmillions,
        except percentages)Certain items
        in the consolidated cash flow statements have been adjusted for non-cash
        movements (principally assets acquired under finance leases, foreign exchange
        effects and newly consolidated and de-consolidated entities) and as a
        result do not correspond to the differences between the balance sheet
        amounts for the respective items.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 these financial statements.Reclassifications
        have been made to increase comparability in 2001 presentation of other
      intangible assets separate from property, plant and equipment.




| | 2003
        annual report | 89
| | -------------------------- | --

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Chapter 12 Financial
statements and other information

|
|

Consolidated
  statements of changes in shareholders equity from 31 December 2000 to
  31 December 2003

|                                    | Issued
      sharedcapital |  | Additionalpaid-in capital |   | Translationreserve |      | Otherreserves |  | Unappropriatednet income |   | Total
|----------------------------------- | -------------------------- |  | ------------------------- | - | ------------------ | ---- | ------------- |  | ------------------------ | - | -----
|Balance
      at 31 December 2000   | 218                        |  | 1,433                     |   |                    | (11  | )             |  | 49                       |   |      
|Final dividend
      previous year  |                            |  |                           |   |                    |      |               |  |                          |   |      
|Add-back for stock
      portion    |                            |  |                           |   |                    |      |               |  |                          |   |      
|Appropriation
      of net income   |                            |  |                           |   |                    |      |               |  | 423                      |   |      
|Net income                          |                            |  |                           |   |                    |      |               |  |                          |   |      
|Interim dividend
      current year |                            |  |                           |   |                    |      |               |  |                          |   |      
|Repurchase of
      shares          |                            |  |                           |   |                    |      |               |  | (33                      | ) |      
|Foreign exchange
      effects      |                            |  |                           |   |                    | 3    |               |  |                          |   |      
|Other                               | 12                         |  | (12                       | ) |                    |      |               |  |                          |   |      
|                                    |                            |  |                           |   |                    |      |               |  |                          |   |      
|Balance
      at 31 December 2001   | 230                        |  | 1,421                     |   |                    | (8   | )             |  | 439                      |   |      
|Final dividend
      previous year  |                            |  |                           |   |                    |      |               |  |                          |   |      
|Appropriation
      of net income   |                            |  |                           |   |                    |      |               |  | 404                      |   |      
|Net income                          |                            |  |                           |   |                    |      |               |  |                          |   |      
|Interim dividend
      current year |                            |  |                           |   |                    |      |               |  |                          |   |      
|Foreign exchange
      effects      |                            |  |                           |   |                    | (54  | )             |  |                          |   |      
|Other                               |                            |  |                           |   |                    |      |               |  | 1                        |   |      
|                                    |                            |  |                           |   |                    |      |               |  |                          |   |      
|Balance
      at 31 December 2002   | 230                        |  | 1,421                     |   |                    | (62  | )             |  | 844                      |   |      
|Final dividend
      previous year  |                            |  |                           |   |                    |      |               |  |                          |   |      
|Appropriation
      of net income   |                            |  |                           |   |                    |      |               |  | 409                      |   |      
|Net income                          |                            |  |                           |   |                    |      |               |  |                          |   |      
|Interim dividend
      current year |                            |  |                           |   |                    |      |               |  |                          |   |      
|Foreign exchange
      effects      |                            |  |                           |   |                    | (68  | )             |  |                          |   |      
|Other                               |                            |  |                           |   |                    |      |               |  | (20                      | ) |      
|                                    |                            |  |                           |   |                    |      |               |  |                          |   |      
|Balance
      at 31 December 2003   | 230                        |  | 1,421                     |   |                    | (130 | )             |  | 1,233                    |   |      
|                                    |                            |  |                           |   |                    |      |               |  |                          |   |      

(inmillions)Per 1 January
        2003 dividends proposed, but not yet declared, are to be presented as
        a component of equity instead of as a liability. The prior year balances
        are adjusted for comparison purposes.The accompanying
        notes form an integral part of these financial statements.




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      annual report | 
|-- | ------------------------ | 

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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 principles The 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. Certain reclassifications have
been made to the prior years financial statements to conform to the current years
presentation. Changes
    in accounting policiesIn accordance with
    RJ160 of Guidelines for Annual Reporting in the Netherlands dividend
    payable amounts have been reclassified from Other current liabilities
    to Shareholders equity, (2002: 119; 2001: 114).These reclassifications
    had no effect on the prior years net income. Consolidation
    principles Group 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 results of operations
    are disclosed separately. Joint ventures in which another party and we have
    equal control are consolidated proportionally. Companies in which we acquired
    a controlling interest during the course of the financial year are consolidated
    in the financial statements from the date on which the controlling interest
    was acquired. Companies that are no longer associated with us are consolidated
    in the




financial statements
    up to the date on which we dispose of our interests in them. 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 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 financial income and 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 adjustment balance.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 are also added to or charged against the cumulative translation.
    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,liabilities,
    cash and cash equivalents (monetary assets and liabilities)


| | 2003
      annual report | 91
| | ------------------------ | --

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Chapter 12 Financial statements and other information

|
|



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 financial income and expenses. Use
    of estimatesThe preparation
    of financial statements requires management to make estimates and assumptions
    that affect amounts reported in the financial statements in order to conform
    with generally accepted accounting principles. Actual results could differ
    from those estimates. Accounting
    policies relating to the valuation of assets and liabilities Goodwill
    and other intangible assetsGoodwill represents the excess of the consideration paid over the fair value of the acquired net assets. Goodwill arising from acquisitions and other intangible assets are valued at historical cost less amortisation or at the recoverable amount if this is less on a permanent basis. 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. Costs related to the development and installation of internal use software are capitalised and amortised over the estimated useful life. Prepayments on intangibles assets includes mainly assets under construction which are not yet used in operating activities. At the moment Intangible Assets are used in operating activities, the asset is transferred to the other categories.The amortisation of intangible assets will begin at the moment the assets have been transferred. Property,
    plant and equipmentProperty, plant and
    equipment are valued at historical cost less depreciation or at the recoverable
    amount if this is less on a permanent basis. 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 saleof
    property, plant and equipment is included in the statements of income as part
    of operating income.




Affiliated
    companiesInvestments
    in affiliated companies are included in the financial statements under financial
    fixed assets from the date on which we obtain significant influence up to
    the date they are disposed of. These investments are included at net asset
    value in accordance with our accounting principles. Non-core
    investmentsNon-core activities identified as part of acquired affiliated companies and subsidiaries are designated as assets held for disposal.These assets are valued at 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 accounts. 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 riks connected to anticipated cash flows or existing assets and liabilities.We do not hold or issue derivative financial instruments for trading purposes.


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We
    use foreign currency forward exchange contracts to hedge the cash flow risk
    and liabilities. 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 income, or as adjustments of carrying amounts, when the hedged transaction
    occurs. The net exposures of derivative financial instruments are re-valued at the prevailing spot exchange rate.The resulting gains and losses are included in financial income and expenses.The realised and unrealised gains and losses on the offsetting hedges of on-balance-sheet commitments resulting from changes in the spot exchange rate are also included in financial income and expenses. The related amounts due to or from counter parties are included in other assets or other liabilities.The premium or discount arising at the inception of the contracts is amortised over the life of the contract and included in financial income and expenses. If an anticipated cash flow does not occur or is expected not to occur, the foreign currency forward exchange contract is terminated, and any results are recognised in financial income and expenses. Pension
    liabilitiesFor defined benefit
    plans, pensions are accounted for at fair value in accordance with SFAS no.
    87,Employers Accounting for Pensions, through which pension expense
    and related liabilities are based on a specific methodology that reflects
    the concepts of accrual accounting. Amounts are reflected in the income statement
    systematically over the service lives of the employees covered by the plan.
    Amounts charged to expense are typically different from amounts funded.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, except for certain post-retirement benefits, which 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 for book purposes and for tax purposes are calculated
      on the basis of the
    current rates of income tax. 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. 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. 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.


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Chapter 12 Financial statements and other information

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Revenue
    is measured
    at the fair value of the consideration of received amounts or receivable amounts. Revenues
          of delivered goods and services are recognised when:we
        have transferred to the buyer the significant risks and rewards of ownership
        of the goods;we
        retain neither continuing managerial involvement to the degree usually
        associated with ownership nor effective control of the goods sold;the
        amounts of revenue are measured reliably;it
        is probable that the economic benefits associated with the transaction
        will flow to us;the
        costs to be incurred in respect of the transaction can be measured reliably;
        andthe
        stage of completion of the transaction at the balance sheet date can be
        measured reliably. 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. 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 sale of property, plant and equipment and the rental income from buildings and houses. Depreciation
    expense, amortisation and impairmentsDepreciation expense and amortisation are calculated on the basis of the historical cost of property, plant and equipment and intangible assets using the straight-line method on the basis of the estimated useful life.This estimated useful life takes into account the residual value (if any) of property, plant and equipment. We 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 of 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 the prevailing 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 statement The 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

|Fixed
      assets                                                      |            |   |          |           |                |  |             |   |  |       |  
|----------------------------------------------------------------------- | ---------- | - | -------- | --------- | -------------- |  | ----------- | - |  | ----- | -
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|1Intangible
      assets: 2,421 million (2002: 2,766)                   |            |   |          |           |                |  |             |   |  |       |  
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|Statement of changes in intangible assets                               |            |   |          |           |                |  |             |   |  |       |  
|                                                                        |            |   |          |           |                |  | Prepayments |   | 
|                                                                        | Goodwill   |   | Software |           | on intangibles |  | Total      
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|Amortisation percentage                                                 | 2.5% - 20% |   |          | 20% - 35% |                |  |             |   |  |       |  
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|Historical cost                                                         | 3,248      |   |          | 144       |                |  | 8           |   |  | 3,400 |  
|Accumulated amortisation                                                | (573       | ) |          | (60       | )              |  | (1          | ) |  | (634  | )
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|Balance at 31 December 2002                                             | 2,675      |   |          | 84        |                |  | 7           |   |  | 2,766 |  
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|Changes
      in 2003                                                   |            |   |          |           |                |  |             |   |  |       |  
|Additions                                                               | 58         |   |          | 46        |                |  | 21          |   |  | 125   |  
|Disposals                                                               | (2         | ) |          | (3        | )              |  | (3          | ) |  | (8    | )
|Internal transfers/reclassifications                                    | (6         | ) |          | 18        |                |  | (12         | ) |  |       |  
|Amortisation and impairment                                             | (334       | ) |          | (44       | )              |  |             |   |  | (378  | )
|Exchange rate differences                                               | (82        | ) |          | (1        | )              |  | (1          | ) |  | (84   | )
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|Total
      changes                                                     | (366       | ) |          | 16        |                |  | 5           |   |  | (345  | )
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|Historical cost                                                         | 3,196      |   |          | 200       |                |  | 13          |   |  | 3,409 |  
|Accumulated amortisation/impairment                                     | (887       | ) |          | (100      | )              |  | (1          | ) |  | (988  | )
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|Balance
      at 31 December 2003                                       | 2,309      |   |          | 100       |                |  | 12          |   |  | 2,421 |  
|Of which is under restrictive title or held as security for liabilities |            |   |          | 1         |                |  | 1           |   |  | 2     |  
|                                                                        |            |   |          |           |                |  |             |   |  |       |  
|(inmillions,
       except percentages)                                |            |   |          |           |                |  |             |   |  |       |  

Impairment As a result of weak
    economic conditions in some of the markets in which we operate, we experienced
    declines in operating income for some of our mail and logistics businesses.These
    declines prompted us to revise our long-term forecasts for some of these businesses.
    As a result, we have performed goodwill impairment tests on these businesses
    based on our revised forecasts.The goodwill impairment
    tests were based on determining the value in use for these businesses using
    the present value of the future cash flows that they are expected to generate,
    using a discount rate of 7.6%.




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Chapter 12 Financial statements and other information

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The result of the impairment review was that the carrying amounts of certain businesses exceeded their recoverable amounts by193 million.This led to a pre-tax, non-cash183 million reduction in the carrying value of our goodwill and a pre-tax, non-cash asset impairment of10
    million on the carrying value of property, plant and equipment.The impairments
    are allocated to our companys segments as indicated below:


|                                |          |  |             | Property, plant |       |  |     | 
|------------------------------- | -------- |  | ----------- | --------------- | ----- |  | --- | 
|                                | Goodwill |  | & equipment |                 | Total | 
|                                |          |  |             |                 |       |  |     | 
|Logistics division              |          |  |             |                 |       |  |     | 
|France                          | 76       |  |             | 6               |       |  | 82  | 
|Italy non-automotive            | 48       |  |             |                 |       |  | 48  | 
|Germany                         | 24       |  |             |                 |       |  | 24  | 
|Nordics                         | 15       |  |             |                 |       |  | 15  | 
|Spain                           |          |  |             | 4               |       |  | 4   | 
|                                |          |  |             |                 |       |  |     | 
|                                | 163      |  |             | 10              |       |  | 173 | 
|Mail division                   |          |  |             |                 |       |  |     | 
|UK Data and document management | 20       |  |             |                 |       |  | 20  | 
|                                |          |  |             |                 |       |  |     | 
|Total impairment                | 183      |  |             | 10              |       |  | 193 | 
|                                |          |  |             |                 |       |  |     | 
|(inmillions)                   |          |  |             |                 |       |  |     | 

These impairments
    of goodwill and property, plant and equipment, totalling
    193 million on a pre-tax, non-cash basis were reflected as a component of
    Depreciation, amortisation and impairments in the accompanying
    consolidated statements of income.




Goodwill

|Summary
      of principal acquisitions in the year |           |  |          | Month    |               |  |       |  | Acquisition |    | Goodwill
      on | 
|--------------------------------------------------- | --------- |  | -------- | -------- | ------------- |  | ----- |  | ----------- | -- | ----------------- | 
|                                                    | Division  |  | acquired |          | %
      owner |  | cost  |  | acquisition |   
|                                                    |           |  |          |          |               |  |       |  |             |    |                   | 
|Company
      name                                  |           |  |          |          |               |  |       |  |             |    |                   | 
|Fischer                                             | Mail      |  |          | January  |               |  | 100.0 |  |             | 3  |                   | 
|Blitzpunkt                                          | Mail      |  |          | January  |               |  | 100.0 |  |             | 7  |                   | 
|Full Service                                        | Mail      |  |          | January  |               |  | 100.0 |  |             | 1  |                   | 
|DocVision                                           | Mail      |  |          | May      |               |  | 100.0 |  |             | 9  |                   | 
|Archive
      and Data Storage                      | Express   |  |          | June     |               |  | 90.0  |  |             | 4  |                   | 
|TNT Arvil                                           | Logistics |  |          | June     |               |  | 51.0  |  |             | 5  |                   | 
|Prime
      Vision                                  | Mail      |  |          | December |               |  | 60.0  |  |             | 3  |                   | 
|Olaf Jepsen
      (remaining shares)                | Mail      |  |          | December |               |  | 100.0 |  |             | 9  |                   | 
|Other acquisitions                                  |           |  |          |          |               |  |       |  |             | 18 |                   | 
|                                                    |           |  |          |          |               |  |       |  |             |    |                   | 
|Total                                               |           |  |          |          |               |  |       |  |             | 59 |                   | 
|                                                    |           |  |          |          |               |  |       |  |             |    |                   | 
|(inmillions)                                       |           |  |          |          |               |  |       |  |             |    |                   | 

Additions in 2003
    include 58
    million (2002: 127) 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 during 2003 have generally
    centred around addressing our long-term strategic plans by, amongst others,
    covering new geographic areas where we were previously not present or present
    only to a limited extent, gaining




key market share, and obtaining full control of some of our successful joint ventures. The acquisition of Werbeagentur
Fischer GmbH further improves the mail divisions European presence in the
unaddressed mail communication market in Germany.Werbeagentur Fischer is market
leader in south-east Germany and delivered over 132 million leaflets.




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Blitzpunkt GmbH was
    acquired to provide the mail division with a presence in the unaddressed mail
    distribution market in east Germany. Blitzpunkt delivered 335 million leaflets
    and 19 million free newspapers. Full Service Srl was acquired through TPG Post Italia. Full Service has established a well-managed data processing, printing and outsourcing of data related services business. DocVision
    B.V. was acquired through an asset deal to increase the mail divisions
    presence in mailroom management, repro services, colour copy and print and
    outsourcing services in The Netherlands. Archive
    and Data Storage Ltd. was acquired to provide the express division with a
    strategically important presence in the data storage market in London, United
    Kingdom.


A 51% share
    was acquired in TNT Arvil  joint venture TNT Arcese Bonzano Spa, which
    is appointed as the sole operator of the inbound (material and components
    transport, handling and assembly line feeding) of all Italian plants of Fiat. Prime Vision B.V. was acquired to develop, together with the minority shareholder and former owner expertise, in pattern and character recognition software.The company specialises in the development, production, marketing and sales of patterns and character recognition products. These newly acquired subsidiaries are summarised in the tables below:




Opening
balance sheet summary of newly acquired entities

|                           | Fischer |  | Blitzpunkt |   | Full Service |  | DocVision |  | Archive
      anddata torage |     | TNT Arvil |  | Prime
      vision
|-------------------------- | ------- |  | ---------- | - | ------------ |  | --------- |  | ---------------------------- | --- | --------- |  | ------------------
|Total fixed assets         | 1       |  |            | 1 |              |  |           |  |                              | 1   |           |  | 1                 
|Current assets             |         |  |            | 1 |              |  | 1         |  |                              | 5   |           |  | 1                 
|                           |         |  |            |   |              |  |           |  |                              |     |           |  |                   
|Total
      assets         | 1       |  |            | 2 |              |  | 1         |  |                              | 6   |           |  | 2                 
|                           |         |  |            |   |              |  |           |  |                              |     |           |  |                   
|                           |         |  |            |   |              |  |           |  |                              |     |           |  |                   
|Shareholders
      Equity |         |  |            |   |              |  |           |  |                              | (1) |           |  |                   
|Provisions                 |         |  |            | 1 |              |  |           |  |                              | 2   |           |  |                   
|Longterm liabilities       |         |  |            |   |              |  | 1         |  |                              |     |           |  |                   
|Current liabilities        | 1       |  |            | 1 |              |  |           |  |                              | 5   |           |  | 2                 
|                           |         |  |            |   |              |  |           |  |                              |     |           |  |                   
|Total
      liabilities    |         |  |            |   |              |  |           |  |                              |     |           |  |                   
|and
      equity           | 1       |  |            | 2 |              |  | 1         |  |                              | 6   |           |  | 2                 
|                           |         |  |            |   |              |  |           |  |                              |     |           |  |                   
|(inmillions)              |         |  |            |   |              |  |           |  |                              |     |           |  |                   



The additional 49% of the outstanding shares Olaf Jepsen GmbH was acquired.TPG had already acquired 51% of the shares in 1998. Olaf Jespen is a key part of the total TPG Mail unaddressed mail network in Germany.The company annually delivers 956 million items such as leaflets and newspapers. In addition,other acquisitions of18 million, paid in cash, consist of amounts paid in respect of the finalisation of purchase considerations of9 million, additional shareholdings in previous acquisitions from prior years amounting to5 million, and a number of smaller acquisitions with a combined purchase price of3 million. Goodwill recognised on these transactions amounted to14 million. Recognised goodwill related to the acquisitions was allocated based upon fair value of assets and liabilities acquired.The goodwill on acquisitions in 2003 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265 million.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 2003 and 2002 as though the acquisitions in the table above had taken place on 1 January 2002.These proforma results do not necessarily reflect the results that would have arisen had these acquisitions actually taken place on 1 January 2002 nor are they necessarily indicative of future performance of TPG.




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Chapter 12 Financial statements and other information

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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(unaudited)2003
      
      2002Total operating
        revenues
      11,892
      
      
      11,892Net income before
        minority interests
      301
      
      
      604Net income
      296
      
      
      590Net income(incents)per
        ordinary share/ADR
      62.3
      
      
      124.2Net income(incents)per
        diluted ordinary share
      62.3
      
      
      124.2(inmillions,
        except per share data)




SoftwareInternally
    generated software included in the total software balance had a book value
    of68 million
    at 31 December 2003. Prepayments on internally generated intangible assets
    had a book value of1 million at
    31 December 2003.




2Property,
  plant and equipment: 2,009 million (2002: 2,130)

|Statement
      of changes in property, |                |   |                 |        | Other
      property, |  |                   |   |      
|--------------------------------------- | -------------- | - | --------------- | ------ | --------------------- |  | ----------------- | - | -----
|plant
      and equipment               | Land
      and |   | Plant
      and |        | plant
      and       |  | Construction      |   |      
|                                        | buildings      |   | equipment       |        | equipment             |  | in
      progress |   | Total
|Depreciation
      percentage           | 0%-10%         |   |                 | 4%-33% |                       |  | 7%-25%            |   |      
|                                        |                |   |                 |        |                       |  |                   |   |      
|                                        |                |   |                 |        |                       |  |                   |   |      
|Historical cost                         | 1,525          |   |                 | 1,172  |                       |  | 1,125             |   |      
|Accumulated depreciation                | (529           | ) |                 | (672   | )                     |  | (558              | ) |      
|                                        |                |   |                 |        |                       |  |                   |   |      
|Balance
      at 31 December 2002       | 996            |   |                 | 500    |                       |  | 567               |   |      
|                                        |                |   |                 |        |                       |  |                   |   |      
|                                        |                |   |                 |        |                       |  |                   |   |      
|Changes
      in 2003                   |                |   |                 |        |                       |  |                   |   |      
|Capital expenditure                     | 47             |   |                 | 86     |                       |  | 88                |   |      
|Acquisitions                            |                |   |                 | 7      |                       |  | 2                 |   |      
|Disposals                               | (18            | ) |                 | (3     | )                     |  | (17               | ) |      
|Exchange rate
      differences         | (18            | ) |                 | (7     | )                     |  | (18               | ) |      
|                                        |                |   |                 |        |                       |  |                   |   |      
|Net
      additions / disposals         | 11             |   |                 | 83     |                       |  | 55                |   |      
|Depreciation and
      impairments      | (62            | ) |                 | (135   | )                     |  | (136              | ) |      
|Transfers and
      other changes       | 36             |   |                 | 21     |                       |  | (1                | ) |      
|                                        |                |   |                 |        |                       |  |                   |   |      
|Total
      changes                     | (15            | ) |                 | (31    | )                     |  | (82               | ) |      
|                                        |                |   |                 |        |                       |  |                   |   |      
|                                        |                |   |                 |        |                       |  |                   |   |      
|Historical cost                         | 1,496          |   |                 | 1,215  |                       |  | 1,073             |   |      
|Accumulated depreciation                | (515           | ) |                 | (746   | )                     |  | (588              | ) |      
|                                        |                |   |                 |        |                       |  |                   |   |      
|Balance
      at 31 December 2003       | 981            |   |                 | 469    |                       |  | 485               |   |      
|                                        |                |   |                 |        |                       |  |                   |   |      
|(inmillions,
      except percentages) |                |   |                 |        |                       |  |                   |   |      



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|Included
      in the balance sheets on 31 December 2003 are: |               
|------------------------------------------------------------- | --------------
|                                                              |               
|                                                              |               
|                                                              | Land
      and
|                                                              | buildings     
|Under
      finance lease                                     | 30            
|Mail                                                          |               
|Express                                                       | 11            
|Logistics                                                     | 19            
|Pledged
      as security for liabilities                     | 5             
|Logistics                                                     | 5             
|Subleased
      to third parties                              | 10            
|Express                                                       | 5             
|Logistics                                                     | 5             
|Under
      restrictive title                                 | 5             
|Logistics                                                     | 5             
|                                                              |               
|(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 NV to our company upon incorporation on1 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 2003 of these assets contributed to our company on 1 January 1989 is113 million (2002: 123), net of accumulated depreciation of298 million (2002: 299). The valuation of the businesses in the logistics division led to an impairment of assets in France of6 million and Spain of4 million, totalling10 million. Of this10 million,6 million related to plant and equipment and4 million to other property, plant and equipment (see note 1).




Lease hold
    rights and ground rent for land and buildings are mainly held by express and
    logistics.The book value of the lease hold rights and ground rent in express
    is11 million,
    comprising historic value of13 with accumulated
    depreciation2 million.
    The book value of the lease hold rights and ground rent in logistics is19 million,
    comprising historic value of22 million
    with accumulated depreciation3 million.Lease hold
    rights and ground rent for land and buildings are mainly in Belgium for25 million,
    in France for4 million and
    in the Netherlands for1 million.The term of
    the various contracts are in between 3 and 10 years. In 2003 the annual amount
    paid for the lease hold rights and ground rent contracts was2.9 million.




|3    Financial
      fixed assets:627 million (2002: 677) |                    
|--------------------------------------------------------- | -------------------
|                                                          |                    
|Statement
      of changes in financial fixed assets      |                    
|                                                          |                    
|                                                          | Investments        
|                                                          | in
      affiliated
|                                                          | companies          
|Balance
      at 31 December 2002                         | 95                 
|                                                          |                    
|                                                          |                    
|Changes
      in 2003                                     |                    
|Additions                                                 | 13                 
|Disposals/decreases                                       | (22                
|(De)consolidation                                         |                    
|Withdrawals /
      repayments                            |                    
|Dividend                                                  |                    
|Exchange rate
      differences                           | (1                 
|Other changes                                             | (6                 
|                                                          |                    
|Total
      changes                                       | (16                
|                                                          |                    
|                                                          |                    
|Balance
      at 31 December 2003                         | 79                 
|                                                          |                    
|(inmillions)                                             |                    



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Chapter 12 Financial statements and other information

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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388 million prepayments and accrued income at 31 December 2003 is an amount
    of205 million of deferred tax assets (2002: 374).The short term deferred tax
    assets of37 million (2002:
    32) is included in accounts receivables.




Prepayments also
    include an amount of4 million (2002: 5) 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 2003, the amount amortised in the income statement was1 million (2002: 1).




Current
  assets

4
      Inventory:
        49 million (2002: 56)At
        31 December2003
      
      2002Raw
        materials
      19
      
      
      19Finished
        goods
      30
      
      
      37Total
      49
      
      
      56(in
        millions) Inventory is stated
    net of provisions for obsolete items amounting to2 million (2002:2). 5
      Accounts
        receivable:1,977
        million (2002: 1,922) At
        31 December2003
      
      2002Trade accounts
        receivable
      1,669
      
      
      1,649Deferred tax
        assets
      37
      
      
      32VAT receivable
      55
      
      
      46Accounts receivable
        fromaffiliated
        companies
      7
      
      
      8Receivables
        from employees
      0
      
      
      1Other
      209
      
      
      186Total
      1,977
      
      
      1,922(in
        millions)




Trade accounts receivable
    for services rendered and delivered goods have been included after deduction
    of a provision for doubtful receivables amounting to83 million at 31 December
    2003 (2002: 79). 6
      Prepayments
        and accrued income:362
        million (2002: 358)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 2003, prepayments amounted to90 million (2002:
          167). All prepayments and accrued income are due within in one year.  7
      Cash
        and cash equivalents:470
        million (2002: 357)Cash and
            cash equivalents comprise cash at hand of10 million
            (2002: 14), cash at bank and on deposit of453 million (2002: 332) and outstanding cheques of6 million
            (2002: 8). Marketable securities are1 million
            (2002: 3). Included in cash and cash equivalents is167 million
            (2002: 121) of restricted cash held and partially controlled by consolidated
            joint ventures.


Group equity

---

8
      Shareholders
        equity:2,969
        million (2002: 2,961)Group equity
            consist of shareholders equity and minority interest. See notes
            (32) to (36) for the explanation of shareholders equity.


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Provisions

---

|9 | Provisions:
      153 million (2002: 161)
|- | -----------------------------------------

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 2002        | 35         |   |  | 30            |   |  | 96    |   |  | 161   |  
|                                   |            |   |  |               |   |  |       |   |  |       |  
|                                   |            |   |  |               |   |  |       |   |  |       |  
|Additions                          |            |   |  | 29            |   |  | 19    |   |  | 48    |  
|Withdrawals                        | (14        | ) |  | (12           | ) |  | (17   | ) |  | (43   | )
|Exchange rate differences          |            |   |  |               |   |  | (3    | ) |  | (3    | )
|(De)consolidation                  |            |   |  | 1             |   |  | 2     |   |  | 3     |  
|Interest                           | 2          |   |  |               |   |  |       |   |  | 2     |  
|Other / Releases                   |            |   |  | (6            | ) |  | (9    | ) |  | (15   | )
|                                   |            |   |  |               |   |  |       |   |  |       |  
|Balance at 31 December 2002        | 23         |   |  | 42            |   |  | 88    |   |  | 153   |  
|                                   |            |   |  |               |   |  |       |   |  |       |  
|(in 
      millions)              |            |   |  |               |   |  |       |   |  |       |  
|                                   |            |   |  |               |   |  |       |   |  |       |  

We expect to make
    cash expenditures of approximately 27 million from the restructuring provision,13 million from the
    retirement schemes provision and9 million 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
    at an average interest rate of 6%. Provisions for restructuring deal primarily with restructuring projects for mail activities in the Netherlands, integration and restructuring projects within express and logistics and various other issues. During the year approximately 1,532 (2002: 748)




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, 358 related to employees in mail, 271 related to employees in express, and 903 related to employees in logistics. Of the 1,532 positions reorganised, 1,099 related to direct staff and 433 to overhead staff. Other provisions
    (88 million) mainly relate to dilapidation of warehouse contracts and contractual
    obligations (18 million), the transformation through standardisation programme related
    provisions (15 million), provisions
    for contractual obligations regarding divested activities (9 million) and various
    other provisions held by companies in the group (46 million).




Pension
  liabilities

---

10
      Pension
        liabilities: 521 million (2002: 742)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. Senior management of TPG participates in a separate pension fund in the Netherlands.




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 as per 1 January 2001.
    The plan covers some 97,000 participants including approximately 12,000 pensioners
    and some 24,000 former employees.By
    law the plan is managed by an independent board that falls under the supervision
    of the Independent Supervisory Authority for Pensions and Insurance. 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




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Chapter 12 Financial statements and other information

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pension benefits are accrued
on an annual basis of 2.25% of the pensionable salary. 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 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 new minimum funding requirements of the Independent
    Supervisory Authority for Pensions and Insurance.The total contribution to
    the main pension fund amounted to169 million in 2003
    (55
    in 2002) and is estimated to be163 million in 2004.The
    benefits arising from the transitional plan are directly paid by TPG.These
    payments amounted to79 million in 2003
    (67
    million in 2002) and are estimated at84 million for 2004. The pension
    fund runs an actively managed investment portfolio. The pension funds uses
    Asset and Liability Management (ALM) studies that generate future scenarios
    to determine its optimal asset mix. During 2003, the dynamic weight of equity
    investments increased to 43.6%, the dynamic weight of fixed interest investments
    decreased to 46.9%, the weight of real estate investments (including international)
    went up to 9.4% and the cash and cash equivalents position ended at 0.1%.
    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 2003 a tactical spread of -5% and +5% is applicable.
    Investments in equity consists for 25% of a european equity portfolio and
    for 75% of a worldwide equity portfolio, half of which is hedged against US
    dollar exposure. The average return over the last 10 years amounted 8.5%.
    The fixed income portfolio's consist of 60% government bonds for the 12 EMU-countries
    with the remainder high quality credits. The average return over the last
    10 years amounted 7.0%. Real estate investments saw an average return of 7.7%
    over the last 10 years.


The table
      below shows the strategic asset mix applicable in 2003 and our actual asset
      mix of the main pension fund. Actualasset
        mix at31 Dec 2003
      
      Strategicasset
        mixEquities
      43.6
      %
      
      
      41.0
      %Fixed interest
      46.9
      %
      
      
      50.0
      %Real estate
      9.4
      %
      
      
      9.0
      %Cash
      0.1
      %Total
      100.0
      %
      
      
      100.0
      %(in 
        millions) The assets of our
    major plan cover approximately 94% of our total pension assets and the liabilities
    described in the section above cover approximately 94% of our total pension
    liabilities. Pensions
    costInherent in
    the valuation of our pensions and the determinition 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 2003, our
    net periodic pension cost was43 million (2002: 6). Our net periodic pension cost is expected to decrease
    to approximately20 million in 2004, primarily as a result of26 million lower transition
    cost. Total cash
    contributions in 2003 amounted264 million (2002:
    133) and are expected to amount approximately270 million in 2004.The total liability at year end 2004 is estimated to end
    at271
    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
    is31 December. Information required to be disclosed with respect to the funded status of our main pension schemes at 31 December 2003 and 2002 and with respect to the net periodic pension costs for 2003, 2002 and 2001 are presented in the table below.






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Disclosures

|                                                       | 2003   |   |  | 2002   |  
|------------------------------------------------------ | ------ | - |  | ------ | -
|                                                       |        |   |  |        |  
|Change
      in benefit obligation                     |        |   |  |        |  
|Benefit
      obligation at beginning of year          | (3,306 | ) |  | (3,298 | )
|Service costs                                          | (116   | ) |  | (129   | )
|Interest costs                                         | (187   | ) |  | (187   | )
|Plan participants
      contributions                 | (3     | ) |  | (2     | )
|Amendments                                             | (13    | ) |  | 0      |  
|Actuarial (loss)
      / gain                          | (186   | ) |  | 201    |  
|Benefits paid                                          | 134    |   |  | 109    |  
|                                                       |        |   |  |        |  
|Benefit
      obligation at end of year                | (3,677 | ) |  | (3,306 | )
|                                                       |        |   |  |        |  
|                                                       |        |   |  |        |  
|Change
      in plan assets                            |        |   |  |        |  
|Fair
      value of plan assets at beginning of year   | 2,833  |   |  | 3,093  |  
|Actual return
      on plan assets                     | 308    |   |  | (283   | )
|Employer contribution                                  | 257    |   |  | 130    |  
|Plan participants
      contributions                 | 3      |   |  | 2      |  
|Amendments                                             | 10     |   |  | 0      |  
|Benefits paid                                          | (134   | ) |  | (109   | )
|                                                       |        |   |  |        |  
|Fair
      value of plan assets at end of year         | 3,277  |   |  | 2,833  |  
|                                                       |        |   |  |        |  
|                                                       |        |   |  |        |  
|Funded
      status as per 31 December                 |        |   |  |        |  
|Funded
      status                                    | (400   | ) |  | (473   | )
|Unrecognised transition
      costs                    |        |   |  | 26     |  
|Unrecognised prior
      service costs                 | (313   | ) |  | (353   | )
|Unrecognised net
      actuarial loss / (gain)         | 192    |   |  | 58     |  
|                                                       |        |   |  |        |  
|Prepaid
      (accrued) benefit cost                   | (521   | ) |  | (742   | )
|                                                       |        |   |  |        |  
|                                                       |        |   |  |        |  
|Components
      of net periodic benefit cost for      |        |   |  |        |  
|Service costs                                          | (116   | ) |  | (129   | )
|Interest costs                                         | (187   | ) |  | (187   | )
|Expected return
      on plan assets                   | 234    |   |  | 295    |  
|Amortisation of
      transition costs                 | (26    | ) |  | (45    | )
|Amortisation of
      prior service costs              | 40     |   |  | 40     |  
|Amortisation of
      actuarial gain / (loss)          | 19     |   |  | 24     |  
|Other costs                                            | (7     | ) |  | (4     | )
|                                                       |        |   |  |        |  
|Net
      periodic benefit costs                       | (43    | ) |  | (6     | )
|                                                       |        |   |  |        |  
|                                                       |        |   |  |        |  
|Other
      balance sheet entries as of 31 December    |        |   |  |        |  
|Prepaid (accrued)
      benefit costs                  | (521   | ) |  | (742   | )
|Additional minimum
      liability                     | 0      |   |  | 0      |  
|Intangible assets                                      | 0      |   |  | 0      |  
|Reduction to equity                                    | 0      |   |  | 0      |  
|                                                       |        |   |  |        |  
|                                                       |        |   |  |        |  
|Accumulated
      benefit obligation as of 31 December |        |   |  |        |  
|Accumulated benefit
      obligation                   | (3,394 | ) |  | (3,019 | )
|                                                       |        |   |  |        |  
|                                                       |        |   |  |        |  
|Weighted-average
      assumptions as of 31 December   |        |   |  |        |  
|Discount rate                                          | 5.5    | % |  | 5.5    | %
|Expected return
      on plan 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 12 Financial
  statements and other information

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|



The accrued pension
    costs did not include an adjustment to recognise a minimum liability (2002:
    0). In 2003, no additional intangible asset was recognised (2002: 0); nor
    was an amount charged directly to equity (2002: 0). The table below shows
  the sensitivity of the net periodic pension cost to deviations in assumptions.




Changes
        in assumptions %-changeinassumptions
      
      change
        innet periodiccostsNet
        periodic pension costs
      
      
      
      (43
      )Discount rate
      +0.5
      %
      
      14Expected return
        on plan assets
      +0.5
      %
      
      15Rate of compensation
        increase
      +0.5
      %
      
      (19
      )Rate benefit
        increase
      +0.5
      %
      
      (45
      )Net
        periodic pension costs
      
      
      
      (43
      )Discount rate
      (0.5
      )%
      
      (63
      )Expected return
        on plan assets
      (0.5
      )%
      
      (13
      )Rate of compensation
        decrease
      (0.5
      )%
      
      10Rate benefit
        decrease
      (0.5
      )%
      
      19(inmillions,
        except percentages)




|Long-term
      liabilities
|---------------------------
|                           
|                           
|11                         
|                           

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




|                                                  | Bond  |  | Otherloans |  | Financeleases |  | Total
|------------------------------------------------- | ----- |  | ---------- |  | ------------- |  | -----
|                                                  |       |  |            |  |               |  |      
|2004                                              |       |  | 19         |  | 5             |  | 24   
|2005                                              |       |  | 27         |  | 18            |  | 45   
|2006                                              |       |  | 207        |  | 14            |  | 221  
|2007                                              |       |  | 17         |  | 15            |  | 32   
|2008                                              | 1,000 |  | 16         |  | 14            |  | 1,030
|Thereafter                                        |       |  | 107        |  | 39            |  | 146  
|                                                  |       |  |            |  |               |  |      
|Total                                             | 1,000 |  | 393        |  | 105           |  | 1,498
|Of
      which is included in current liabilities |       |  | 19         |  | 5             |  | 24   
|                                                  |       |  |            |  |               |  |      
|Long
      term interest-bearing liabilities      | 1,000 |  | 374        |  | 100           |  | 1,474
|                                                  |       |  |            |  |               |  |      
|(inmillions)                                     |       |  |            |  |               |  |      



Long-term
    liabilities: 1,474 million (2002: 1,523)Long-term
    liabilities include a 1 billion Eurobond, a drawing of187 million on a Canadian dollar-denominated syndicate facility, a129 million loan and58 million of other long-term loans and100 million of finance
    leases. 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, (negative
    outlook) by Standard & Poors Ratings Services and A1,
    (stable outlook) by Moodys Investor Services Limited. Other long-term liabilities
    include a 187 million (2002:
    200) 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 2003, the rate of interest on this facility was 3.14%. Also included
    is 129 million (2002: 142) in respect of the long term portion of a loan signed
    in December 2001.This loan is to be repaid in quarterly instalments through
    2020 and carries a rate of interest of 5.85%. Other interest bearing
    liabilities of 158 million (2002: 181) includes100 million (2002:
    107) of finance leases and30 million in loans
    to finance real estate for the German operations (2002: 26) with fixed interest
    rates ranging between 5.5% and 6.5% expiring in 2010. In addition, the company
    has28 million in other
    loans (2002: 48). Aircraft with a book
    value of 55 million are pledged as collateral on the related lease obligation.There
    are no other significant assets pledged as collateral on these liabilities.




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Accrued
    liabilities: 187 million (2002: 138)At 31 December
    2003 we had 167 million (2002:
    138) of non-interest-bearing accrued liabilities representing leaving indemnity
    liabilities and20 million (2002:
    0) of other miscellaneous long-term liabilities.


|Current
      liabilities
|-------------------------
|                         

12
      State
        loans: 0 (2002: 72)The
        company had 72 million of short-term loans from the Dutch State, denominated in Dutch
        guilders, consisting of a41 million ordinary loan (Loan A) and a31 million subordinated
        loan (Loan B). Final repayment took place on 31 December 2003.13
      Other
        current liabilities:540
        million
        (2002: 702) At
        31 December2003
      
      
      20021Short term bank
        debt
      45
      
      
      136Income tax payable
      18
      
      
      118Taxes and socialsecurity
        contributions
      280
      
      
      224Current portion
        of long-term debts
      24
      
      
      30Expenses to
        be paid
      57
      
      
      60Other current
        liabilities
      116
      
      
      134Total
      540
      
      
      702 (inmillions)1
      Per
        1 January 2003 dividends proposed, but not yet declared are to be presented
        as a component of equity instead of as a liability.The prior year balances
        are adjusted for comparison purposes. 14
      Accrued
        current liabilities:1,224
        million (2002: 1,143) At
        31 December2003
      
      
      2002Amounts received
        in advance
      148
      
      
      119Expenses to
        be paid
      724
      
      
      670Vacation / vacation
        payments
      191
      
      
      196Terminal dues
      45
      
      
      56Other accrued
        current liabilities
      116
      
      
      102Total
      1,224
      
      
      1,143(inmillions)




15
      Commitments
        and contingencies(No
        corresponding financial statement number) At
        31 December2003
      
      
      2002Commitments
        relating to:Operating
        guarantees
      9
      
      
      3Financial
        guarantees
      254
      
      
      216Rent
        and operating lease contracts
      1,679
      
      1,653Capital
        expenditure
      58
      
      
      12Purchase
        commitments
      100
      
      
      35(in millions) Of the total commitments
    indicated above, 631 million are of
    a short-term nature (2002: 443). Financial
    and operating guaranteesTotal
    financial and operating guarantees provided by our company amounted to 263 million (2002: 219), of which90 million (2002:
    90) relate to guarantees issued by our company to banks and other institutions
    and94 million (2002:
    54) relate to corporate guarantees.These guarantees were issued in connection
    with the groups obligations under lease contracts, custom duty deferment
    and local credit lines. 62 million (including
    accrued interest of18 million) relates to an obligation in 2010 to fund additional potential
    costs that relate to wage guarantees and are contingent on the disability
    and (in)voluntary termination of the employees.The likelihood of liabilities
    arising from these guarantees is considered remote and accordingly they have
    not been recognised in the balance sheet at 31 December 2003. In an arrangement
    with an insurance company, the company is obliged to pay for any annually
    determined shortfalls in the insurance underwriting reserve as a result of
    the annual calculation of the remaining wage guarantees. No amounts were payable
    in either 2003 or 2002 in respect of this arrangement. The 17 million of remaining financial guarantees in 2003 relates to bank guarantees
    issued locally by group companies.




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        annual report | 105
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    statements and other information

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Rent and lease
    contractsIn 2003 operational lease expenses (including rental) in the consolidated statements of income amounted to569 million (2002: 574). Future payments on non-cancellable existing lease contracts are as follows: Payable
        in the year ending
      At
        31 December2003
      
      
      20022004
      356
      
      
      3692005
      307
      
      
      2962006
      242
      
      
      2402007
      181
      
      
      1942008
      154
      
      
      144Thereafter
      439
      
      
      410Total
      1,679
      
      
      1,653Of
        which guaranteed by thirdparties
        / customers
      105
      
      
      127(in 
        millions) These operating lease commitments relate to real estate for 1,436 million (2002: 1,461), transport equipment for 199 million (2002: 114) and computer equipment for 44 million (2002: 78). Capital
    expenditureCommitments in connection
with capital expenditure are 58
million.These commitments primarily relate to projects within the operations
of the mail division. These projects include sequence sorting (30
million) and tray cart unloading (10
million). Purchase
    commitmentsAt 31 December 2003 we had
    unconditional purchase commitments of 100
    million which are 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. Legal
    proceedingsGovernments
    proceedings: decision on tariff freeze (mail)The administrative
    decision of 21 September 2003 of the Minister of Economic Affairs on the temporary
    tariff freeze (until 1 January 2005) has been formalised through a change
    of the General Postal Regulations Decree published on 6 October 2003. We decided
    to lodge an appeal against this administrative decision addressed to our company,
    which has formally been submitted to the Minister on 30 January 2004. According
    to us there is no legal basis for the tariff freeze decided in the Postal
    Law while the decision severely interferes with the freedom of our entrepreneurship. Other
    legal proceedings: subcontractor suits (express)The 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. On 17
    December 2001, when a Bordeaux court ruled in our favour, ordering the release
    of our French express subsidiaries from all charges. In another case the court
    ruled against TNT Express International and its regional operations director.
    Both lodged an appeal. The ruling of the Bordeaux court was upheld by the
    court of appeal in Bordeaux by judgement of 27 January
    2004. Other proceedings
    on ordinary 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 have provided for all probable liabilities deriving
from the normal course of business. Credit
    facilitiesAt 31 December
    2003, committed facilities with domestic and international banks amounted
    to 787
    million, of which  600 million remained undrawn. The undrawn committed
    facilities consisted of a five-year  600 million revolving, syndicated
    facility signed on 15 October 2003, which supported our Euro Commercial Paper
    program. In addition, at 31 December 2003, we had  417 million of uncommitted
    facilities, of which 351
    million remained undrawn. Contractual
    call and put optionsThe contractual
    call and put options mainly relate to TNT Arvil.On
    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. TNT
        Logistics Italys call optionBetween
        1 March 2007 and until 30 April 2007 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 equityplus
        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.




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    report | 
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Ecotrans
          put optionEcotrans
          can exercise its option at anytime up until 28 February 2007. 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
        millionPlus
        loans or capital increases made by EcotransMinus profits
        distributed to EcotransMinus a pro-rated
        amount of losses, capped within certain limits, of the fiscal year end
        preceeding the year in which the option is exercised.




|Fair
      value of the net interest bearing debt | At
      31 December 2003 |  | At
      31 December 2002 | 
|------------------------------------------------- | ------------------------- |  | ------------------------- | 
|                                                  |                           |  |                           | 
|                                                  | Carrying                  |  |                           | 
|                                                  | amount                    |  | Fair
      value          | 
|(a) Cash and cash
      equivalents               | 470                       |  | 470                       | 
|(b) Short-term
      interest bearing debt        | 45                        |  | 45                        | 
|(c) Long-term
      interest bearing debt         | 1,498                     |  | 1,558                     | 
|                                                  |                           |  |                           | 
|(in millions)                                    |                           |  |                           | 



(a)
      The
        carrying value of cash and cash equivalents approximated its fair value
        because of the short maturity of the instruments held.(b)
      Short-term
        debt consists only of short-term bank debt and excludes the 24 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 24
        million current portion of 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 fair value than when it was issued.




Derivative
    financial instrumentsWe 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 2003. 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.




|                   | At
      31 December 2003 |   |  | At
      31 December 2002 |  
|------------------ | ------------------------- | - |  | ------------------------- | -
|                   |                           |   |  |                           |  
|                   | Carrying                  |   |  |                           |  
|                   | amount                    |   |  | Fair
      value          |  
|Total hedges long  | 424                       |   |  | (9                        | )
|Total hedges short | (1,208                    | ) |  | 150                       |  
|                   |                           |   |  |                           |  
|Net                | (784                      | ) |  | 141                       |  
|                   |                           |   |  |                           |  
|(in millions)     |                           |   |  |                           |  



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    report | 107
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Chapter 12 Financial
  statements and other information

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|



The above table
    includes, among others, the following transaction: On 5 December 2001, we entered into a seven year, cross-currency interest rate swap, which created a USD 435 million short position against the Euro.This transaction provides a hedge against US Dollar denominated assets. At 31 December 2003, the fair value of this instrument was138 million positive. In 2003, hedge effectiveness
    was tested on a quarterly basis and was fully effective. As a result, no gains
    or losses were recognised in earnings on the portion of the hedge accounted
    for as a net investment hedge. In 2003, none of the derivative instruments
    gain is excluded from the assessment of hedge effectiveness (2002: 32;




2001: 0).We do not
    expect unrealised gains or losses on the instrument to be reclassified to
    earnings within the next 12 months. The following arrangements
    are not reflected in the table above: On 7 January
    2003, we entered into a USD 100 million interest rate swap (fair value at
    31 December 2003:1 million) with
    a bank, whereby we receive a fixed interest rate and pay a variable interest
    rate until 5 December 2008. On 23 January 2003, we entered into a USD 100
    million interest rate swap (fair value at31
    December 2003: nil) with a bank, whereby we receive a fixed interest rate
    and pay a variable interest rate until 5 December 2008.


|Notes
      to the consolidated statements of income
|----------------------------------------------------
|                                                    

16
      Net sales: 11,785 million(2002:
        11,662; 2001: 10,979)The net sales
          of mail, express and logistics relate to the trading activities of all
          three divisions, arising from rendering services. Other revenues of
          sale of goods and rendering services, not related to the trading activities
          are disclosed under note (17). Net
        sales by division
      Year
        ended at 31 December2003
      
      20021
      
      20011Mail
      3,852
      
      
      3,949
      
      3,810Express
      4,201
      
      
      4,119
      
      3,833Logistics
      3,714
      
      
      3,577
      
      3,336Non-allocated
      18
      
      
      17Total
        net sales
      11,785
      
      
      11,662
      
      10,979 (inmillions)1
      Figures for
        2001 and 2002 have been restated to reflect the transfer of Innight services
        from express to logistics.  Net
        sales per geographic area
      Year
        ended at 31 December2003
      
      2002
      
      2001EuropeThe
        Netherlands
      3,733
      
      
      3,759
      
      3,711United
        Kingdom
      1,775
      
      
      1,862
      
      1,611Italy
      1,550
      
      
      1,426
      
      1,299France
      904
      
      
      873
      
      707Germany
      859
      
      
      792
      
      781Rest
        of Europe
      1,124
      
      
      1,109
      
      972AmericasNorth
        Americas
      726
      
      
      800
      
      885South
        Americas
      128
      
      
      128
      
      142Africa &
        Middle East
      70
      
      
      68
      
      62Australia
      481
      
      
      446
      
      474Asia
      435
      
      
      399
      
      335Total
        net sales
      11,785
      
      
      11,662
      
      10,979(inmillions)




The basis of allocation of net sales by geographical area is the country or region in which the entity recording the sales is located. 17
      Other operating revenues:81
        million (2002: 120; 2001: 239)Other operating
          revenues are related to the sale of goods and rendering services, not
          related to the normal trading activities. Other operating revenues include
          certain revenues from net gains from sale of property and equipment
          (33 million;
          2002: 30; 2001: 111), the disposal of shares of interest in group companies
          (9
          million; 2002: 58; 2001: 26) and the rent of buildings and houses and
          other revenues (39 million;
          2002: 32; 2001: 102). Other operating
    revenues include44 million (2002:
    47; 2001: 74) of mail,21 million (2002:
    26; 2001: 39) of express and17 million (2002:
    29; 2001: 11) of logistics and0 (2002: 18; 2001:
    115) non-allocated revenue. 18
      Salaries and social security contributions:4,163
        million (2002: 4,027; 2001: 3,836)  Year
        ended at 31 December2003
      
      2002
      
      2001Salaries
      3,509
      
      
      3,423
      
      3,257Pension contributions
      85
      
      
      57
      
      37Social security
        contributions
      569
      
      
      547
      
      542Total
      4,163
      
      
      4,027
      
      3,836(inmillions) The net periodic pension cost in respect of the defined benefit pension plans amounted to 43 million in 2003 (2002: 6; 2001: (9)).The expense in respect of defined contribution plans amounted to42 million in 2003 (2002: 51; 2001: 46)     .


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        annual report | 
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|                                                                 |         |  |      |         |      |        
|---------------------------------------------------------------- | ------- |  | ---- | ------- | ---- | -------
|                                                                 |         |  |      |         |      |        
|                                                                 |         |  |      |         |      |        
|                                                                 |         |  |      |         |      |        
|                                                                 | 2003    |  | 2002 |         | 2001 |        
|Employees at year-end
      1                                    | 163,028 |  |      | 150,365 |      | 138,563
|Mail                                                             | 80,613  |  |      | 75,424  |      | 68,081 
|Express
      2                                                  | 43,723  |  |      | 41,601  |      | 39,197 
|Logistics
      2                                                | 38,692  |  |      | 33,340  |      | 31,285 
|                                                                 |         |  |      |         |      |        
|                                                                 |         |  |      |         |      |        
|Employees of proportionately
      consolidated joint ventures 3 | 7,363   |  |      | 9,919   |      | 8,516  
|                                                                 |         |  |      |         |      |        
|                                                                 |         |  |      |         |      |        
|Number of external
      agency staff at year end                | 4,038   |  |      | 4,331   |      | 5,422  
|                                                                 |         |  |      |         |      |        
|                                                                 |         |  |      |         |      |        
|FTEs year
      average 1, 4                                    | 121,299 |  |      | 113,444 |      | 109,589
|Mail                                                             | 44,328  |  |      | 43,623  |      | 43,227 
|Express
      2                                                  | 39,476  |  |      | 37,414  |      | 35,904 
|Logistics
      2                                                | 37,495  |  |      | 32,407  |      | 30,458 
|                                                                 |         |  |      |         |      |        
|                                                                 |         |  |      |         |      |        
|FTEs of
      proportionately consolidated joint ventures 3, 4  | 6,275   |  |      | 8,447   |      | 7,058  
|                                                                 |         |  |      |         |      |        
|                                                                 |         |  |      |         |      |        
|Employees (at
      year end) per geographic region:             |         |  |      |         |      |        
|Netherlands                                                      | 69,005  |  |      | 70,645  |      | 68,306 
|Rest
      of Europe                                             | 69,558  |  |      | 57,574  |      | 49,570 
|                                                                 |         |  |      |         |      |        
|Europe
      in total                                            | 138,563 |  |      | 128,219 |      | 117,876
|Asia                                                             | 5,881   |  |      | 4,662   |      | 4,267  
|Australia                                                        | 5,819   |  |      | 5,468   |      | 5,172  
|USA
      & Canada                                               | 6,920   |  |      | 6,839   |      | 6,091  
|Rest
      of the world                                          | 5,845   |  |      | 5,177   |      | 5,157  
|                                                                 |         |  |      |         |      |        
|Total
      employees                                            | 163,028 |  |      | 150,365 |      | 138,563
|                                                                 |         |  |      |         |      |        

|1 | Including temporary
      employees on our payroll.                                                                                                                                                                                                                           
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2 | Figures for
      2001 and 2002 have been restated to reflect the transfer of Innight services
      from express to logistics.                                                                                                                                               
|3 | On a 100% basis.                                                                                                                                                                                                                                                              
|4 | FTEs
      (full time equivalents) are monthly calculated and based on the total hours
      worked divided by the locally agreed standard working weeks or contracts.
      The yearly average is based on the summation of the monthly numbers and
      divided by twelve.
|  |                                                                                                                                                                                                                                                                               



At the end of 2003,
    7,363 people (2002: 9,919; 2001: 8,516) were employed by proportionately consolidated
    companies, of whom 4,139 (2002: 5,854; 2001: 6,227) were on the payroll of
    Dutch companies, primarily Postkantoren B.V. and 3,224 (2002: 4,065; 2001:
    2,289) were on the payroll of companies outside the Netherlands. Employees in our
    mail division increased in 2003 by 5.189 or 6.9% compared to an increase of
    FTE's of 705 or 1.6%. This is mainly due to the acquisitions of Blitzpunkt
    and Fischer Werbeagentur. These companies have a high number of head counts
    and a low number of FTE's, driven by the fact that most of the employees are
    part-time distributors for a number of hours a week.


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    annual report | 109
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Chapter 12 Financial statements and other information

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Remuneration
    members of the Supervisory Board Over 2003, the accrued
    remuneration of the current members of the Supervisory Board, excluding VAT,
    amounted to 361,889 (2002: 359,051;
    2001: 360,752).The remuneration of the individual members of the Supervisory
    Board is set out in the table below:


|Supervisory
      Board compensation | Base         |  | Other     |        | Total       
|------------------------------------ | ------------ |  | --------- | ------ | ------------
|                                     | compensation |  | payments1 |        | remuneration
|R.J.N. Abrahamsen                    | 36,302       |  |           | 2,836  |             
|F. Bernabè                           | 36,302       |  |           | 1,702  |             
|J.M.T. Cochrane                      | 36,302       |  |           | 4,538  |             
|R. Dahan 2                           | 27,227       |  |           | 2,269  |             
|V. Halberstadt                       | 36,302       |  |           | 4,538  |             
|J.H.M. Hommen                        | 36,302       |  |           | 2,836  |             
|W. Kok 2                             | 27,227       |  |           | 1,134  |             
|R.W.H. Stomberg                      | 36,302       |  |           | 4,538  |             
|M.Tabaksblat                         | 45,378       |  |           | 1,702  |             
|                                     |              |  |           |        |             
|Total
      current Board members    | 317,644      |  |           | 26,093 |             
|                                     |              |  |           |        |             
|                                     |              |  |           |        |             
|W. Dik                               | 9,076        |  |           |       |             
|A. Maas                              | 9,076        |  |           |       |             
|                                     |              |  |           |        |             
|Total
      former Board members     | 18,152       |  |           |       |             
|                                     |              |  |           |        |             
|Total
      Supervisory Board        | 335,796      |  |           | 26,093 |             
|                                     |              |  |           |        |             

|1 | Payments relating
      to number of Supervisory Board committee meetings attended.
|- | -----------------------------------------------------------------------------------
|2 | Mr. R. Dahan and
      Mr.W. Kok joined the Supervisory Board as per 1 April 2003. 

No options or shares are 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 Management During 2003, the Board
    of Management consisted of five members. Per 1 September the group managing
    director logistics Roberto Rossi stepped down and per the same date Dave Kulik
    was appointed group managing director logistics. As of 1 January 2004 Marie-Christine
    Lombard succeeded Alan Jones as group managing director express.


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        annual report | 
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Total remunerationThe remuneration
    of the individual members of the Board of Management is set out in the table
    below:






|                                    |              |  |                 |         |           |  |                  |  |                  |           |                  |  |            |  |  |           |   | 
|----------------------------------- | ------------ |  | --------------- | ------- | --------- |  | ---------------- |  | ---------------- | --------- | ---------------- |  | ---------- |  |  | --------- | - | 
|Compensation
      & benefits       |              |  |                 |         |           |  | Pension          |  |                  |           |                  | 
|Board
      of Management           | Periodic     |  | Profit          |         |           |  | contributions    |  |                  |           |                  | 
|                                    | paid         |  | share
      and |         | Severance |  | for
      future |  |                  |           |                  | 
|                                    | compensation |  | bonus           |         | payments  |  | payments         |  | 2003
      total |           | 2002
      total | 
|                                    |              |  |                 |         |           |  |                  |  |                  |           |                  |  |            |  |  |           |   | 
|Peter Bakker                        | 943,154      |  |                 | 21,674  |           |  |                  |  |                  | 488,201   |                  |  | 1,453,029  |  |  | 1,484,894 |   | 
|Jan Haars                           | 528,330      |  |                 | 162,502 | 2         |  |                  |  |                  | 480,957   |                  |  | 1,171,789  |  |  | 1,817,077 |   | 
|Harry Koorstra                      | 634,313      |  |                 | 208,951 |           |  |                  |  |                  | 1,132,049 |                  |  | 1,975,313  |  |  | 882,181   |   | 
|Dave Kulik1                         | 245,570      |  |                 | 11,942  |           |  |                  |  |                  | 192,634   |                  |  | 450,146    |  |  |           |   | 
|                                    |              |  |                 |         |           |  |                  |  |                  |           |                  |  |            |  |  |           |   | 
|Total
      current Board of        |              |  |                 |         |           |  |                  |  |                  |           |                  |  |            |  |  |           |   | 
|Management                          | 2,351,367    |  |                 | 405,069 |           |  |                  |  |                  | 2,293,841 |                  |  | 5,050,277  |  |  | 4,184,152 |   | 
|                                    |              |  |                 |         |           |  |                  |  |                  |           |                  |  |            |  |  |           |   | 
|Ad Scheepbouwer                     |              |  |                 |         |           |  |                  |  |                  |           |                  |  |            |  |  | (39,770   | ) | 
|John Fellows                        |              |  |                 | 33,891  |           |  |                  |  |                  |           |                  |  | 33,891     |  |  |           |   | 
|Carel Paauwe                        |              |  |                 |         |           |  |                  |  |                  |           |                  |  |            |  |  | 36,267    |   | 
|Bert van Doorn                      |              |  |                 | 52,139  |           |  |                  |  |                  |           |                  |  | 52,139     |  |  | (10,763   | ) | 
|Alan Jones                          | 1,047,143    |  |                 | 292,718 |           |  | 747,665          |  |                  | 4,162,574 |                  |  | 6,250,100  |  |  | 1,736,748 |   | 
|Roberto Rossi                       | 458,760      |  |                 |         |           |  | 1,967,449        |  |                  | 111,082   |                  |  | 2,537,291  |  |  | 1,337,274 |   | 
|                                    |              |  |                 |         |           |  |                  |  |                  |           |                  |  |            |  |  |           |   | 
|**Total
      former Board of**     |              |  |                 |         |           |  |                  |  |                  |           |                  |  |            |  |  |           |   | 
|**Management**                      | 1,505,903    |  |                 | 378,748 |           |  | 2,715,114        |  |                  | 4,273,656 |                  |  | 8,873,421  |  |  | 3,059,756 |   | 
|                                    |              |  |                 |         |           |  |                  |  |                  |           |                  |  |            |  |  |           |   | 
|**Total
      Board of Management** | 3,857,270    |  |                 | 783,817 |           |  | 2,715,114        |  |                  | 6,567,497 |                  |  | 13,923,698 |  |  | 7,243,908 |   | 
|                                    |              |  |                 |         |           |  |                  |  |                  |           |                  |  |            |  |  |           |   | 

|1 | Remuneration
      of Dave Kulik as of 1 September 2003.
|- | --------------------------------------------------------
|2 | Includes150,000 moving allowance.                      
|  |                                                         

Roberto Rossi received
  a severance payment of 2.0 million.This
  amount represents three years base salary and was a contractually agreed severance
  arrangement as specified in his employment contract. Alan Jones was paid an
  amount of0.7 million in settlement
  of the contractual notice period. A further3.9 million pension
  obligation has been funded in settlement of an old pension claim and the contractual
  funding obligations during the notice period. The
        components of the profit shares and bonus package for the Board of Management
        can be detailed as follows:Short-term incentive,
        consisting of cash bonus and a bonus matching scheme;Long-term incentive,
        consisting of a share option scheme and performance share scheme.




Short-term
    incentiveThe bonus
    schemes for the chief executive officer and the chief financial officer are
    based on targeted levels of earnings per share growth. Divisional members
    of the Board of Management were 50% targeted on earnings per share growth
    and 50% on divisional economic profit targets. All economic profit targets
    except for logistics were met.The earnings per share target was not met.


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    annual report | 111
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Chapter 12 Financial
  statements and other information

|
|



The 2003 profit share
  and bonus amounts for the members of the board are accrued as set out below






|                             |                |  |                     |     |                      |  |                   |   |                    |        |  |  |         |  | 
|---------------------------- | -------------- |  | ------------------- | --- | -------------------- |  | ----------------- | - | ------------------ | ------ |  |  | ------- |  | 
|                             |                |  |                     |     |                      |  |                   |   |                    |        |  |  |         |  | 
|                             | Accrued        |  | 2003
      bonus as |     | Other                |  | Accrued
      for |   |                    |       
|                             | for
      2003 |  | percentage
      of |     | bonus
      /special |  | matching          |   | Profit
      share |       
|                             | performance    |  | base
      pay      |     | payments             |  | shares            |   | and
      bonus    |       
|                             |                |  |                     |     |                      |  |                   |   |                    |        |  |  |         |  | 
|Peter Bakker                 |               |  |                     |     |                      |  |                  |   |                    | 21,674 |  |  | 21,674  |  | 
|Jan Haars                    |               |  |                     |     |                      |  | 150,000           | 1 |                    | 12,502 |  |  | 162,502 |  | 
|Harry Koorstra               | 191,952        |  |                     | 32% |                      |  |                  |   |                    | 16,999 |  |  | 208,951 |  | 
|Dave Kulik                   |               |  |                     |     |                      |  |                  |   |                    | 11,942 |  |  | 11,942  |  | 
|                             |                |  |                     |     |                      |  |                   |   |                    |        |  |  |         |  | 
|Total
      current Board of |                |  |                     |     |                      |  |                   |   |                    |        |  |  |         |  | 
|Management                   | 191,952        |  |                     |     |                      |  | 150,000           |   |                    | 63,117 |  |  | 405,069 |  | 
|                             |                |  |                     |     |                      |  |                   |   |                    |        |  |  |         |  | 
|1Moving
      allowance.     |                |  |                     |     |                      |  |                   |   |                    |        |  |  |         |  | 
|                             |                |  |                     |     |                      |  |                   |   |                    |        |  |  |         |  | 

Share-matching
    schemeBonus shares
    will be matched on a one to one basis under the condition that at least 50%
    of these shares are kept for at least three years.The bonus-shares are held
    in a trust by our share administrator.




All board members
  participated in the scheme and none of the acquired shares were sold.The current
  holding of bonus related shares (including the shares from reinvested dividend)
  and matching entitlement is set out in the two tables below:


|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |      
|------------------------- | ----- |  |  | -------- |  | ----------------- | ------------------------------------ | ---------------- |  | -------------- |  | ----------------- | -----
|                          |       |  |  |          |  |                   | Number
      of bonus related shares
|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |      
|                          |       |  |  |          |  |                   |                                      | Granted
      or |  | Sold
      or  |  |                  
|                          |       |  |  |          |  | Shares
      held |                                      | acquired         |  | transferred    |  | Shares
      held
|                          |       |  |  |          |  | as
      of       |                                      | during
      the |  | during         |  | as
      of      
|                          | Year  |  |  |          |  | 1
      Jan 2003  |                                      | year             |  | the
      year |  | 31
      Dec 2003
|Board
      of Management |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |      
|Peter Bakker              | 2003  |  |  | Bonus    |  |                   |                                     |                  |  | 7,042          |  |                   |     
|                          |       |  |  | Dividend |  |                   |                                     |                  |  | 55             |  |                   |     
|Jan Haars                 | 2003  |  |  | Bonus    |  |                   |                                     |                  |  | 4,062          |  |                   |     
|                          |       |  |  | Dividend |  |                   |                                     |                  |  | 31             |  |                   |     
|Harry Koorstra            | 2003  |  |  | Bonus    |  |                   |                                     |                  |  | 5,523          |  |                   |     
|                          |       |  |  | Dividend |  |                   |                                     |                  |  | 43             |  |                   |     
|Dave Kulik                | 2003  |  |  | Bonus    |  |                   |                                     |                  |  | 3,880          |  |                   |     
|                          |       |  |  | Dividend |  |                   |                                     |                  |  | 30             |  |                   |     
|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |      
|Current
      members     | total |  |  |          |  |                   |                                     |                  |  | 20,666         |  |                   |     
|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |      
|Former
      members      | total |  |  |          |  |                   |                                     |                  |  | 11,586         |  |                   | 2,575
|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |      
|Total                     |       |  |  |          |  |                   |                                     |                  |  | 32,252         |  |                   | 2,575
|                          |       |  |  |          |  |                   |                                      |                  |  |                |  |                   |      

The shares granted
  during the year in the table above represent 25% of the remuneration costs of
  the bonuses of 2002 as reported in 2002.






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      annual report | 

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|                          |       |  |                  | Number of matching rights on shares
|------------------------- | ----- |  | ---------------- | -----------------------------------
|                          |       |  |                  |                                    
|                          |       |  |                  |                                    
|                          |       |  | Outstanding      |                                    
|                          |       |  | as
      of      |                                    
|                          | Year  |  | 1
      Jan 2003 |                                    
|Board
      of Management |       |  |                  |                                    
|Peter Bakker              | 2003  |  |                  |                                   
|Jan Haars                 | 2003  |  |                  |                                   
|Harry Koorstra            | 2003  |  |                  |                                   
|Dave Kulik                | 2003  |  |                  |                                   
|                          |       |  |                  |                                    
|Current
      members     | total |  |                  |                                   
|                          |       |  |                  |                                    
|Former
      members      | total |  |                  |                                   
|                          |       |  |                  |                                    
|Total                     |       |  |                  |                                   
|                          |       |  |                  |                                    

The number of matching
  rights on shares granted on 21 February 2003 and active per 28 April 2003 have
  been accrued as part of the remuneration costs of 2003 on a linear basis. Long-term
    incentivesUnder the performance
    schedule 0%  150% of the base allocation of the share options and 0%
     120% of the performance shares might vest depending on the relative
    total shareholder return performance of our company during the three financial
    years starting with the year of grant.The maximum number of options and rights
    on performance shares that can vest are disclosed in this report (150% of
    base allocation share options and 120% of base allocation performance shares).The
    total number of options and rights on performance shares that vest is dependent
    on our total shareholders return measured against AEX companies and
    direct competitors.






| |                        |    
| | ---------------------- | ---
| | 2003
    annual report | 113

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Chapter 12 Financial statements and other information

|
|



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 Management:


|               |       |   | Number
      of options |  | Amounts
      in  |  |                  | 
|-------------- | ----- | - | ----------------------- |  | ------------------ |  | ---------------- | 
|               |       |   |                         |  |                    |  |                  | 
|               |       |   | Out-                    |  |                    |  |                  | 
|               |       |   | standing                |  | Granted            |  | Exercised        | 
|               |       |   | as
      of             |  | during
      the   |  | during
      the | 
|               | Year  |   | 1
      Jan 2003        |  | year
      2       |  | year             | 
|Board
      of |       |   |                         |  |                    |  |                  | 
|Management     |       |   |                         |  |                    |  |                  | 
|Peter Bakker   | 1998  |   | 24,000                  |  |                    |  |                  | 
|               | 1999  |   | 20,000                  |  |                    |  |                  | 
|               | 2000  |   | 20,000                  |  |                    |  |                  | 
|               | 2001  |   | 20,000                  |  |                    |  |                  | 
|               | 2002  |   | 60,000                  |  |                    |  |                  | 
|               | 2003  |   |                         |  | 60,000             |  |                  | 
|Jan Haars      | 1998  |   | N/a                     |  |                    |  |                  | 
|               | 1999  |   | N/a                     |  |                    |  |                  | 
|               | 2000  |   | N/a                     |  |                    |  |                  | 
|               | 2001  |   | N/a                     |  |                    |  |                  | 
|               | 2002  |   | 30,000                  |  |                    |  |                  | 
|               | 2003  |   |                         |  | 30,000             |  |                  | 
|Harry Koorstra | 1998  |   | N/a                     |  |                    |  |                  | 
|               | 1999  |   | N/a                     |  |                    |  |                  | 
|               | 2000  | 1 | 9,000                   |  |                    |  |                  | 
|               | 2001  |   | 20,000                  |  |                    |  |                  | 
|               | 2002  |   | 30,000                  |  |                    |  |                  | 
|               | 2003  |   |                         |  | 30,000             |  |                  | 
|Dave Kulik     | 1998  |   | N/a                     |  |                    |  |                  | 
|               | 1999  |   | N/a                     |  |                    |  |                  | 
|               | 2000  |   | N/a                     |  |                    |  |                  | 
|               | 2001  |   | N/a                     |  |                    |  |                  | 
|               | 2002  |   | N/a                     |  |                    |  |                  | 
|               | 2003  | 1 |                         |  | 18,000             |  |                  | 
|               |       |   |                         |  |                    |  |                  | 
|Current        |       |   |                         |  |                    |  |                  | 
|members        | Total |   | 233,000                 |  | 138,000            |  |                 | 
|Former         |       |   |                         |  |                    |  |                  | 
|members        | 1998  |   | 60,000                  |  |                    |  |                  | 
|               | 1999  |   | 81,000                  |  |                    |  |                  | 
|               | 2000  |   | 80,000                  |  |                    |  |                  | 
|               | 2001  |   | 40,000                  |  |                    |  |                  | 
|               | 2002  |   | 60,000                  |  |                    |  |                  | 
|               | 2003  |   |                         |  | 60,000             |  |                  | 
|               |       |   |                         |  |                    |  |                  | 
|Former         |       |   |                         |  |                    |  |                  | 
|members        | Total |   | 321,000                 |  | 60,000             |  |                 | 
|               |       |   |                         |  |                    |  |                  | 
|Total          |       |   | 554,000                 |  | 198,000            |  |                 | 
|               |       |   |                         |  |                    |  |                  | 

|N/a | 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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1   | Granted before
    the appointment as member of the Board of Management.                                                                                             
|2   | 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 granted.


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Long term incentive / performance share schemeThe table below
    summarises the status of the rights awarded under the Performance Share Scheme
    to the members of the Board of Management:


|                          |       |  | Number
      of rights on performance shares |  |                  | 
|------------------------- | ----- |  | -------------------------------------------- |  | ---------------- | 
|                          |       |  |                                              |  |                  | 
|                          |       |  |                                              |  |                  | 
|                          |       |  | Outstanding                                  |  | Granted          | 
|                          |       |  | as
      of                                  |  | during           | 
|                          | Year  |  | 1
      Jan 2003                             |  | the
      year 1 | 
|Board
      of Management |       |  |                                              |  |                  | 
|Peter Bakker              | 2002  |  | 8,938                                        |  |                 | 
|                          | 2003  |  |                                              |  | 11,795           | 
|Jan Haars                 | 2002  |  | 5,958                                        |  |                 | 
|                          | 2003  |  |                                              |  | 7,863            | 
|Harry Koorstra            | 2002  |  | 5,958                                        |  |                 | 
|                          | 2003  |  |                                              |  | 7,863            | 
|Dave Kulik                | 2002  |  |                                             |  |                 | 
|                          | 2003  |  |                                              |  |                 | 
|                          |       |  |                                              |  |                  | 
|Current
      members     | total |  | 20,854                                       |  | 27,521           | 
|Former members            | 2002  |  | 11,916                                       |  |                  | 
|                          | 2003  |  |                                              |  | 15,726           | 
|                          |       |  |                                              |  |                  | 
|Former
      members      | total |  | 11,916                                       |  | 15,726           | 
|                          |       |  |                                              |  |                  | 
|Total                     |       |  | 32,770                                       |  | 43,247           | 
|                          |       |  |                                              |  |                  | 

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

LoansThe amount of outstanding
    loans made by the company and any of its subsidiaries to members of the Board
    of Management is set out in the table below:


|               | Total
      outstanding loan |  |                              |           | Total
      outstanding loan
|-------------- | ---------------------------- |  | ---------------------------- | --------- | ----------------------------
|               | per
      1 Jan 2003         |  | Repaid
      during the year |           | per
      31 Dec 2003       
|Peter Bakker   | 93,861.72                    |  |                              | 93,861.72 |                             
|Harry Koorstra | 16,348.79                    |  |                              | 16,348.79 |                             
|               |                              |  |                              |           |                             

In the Netherlands
    in 1998 and 1999 tax was levied at the time of grant of the option rights
    and the loans were offered to the Dutch members of the Board of Management
    in order to pay this tax. No interest accrued on the loans, however a fictitious
    income mark-up of 4% was made over the monthly salary. During 2003, all loans
    were paid back by the members of the Board of Management. PensionsPeter Bakker, Jan
    Haars and Harry Koorstra are participants in the TPG Pension Fund.This is
    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 of 1.75% per year and a 401
    K scheme (defined contribution).


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    annual report | 115
| | ---------------------- | ---

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Chapter 12 Financial
  statements and other information

|
|



Personnel
    and management option plansPersonnel
    option planOur Board of Management
    decided, with 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 are:The employee
        is granted an option right for 100 of our company shares.Options are
        granted at the opening price (27.70) as
        traded on the Euronext Amsterdam on the date the grant is made.The option is
        exercisable between 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 / her option 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 option when he or she leaves the company
        for reasons other than those 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 did however result 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. 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 2003 (3,214,500), 2002
    (2,499,750), and in 2001 (1,601,200).These grants are part of the policy of
    granting options each year to eligible members of senior management. 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 and 2003 option plan 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 on the Euronext Amsterdam
        on the date the grant is made (2003: 
        13.85/share and  14.51 / share).For options
        granted in 2003 the option is exercisable between the third and eighth
        anniversary of the day of grant, after eight years the outstanding options
        are forfeited.For options
        granted before 2003 the option is exercisable between 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 / her option 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 option when he or she leaves the
        company for reasons other than those mentioned above. Option rights
    are granted in accordance with the fiscal procedures and regulations that
    apply in the country concerned. In countries where tax is levied on the grant
    of option rights, we offer the option plan participants a loan in order to
    pay this tax, as far as permitted by applicable law. At 31 December 2003 the
    loans receivable amounted to  625,069 (2002: 748,400). Unless we decide otherwise, the loans are repayable either when
    the options are exercised or when the option rights lapse. The company decided
    not to request repayment of the loans that were associated with the tax paid
    on grant of the 1998 management options, that expired in 2003. The exercise of
    options is subject to the TPG rules governing inside information.




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      annual report | 

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The table below summarises the status of the number of outstanding options granted to personnel and management:




|           |      |  |  |                         |  |  |                    |  |  |                |  |  |                |  |  |              |  |  |          |  |  |                | 
|---------- | ---- |  |  | ----------------------- |  |  | ------------------ |  |  | -------------- |  |  | -------------- |  |  | ------------ |  |  | -------- |  |  | -------------- | 
|           |      |  |  |                         |  |  |                    |  |  |                |  |  |                |  |  |              |  |  |          |  |  |                | 
|           |      |  |  | Number
      of options |  |  | Amounts
      in  |  |  |                | 
|           |      |  |  |                         |  |  |                    |  |  |                |  |  |                |  |  |              |  |  |          |  |  |                | 
|           |      |  |  |                         |  |  |                    |  |  |                |  |  |                |  |  | Outstanding- |  |  |          |  |  | Share          | 
|           |      |  |  | Outstanding             |  |  | Granted            |  |  | Excercised     |  |  | Forfeited      |  |  | as
      of  |  |  |          |  |  | price
      on | 
|           |      |  |  | as
        of           |  |  | during             |  |  | during         |  |  | during         |  |  | 31
      Dec |  |  | Exercise |  |  | exercise       | 
|           | Year |  |  | 1
        Jan 2003      |  |  | the
      year     |  |  | the
      year |  |  | the
      year |  |  | 2003         |  |  | price    |  |  | date           | 
|Personnel  | 1999 |  |  | 1,979,200               |  |  |                    |  |  |                |  |  | 44,400         |  |  | 1,934,800    |  |  | 27.70    |  |  |                | 
|           |      |  |  |                         |  |  |                    |  |  |                |  |  |                |  |  |              |  |  |          |  |  |                | 
|           |      |  |  |                         |  |  |                    |  |  |                |  |  |                |  |  |              |  |  |          |  |  |                | 
|Management | 1998 |  |  | 82,000                  |  |  |                    |  |  |                |  |  | 82,000         |  |  |             |  |  | 23.19    |  |  |                | 
|           | 1998 |  |  | 352,200                 |  |  |                    |  |  |                |  |  | 352,200        |  |  |             |  |  | 21.15    |  |  |                | 
|           | 1999 |  |  | 514,385                 |  |  |                    |  |  |                |  |  | 19,350         |  |  | 495,035      |  |  | 25.26    |  |  |                | 
|           | 1999 |  |  | 9,700                   |  |  |                    |  |  |                |  |  | 700            |  |  | 9,000        |  |  | 25.26    |  |  |                | 
|           | 2000 |  |  | 699,375                 |  |  |                    |  |  |                |  |  | 21,400         |  |  | 677,975      |  |  | 24.96    |  |  |                | 
|           | 2000 |  |  | 6,000                   |  |  |                    |  |  |                |  |  | 3,000          |  |  | 3,000        |  |  | 27.62    |  |  |                | 
|           | 2001 |  |  | 1,439,400               |  |  |                    |  |  |                |  |  | 70,100         |  |  | 1,369,300    |  |  | 23.66    |  |  |                | 
|           | 2002 |  |  | 2,452,650               |  |  |                    |  |  |                |  |  | 127,500        |  |  | 2,325,150    |  |  | 22.24    |  |  |                | 
|           | 2003 |  |  |                         |  |  | 3,195,000          |  |  |                |  |  | 165,150        |  |  | 3,029,850    |  |  | 13.85    |  |  |                | 
|           | 2003 |  |  |                         |  |  | 19,500             |  |  |                |  |  |                |  |  | 19,500       |  |  | 14.51    |  |  |                | 
|           |      |  |  |                         |  |  |                    |  |  |                |  |  |                |  |  |              |  |  |          |  |  |                | 
|Total      |      |  |  | 7,534,910               |  |  | 3,214,500          |  |  |               |  |  | 885,800        |  |  | 9,863,610    |  |  |          |  |  |                | 
|           |      |  |  |                         |  |  |                    |  |  |                |  |  |                |  |  |              |  |  |          |  |  |                | 



|                                     |                                |   |      |                                                           |  |      |                                    |   |  |                                                                      |  |  |                                    |   |  |                                                                  | 
|------------------------------------ | ------------------------------ | - | ---- | --------------------------------------------------------- |  | ---- | ---------------------------------- | - |  | -------------------------------------------------------------------- |  |  | ---------------------------------- | - |  | ---------------------------------------------------------------- | 
|Statements
      of changes of       | 2003                           |   | 2002 |                                                           |  | 2001
|                                     |                                |   |      |                                                           |  |      |                                    |   |  |                                                                      |  |  |                                    |   |  |                                                                  | 
|outstanding
      options            | Number
      of 
      options |   |      | Weighted
        
        averageexercise 
        price |  |      | Number
        
        of options |   |  | Weighted
        
        average 
        exercise 
        price  |  |  | Number
        of 
        options |   |  | Weighted
      average
        
        exercise
        price  | 
|Balance
      at beginning of year   | 8,088,910                      |   |      | 24.31                                                     |  |      | 5,992,460                          |   |  | 25.44                                                                |  |  | 4,672,660                          |   |  | 25.97                                                            | 
|Granted                              | 3,412,500                      |   |      | 13.85                                                     |  |      | 2,679,750                          |   |  | 22.2                                                                 |  |  | 1,721,200                          |   |  | 23.66                                                            | 
|Exercised                            |                               |   |      |                                                          |  |      | (18,800                            | ) |  | 21.15                                                                |  |  | (10,300                            | ) |  | 21.95                                                            | 
|Forfeited                            | (1,190,800                     | ) |      | 21.06                                                     |  |      | (564,500                           | ) |  | 26.41                                                                |  |  | (391,100                           | ) |  | 23.93                                                            | 
|                                     |                                |   |      |                                                           |  |      |                                    |   |  |                                                                      |  |  |                                    |   |  |                                                                  | 
|Balance
      at end of year         | 10,310,610                     |   |      | 21.22                                                     |  |      | 8,088,910                          |   |  | 24.31                                                                |  |  | 5,992,460                          |   |  | 25.44                                                            | 
|Exercisable at
      31 December     | 3,275,110                      |   |      | 26.61                                                     |  |      | 3,124,185                          |   |  | 26.23                                                                |  |  | 875,685                            |   |  | 23.06                                                            | 
|Weighted average
      fair value of |                                |   |      |                                                           |  |      |                                    |   |  |                                                                      |  |  |                                    |   |  |                                                                  | 
|options
      at grant date (in )   |                                |   |      | 3.29                                                      |  |      |                                    |   |  | 6.28                                                                 |  |  |                                    |   |  | 7.15                                                             | 
|                                     |                                |   |      |                                                           |  |      |                                    |   |  |                                                                      |  |  |                                    |   |  |                                                                  | 



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 management Members of a select
    group of senior managers were paid 75% of their 2002 bonus in cash and 25%
    as grant of TPG shares with an associated matching right (2003: 54,405) if
    at least 50% of the shares are kept for 3 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 is approved by the Supervisory Board. 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 (2003: 13.85/share).The
        rights on matching shares are granted for zero costs and the number of
        shares is equal to the number of bonus shares.


| | 2003
    annual report | 117
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Chapter 12 Financial
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The matching
        shares are delivered 3 years after the delivery of the bonus shares.
        One matching share is delivered for each bonus share that has been retained
    for 3 years.For each bonus
        share that is sold within 3 years, the associated right to one matching
        share lapses. If more than 50% of the bonus shares are sold within 3
    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 |  |  |               
|---------- | ---- |  |  | ----------------------------------------- |  |  | --------------
|           |      |  |  |                                           |  |  |               
|           |      |  |  |                                           |  |  |               
|           |      |  |  | Outstanding                               |  |  | Granted       
|           |      |  |  | as
      of                               |  |  | during        
|           | Year |  |  | 1
      Jan 2003                          |  |  | the
      year
|Management | 2003 |  |  |                                          |  |  | 54,405        
|           |      |  |  |                                           |  |  |               
|           |      |  |  |                                           |  |  |               

The number of matching rights on shares granted 21 February 2003 and active per 28 April 2003 have been accrued as part of the salary costs of 2003 on a linear basis. Hedging
    of Shares We manage our risk
    in connection with the obligations we have under the existing share and option
    plans by purchasing shares in the market. In 2003 and 2002 we purchased no
    shares.




At 31 December
    2003 we have a total of 5,148,850 shares held in treasury (2002: 5,235,260),
    purchased at a weighted average price per share of 25.24.
    At 31 December 2003, we have a total of 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 | 
|                                                                           |                                 | 
|                                                                           | 2003                            | 
|Number of issued
      and outstanding ordinary shares                     | 480,259,522                     | 
|Number of treasury
      shares held by the company                        | 5,148,850                       | 
|Average number
      of ordinary shares per year                           | 475,078,945                     | 
|Diluted number
      of ordinary shares per year                           | 277,185                         | 
|                                                                           |                                 | 
|Average
      number of ordinary shares on fully diluted basis in the year | 475,356,130                     | 
|Net income (incents)per ordinary
      share                              | 63.1                            | 
|Net income (incents)per diluted
      ordinary share                      | 63.1                            | 
|                                                                           |                                 | 
|                                                                           |                                 | 

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 2003 (and so are assumed to be exercised).




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        annual report | 
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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 2001, 2002 and/or 2003 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:




Fair value
  impact options



|                                                        | Year
      ended at 31 December
|------------------------------------------------------- | -------------------------------
|                                                        |                                
|                                                        | 2003                           
|Net
      income                                        |                                
|As reported                                             | 300                            
|As adjusted(unaudited)                                  | 294                            
|Net
      income per ordinary share and per ADS         |                                
|As reported (incents)                                  | 63.1                           
|As adjusted (incents)
      (unaudited)                | 61.9                           
|Net
      income per diluted ordinary share and per ADS |                                
|As reported (incents)                                  | 63.1                           
|As adjusted (incents)
      (unaudited)                | 61.8                           
|                                                        |                                
|(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
|                                    |                               |  |  |       |  | 
|                                    | 2003                          |  |  | 2002  |  | 
|Riskfree interest
      rate(%)     | 4.69                          |  |  | 3.65  |  | 
|Dividend (incents
      per share) | 48.00                         |  |  | 40.00 |  | 
|Volatility(%)                       | 29.0                          |  |  | 29.0  |  | 
|Expected life(years)                | 8                             |  |  | 5     |  | 
|                                    |                               |  |  |       |  | 
|                                    |                               |  |  |       |  | 

19
      Depreciation,
        amortisation and impairments: 711 million (2002: 490; 2001: 437) Year ended at 31 December2003
   
   
   2002
   
   
   2001Goodwill amortisationand impairment
   334
   
   
   154
   
   
   139Amortisation of other intangibles
   44
   
   
   21
   
   
   7Depreciation/impairment of PP&E
   333
   
   
   315
   
   
   291Total
   711
   
   
   490
   
   
   437(inmillions)




Depreciation and impairments of property, plant and equipment are detailed as follows: Year ended at 31 December2003
   
   
   2002
   
   
   2001By classification:Land and buildings
   62
   
   
   56
   
   
   50Plant and equipment
   135
   
   
   117
   
   
   107Other property, plant and equipment
   136
   
   
   142
   
   
   134Total
   333
   
   
   315
   
   
   291By cause:Regular depreciation
   323
   
   
   314
   
   
   291Impairment
   10
   
   
   1Total
   333
   
   
   315
   
   
   291(inmillions)




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    annual report | 119
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Chapter 12 Financial
  statements and other information

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In 2003,
    the allocation of the amount of depreciation and impairments to the divisions
    mail, express and logistics was respectively104
    million,123 million and104 million, (2002: 102, 122 and 88; 2001: 97; 113 and 81). In addition, depreciation
    in respect of non-allocated business amounted to2 million (2002: 3;
    2001: 0). 20
      Other
        operating expenses:)759 million (2002: 843; 2001: 821Total
        advertising expenses incurred in the year amounted to 56 million (2002:
        72; 2001: 61).




The other
    operating expenses in mail in 2003 were265 million (2002: 315; 2001: 331), in express215 million (2002:
    223; 2001: 269) and in logistics253 million (2002:
    269; 2001: 138) and26 million other costs. Included within
    other operating expenses are costs incurred with respect to 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 | 
|---------------------------- | ------------------------------- | 
|                             |                                 | 
|                             | 2003                            | 
|                             |                                 | 
|Audit services               | 8                               | 
|Audit related
      services | 0                               | 
|Tax advisory fees            | 1                               | 
|Other services               | 1                               | 
|                             |                                 | 
|Total                        | 10                              | 
|                             |                                 | 
|(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 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. 21
      Interest
        and similar income and expensesInterest
        and similar income:18
        million (2002: 20; 2001: 26)Interest
        and similar income arises primarily from interest on our bank deposits
        throughout the year. Interest
    and similar expenses:
    110 million (2002: 128; 2001: 119) Year
        ended at 31 December2003
      
      
      2002
      
      
      2001Interest on
        long-term liabilities
      76
      
      
      92
      
      
      32Interest added
        to provisions
      2
      
      
      2
      
      
      1Interest on
        short-term liabilities
      24
      
      
      24
      
      
      77Other financial
        expenses
      8
      
      
      10
      
      
      9Total
      110
      
      
      128
      
      
      119(in millions)




Other financial
    expenses comprise hedge costs of 8 million (2002:
    7; 2001: 4) and foreign exchange losses of  0 (2001: 3; 2001: 5). 22
      Income
        taxes: 368 million(2002: 341; 2001: 335)Income
        taxes in the statements of income of 2003 amount to 
        368million (2002: 341;
        2001: 335), or 54.5% (2002: 35.9%; 2001: 36.3%) of income before income
        taxes, including a tax effect of 9.9% from the goodwill impairment recognised
        in the year.  104 million of our total income taxes relates to tax
        authorities outside the Netherlands (2002: 88; 2001: 48).  Year
        ended at 31 December2003
      
      
      2002
      
      
      20011Dutch statutory
        income tax-rate:
      34.5
      
      
      34.5
      
      
      35.0Adjustment re
        effective incometax
        rate other countries
      (1.1
      )
      
      (0.6
      )
      
      (0.9
      )Permanent differences:Non
        and partly deductible costs
      0.7
      
      
      0.6
      
      
      0.7Amortisation
        of goodwill
      3.7
      
      
      3.6
      
      
      3.3Exempt
        income
      (0.3
      )
      
      (0.6
      )
      
      (1.5
      )Other
      7.1
      
      
      (1.6
      )
      
      (0.3
      )Effective
        income tax rate(excl.
        goodwill impairment)
      44.6
      
      
      35.9
      
      
      36.3Impact goodwill
        impairment
      9.9Effective
        income tax rate(incl.
        goodwill impairment)
      54.5
      
      
      35.9
      
      
      36.3 (in
        percentages)1
      adjusted for
        improved comparability.




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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 2003, the effective income
    tax rate was 44.6% (2002: 35.9%; 2001: 36.3%), excluding the goodwill impairment
    tax effect of 9.9% or 10.1% (2002: 1.4%; 2001: 1.3%) higher than the statutory
    corporate income tax rate of 34.5% in the Netherlands (2002: 34.5%; 2001:
    35.0%). Included in 2003 `other' is the effect of € 59 million to cover
    our estimate of liability to the UK Inland Revenue, including interest and
    penalties, following investigations conducted by our audit committee. The
    independent investigations conducted by our audit committee related to representations
    to the UK Inland Revenue and to our




auditor 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 difference
    between the effective income tax rate and the statutory corporate income tax
    rate is due to permanent differences such as non-deductible amortisation of
    goodwill, non- and partly deductible costs, exempt income and different income
    tax rates in other countries. Income tax expense
  consists of the following:




|                                                                                    | Year
      ended at 31 December | 
|----------------------------------------------------------------------------------- | ------------------------------- | 
|                                                                                    |                                 | 
|                                                                                    | 2003                            | 
|Current tax expense                                                                 | 188                             | 
|Changes in deferred
      taxes (excluding acquisitions / foreign exchange effects) | 180                             | 
|                                                                                    |                                 | 
|Total
      income taxes                                                            | 368                             | 
|                                                                                    |                                 | 
|(in millions)                                                                      |                                 | 



In the year 2003,
    the current tax expense amounted to 188 million (2002:
    357; 2001: 331). The difference between the 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 2003. Deferred
      tax assets at 31 December 2002
    406Changes
    (162
    )(De)consolidation
      / foreign exchange effects
    (2
    )Deferred
      tax assets at 31 December 2003
    242(inmillions) Deferred tax assets arise because of the following differences: Year
        ended at 31 December2003
      
      
      2002Differences
        between valuation forbook and tax
        purposes of:Pension
        liabilities and provisions
      (24
      )
      
      164Property,
        plant and equipment
      3
      
      
      16Tax
        losses and other
      263
      
      
      226Total
        deferred tax assets
      242
      
      
      406(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 2003,
    deferred tax assets amounting to 205 million (2002:
    374) have been accounted for as financial fixed assets and 37 million (2002:
    32) within accounts receivable. The total accumulated
    losses that are available for carry forward at 31 December 2003 amounted to
    750 million (2002:
    836). With these losses carried forward, future tax benefits of 248 million could
    be recognised (2002: 278).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 110
    million at the end of 2003. (2002: 133).We established valuation allowances
    and have therefore effectively not recognised 138 million (2002:
    145) 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. The expiration of
  total accumulated losses is presented in the table below: At
        31 December20032004
      32005
      52006
      62007
      232008 and thereafter
      205Indefinite
      508Total
      750(in millions)




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Chapter 12 Financial
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The following table
  shows the movements in deferred tax liabilities in 2003. Deferred
      tax liabilities 31 December 2002
    133Changes
    18(De)consolidation
      / foreign exchange effects
    (8
    )Deferred
      tax liabilities 31 December 2003
    143(inmillions) Of the total deferred
    tax liabilities 7 million is of
    a short-term nature (2002: 4). Deferred tax liabilities arise because of the
    following differences: Year
      ended at 31 December2003
    
    
    2002Differences between
      valuation forbook and tax purposes
      of:Provisions
    2Property,
      plant and equipment
    80
    
    
    85Other
    61
    
    
    48Total
      deferred tax liabilities
    143
    
    
    133(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 any potential unfavourable consequences are assessed and accrued for accordingly
  in our financial statements.




|Notes
      to the consolidated cash flow statements
|----------------------------------------------------
|                                                    
|                                                    

23
      Net
        cash provided by operating activities:937
        million (2002: 1,032; 2001: 773) Net cash provided
    by operating activities was 937 million, which
    is 9% below last year (1,032 million).
    Net income contributed 300million or
    1,011
    million if corrected for the non-cash impact of depreciation, amortisation
    and impairments a decrease of 78million (7.2%)
    to last year (1,089 million). The change in deferred
    taxes of 180 million is
    a non-cash item that is primarily attributable to tax deductible increased
    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. In 2002 the similar change in deferred tax assets had
    a negative impact of  16 million. The changes in pension
    liabilities of 221 million reflects
    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 who fall
    under our collective labour agreement, plus our cash payment of 79 million for pensions
    which fall under transitional plan of our Dutch collective labour agreement
    and which are directly paid by TPG (see note 10 to our financial statements).
    In total these payments are 131 million higher
    than last year, in particular due to additional contributions totalling 100 million




as
    prescribed in the new minimum funding requirements by the Independent
    Supervisory Authority for Pensions and Insurance. In 2002 similar changes
    in pension liabilities represented a 111 million cash outflow. Working capital
    increased by 26 million in
    2003 versus a decrease of 48million in prior year. Most of the increase in 2003 relates to the accounts
    receivable position that moved unfavourable by 37million 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 18million included
    in current liabilities reflects total income tax payments in 2003 of 288 million compared
    to 276
    million in 2002. Interest paid in 2003 amounted to 84 million compared
    to 117
    million. Trade payables decreased the cash flow by 19 million and
    compared unfavourable with an improvement of 55 million last
    year. The improvement to our accounts receivable and trade payable position
    last year (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 unfavourable by 10 million (2002:
    74) caused by an increase of prepayments and accrued income.




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24
      Net
        cash used in investing activities:(373)
        million (2002: (518); 2001: (698))In 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 (34m) with the
        largest being Blitzpunkt (7 million), Olaf
        Jepsen (9 million for
        remaining 49%) and DocVision B.V. (9 million). Logistics
        acquired for an amount of21 million mainly
        related to deferred considerations for Schrader, Barlatier and Mendy (14 million). Express
        acquired for an amount of4 million related
        to the acquisition of Archive and Data Storage Limited.The acquisition
        of affiliated companies (16 million) related
        mostly to some additional capital contributions in our affiliate Logispring
        (13
        million). In 2002 total acquisition costs were139 million, the
        largest being TNT DFDS Transport Logistics (25 million), Transport
        Nicolas (38 million), Bleckmann
        Group (12 million) and
        Cerilly Invest SA (9 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. During 2002 various smaller disposals
    amounted to a total of14 million. In 2003,
    capital expenditure on property, plant and equipment amounted to287 million.The capital
    expenditure on intangible assets of67 million mainly
    relate to software (46 million) with the
    remainder (21 million) being
    prepayments on intangible assets mostly related to software as well. Of the
    total amount,107 million related
    to mail,160 million to express,83 million to logistics
    and4 million to corporate.
    In mail, capital expenditure on property, plant and equipment mainly related
    to the construction and refurbishment of distribution sites, enlarged buildings
    and equipment for the sorting centers and new buildings with standardised
    construction. In express, capital expenditure included investments in depots,
    hubs and warehouses, fleet expansions and replacements and operational equipment
    including automated sorting systems. In logistics the majority of capital
    expenditure related to warehouses and equipment (e.g. forklifts, racking systems,
    trailers and trucks) dedicated to the operation of contracts and offices. In 2003,
    non-cash investing activities totalled20 million (2002:
    18); this amount relates to additional finance leases. Capital
    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(130 million).This
    primarily results from the postponement of regularly scheduled refurbishmentof
    our Netherlands distribution sites and delay in a few large projects such
    as 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
    expenditure 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
    expenditure are individually less than1 million and include
    small building refurbishments, replacement of IT equipment, and various maintenance-related
    capital expenditure. Capital
    expenditure on property plant & equipment and other intangible assets
    by our express division totalled160 million in 2003
    which is 10.1% below the level of 2002 (178 million). Some
    of the larger capital expenditure 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 (52 million). Of the
    total124 million capital
    expenditure,84 million (68%) was
    spent in Europe. During the year, capital expenditures on other intangible
    assets totalled36 million (2002:
    40) and related primarily to the development of financial systems (e-back
    office) software and further enhancements to our international shared systems. Capital
    expenditure on property, plant and equipment and other intangible assets by
    our logistics division totalled83 million in 2003,
    a 49% 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 relate 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 the year, capital expenditures
    on other intangible assets totalled6 million (2002: 13),
    due primarily to the continued development of financial systems (e-back office)
    software for the entire division.




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Chapter 12 Financial statements and other information

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25
      Net
        cash used in financing activities:(436)
        million (2002: (598); 2001: 125)The
        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 is estimated
        to result in an cash payment of 142
        million to be made in April 2004. In 2002, the final dividend for the
        previous year amounted to 114
        million with a 71
        million interim cash dividend over 2002. New long-term
    liabilities, net of repayments, resulted in a cash outflow of
    13 million (2002: 4).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, 2002: 16), a bilateral facility ( 13
    million), other loans ( 19
    million, 2002: 19), 13
    million due to foreign currency movement and movements in non-interest-bearing
    liabilities of 25
    million (2002: 32). Changes
    in short-term financing resulted in a cash outflow of 219
    million (2002: 405). 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 2002 major repayments were made on to an Australian facility (
    127 million), loan notes
    in British pounds ( 118
    million) and Italian loans ( 68
    million). In 2003,
    non-cash financing activities totalled 26
    million (2002: 18), this amount relates to additional finance leases.






|Additional
      notes
|----------------------
|                      

26
      Pro
        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 information regarding those joint ventures
    in which we have a 50% share is set forth below: Year ended at 31 December2003
   
   2002
   
   2001Total fixed assets
   95
   
   
   118
   
   
   95Total current assets
   185
   
   
   181
   
   
   125Group equity
   89
   
   
   97
   
   
   78Provisions
   32
   
   
   39
   
   
   35Long-term liabilities
   16
   
   
   20
   
   
   11Current liabilities
   143
   
   
   143
   
   
   96Net sales
   543
   
   
   547
   
   
   417Operating income
   15
   
   
   21
   
   
   7Net income
   10
   
   
   12
   
   
   5Net cash provided byoperating activities
   60
   
   
   43
   
   
   19Net cash used in investing activities
   (10
   )
   
   (35
   )
   
   (17
   )Net cash used in financing activities
   (20
   )
   
   (8
   )
   
   1Changes in cash and cash equivalents
   30
   
   
   
   
   
   3(in millions)




27
      Related
        party with the State of the Netherlands(No
        corresponding financial statement number) The
    State as shareholderDuring March
    2001, the Dutch State announced that it sold a total of 40,250,000 of our
    ordinary shares, thus reducing its ownership interest in our outstanding ordinary
    shares from approximately 43.3% to approximately 34.9% (due to the payment
    of a stock dividend in May 2001, this ownership was diluted further to approximately
    34.8%). At such time, the State also announced its intention to reduce its
    involvement with us while continuing to safeguard the public interest in the
    postal concession. The State and we
    agreed in March 2001 to certain amendments to the agreements which govern
    our relationship. Pursuant to this amended agreement the Minister of Transport
    has no longer an option to acquire our preference shares A.This agreement
    has been implemented by amendment of our articles of association on 20 June
    2002 and termination of the option to acquire our preference shares A per
    April 2002. 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:




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      annual report | 

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issuing
    shares in our capital;restrictions
        on or exclusions of the pre-emptive rights of holders of our ordinary
    shares;mergers,
    demergers and dissolutions with respect to us and Royal TPG Post B.V.;certain
    capital expenditures;certain
    dividends and distributions; andcertain
        amendments to our articles of association and the articles of association
        of Royal TPG Post B.V., including any amendment to the articles of association
    with respect to-
      a modification
        of the objects clause that relates to performance of the concession obligations,-
      the creation of
        new classes of shares, profit sharing certificates or other securities
        entitling the holder thereof to the earnings and/or shareholders
        equity of the company,-
      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 of limiting the applicability of rights attached to the special
    share to apply only to our subsidiary for postal activities. Long-term equity interestIn March
    2001 the State expressed its intent to reduce over time its shareholding in
    us to 10% of the outstanding ordinary shares. The State as creditorOn
    31 December 2003  41
    million of a 6.37% senior loan and  31
    million of a 6.72% subordinated loan were repaid. As of 31 December
    2003, no loans are outstanding from the State.See
    note 12 to our consolidated financial statements. 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. 28
      Other
        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 2003, sales made by TPG companies to its joint
    ventures amounted to  136 million (2002: 135). Purchases from joint
    ventures amounted to  24 million (2002: 22).The net amounts due from
    joint venture entities amounted to  35 million (2002: 18). As at 31
    December 2003 loans receivable from affiliated companies as disclosed in notes
    3 and 5, amounted to  9
    million (2002: 10). All transactions with joint ventures and affiliated companies
    are conducted in the normal course of business and under normal terms and
    conditions.




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        annual report | 125

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Chapter 12 Financial
  statements and other information

|
|



29
      Segmental
        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:




|2003                                             | Mail   |   |  | Express |   |  | Logistics |   |  | Intercompany |   |  | Non-
      allocated |   |  | Total   |  
|------------------------------------------------ | ------ | - |  | ------- | - |  | --------- | - |  | ------------ | - |  | -------------------- | - |  | ------- | -
|Net sales                                        | 3,852  |   |  | 4,201   |   |  | 3,714     |   |  |              |   |  | 18                   |   |  | 11,785  |  
|Inter-company
      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 of
      other intangibles          | (16    | ) |  | (23     | ) |  | (5        | ) |  |              |   |  |                      |   |  | (44     | )
|Earnings from
      operations                   | 820    |   |  | 276     |   |  | 24        |   |  |              |   |  | (19                  | ) |  | 1,101   |  
|Amortisation and
      impairment of goodwill1   | (54    | ) |  | (53     | ) |  | (227      | ) |  |              |   |  |                      |   |  | (334    | )
|Total operating
      income                     | 766    |   |  | 223     |   |  | (203      | ) |  |              |   |  | (19                  | ) |  | 767     |  
|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 assets2                                    | 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, See note 1 to our financial
      statements.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2 | Identifiable
      assets also used jointly for the segments have been allocated on basis of
      estimated usage.                                                           







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      annual report | 
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Total assets of our
  company at 31 December 2003 were located as follows:

|Location
      of total consolidated assets at | Intangible |  |  | Property,
      plant |  |  | Financial
      fixed |  |  |                      |  |  |       | 
|---------------------------------------------- | ---------- |  |  | --------------------- |  |  | --------------------- |  |  | -------------------- |  |  | ----- | 
|31 December
      2003                         | assets     |  |  | and
      equipment   |  |  | assets                |  |  | Current
      assets |  |  | Total | 
|Europe                                         |            |  |  |                       |  |  |                       |  |  |                      |  |  |       | 
|The
      Netherlands                          | 106        |  |  | 837                   |  |  | 262                   |  |  | 702                  |  |  | 1,907 | 
|United
      Kingdom                           | 176        |  |  | 524                   |  |  | 13                    |  |  | 382                  |  |  | 1,095 | 
|Italy                                          | 170        |  |  | 87                    |  |  | 180                   |  |  | 680                  |  |  | 1,117 | 
|France                                         | 293        |  |  | 98                    |  |  | 56                    |  |  | 233                  |  |  | 680   | 
|Germany                                        | 104        |  |  | 90                    |  |  | 44                    |  |  | 154                  |  |  | 392   | 
|Rest
      of Europe                           | 1,116      |  |  | 160                   |  |  | 20                    |  |  | 300                  |  |  | 1,596 | 
|Americas                                       |            |  |  |                       |  |  |                       |  |  |                      |  |  |       | 
|North
      Americas                           | 432        |  |  | 63                    |  |  | 17                    |  |  | 128                  |  |  | 640   | 
|South
      Americas                           |            |  |  | 7                     |  |  | 3                     |  |  | 42                   |  |  | 52    | 
|Africa & Middle
      East                     |            |  |  | 2                     |  |  |                       |  |  | 23                   |  |  | 25    | 
|Australia                                      | 21         |  |  | 104                   |  |  | 24                    |  |  | 75                   |  |  | 224   | 
|Asia                                           | 3          |  |  | 37                    |  |  | 8                     |  |  | 139                  |  |  | 187   | 
|                                               |            |  |  |                       |  |  |                       |  |  |                      |  |  |       | 
|Total                                          | 2,421      |  |  | 2,009                 |  |  | 627                   |  |  | 2,858                |  |  | 7,915 | 
|                                               |            |  |  |                       |  |  |                       |  |  |                      |  |  |       | 
|(inmillions)                                  |            |  |  |                       |  |  |                       |  |  |                      |  |  |       | 

Balance
  sheet value of property, plant and equipment at 31 December 2003The property, plant
  and equipment of each of our divisions is as follows:

|                                                  |  | Mail |   |  | Express |   |  | Logistics |   |  | Non-allocated |   |  | Total |  
|------------------------------------------------- |  | ---- | - |  | ------- | - |  | --------- | - |  | ------------- | - |  | ----- | -
|                                                  |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  
|Land and buildings                                |  | 525  |   |  | 288     |   |  | 164       |   |  | 4             |   |  | 981   |  
|Plant and equipment                               |  | 183  |   |  | 124     |   |  | 162       |   |  |               |   |  | 469   |  
|Other property,
      plant and equipment         |  | 53   |   |  | 369     |   |  | 58        |   |  | 5             |   |  | 485   |  
|Construction in
      progress                    |  | 25   |   |  | 39      |   |  | 10        |   |  |               |   |  | 74    |  
|                                                  |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  
|Total                                             |  | 786  |   |  | 820     |   |  | 394       |   |  | 9             |   |  | 2,009 |  
|As
      % of total property, plant and equipment |  | 39.1 | % |  | 40.8    | % |  | 19.6      | % |  | 0.4           | % |  | 100.0 | %
|                                                  |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  
|(inmillions, except
      percentages)           |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  
|                                                  |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  
|                                                  |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  
|Location
      of property, plant and equipment   |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  
|at 31
      December 2003                         |  | Mail |   |  | Express |   |  | Logistics |   |  | Non-allocated |   |  | Total |  
|Europe                                            |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  
|The
      Netherlands                             |  | 731  |   |  | 84      |   |  | 15        |   |  | 7             |   |  | 837   |  
|United
      Kingdom                              |  | 11   |   |  | 403     |   |  | 110       |   |  |               |   |  | 524   |  
|Italy                                             |  | 4    |   |  | 33      |   |  | 50        |   |  |               |   |  | 87    |  
|France                                            |  |      |   |  | 53      |   |  | 45        |   |  |               |   |  | 98    |  
|Germany                                           |  | 2    |   |  | 66      |   |  | 22        |   |  |               |   |  | 90    |  
|Rest
      of Europe                              |  | 35   |   |  | 79      |   |  | 44        |   |  | 2             |   |  | 160   |  
|Americas                                          |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  
|North
      Americas                              |  | 1    |   |  | 2       |   |  | 60        |   |  |               |   |  | 63    |  
|South
      Americas                              |  |      |   |  | 1       |   |  | 6         |   |  |               |   |  | 7     |  
|Africa & Middle
      East                        |  |      |   |  | 2       |   |  |           |   |  |               |   |  | 2     |  
|Australia                                         |  |      |   |  | 83      |   |  | 21        |   |  |               |   |  | 104   |  
|Asia                                              |  | 2    |   |  | 14      |   |  | 21        |   |  |               |   |  | 37    |  
|                                                  |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  
|Total                                             |  | 786  |   |  | 820     |   |  | 394       |   |  | 9             |   |  | 2,009 |  
|                                                  |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  
|(inmillions)                                     |  |      |   |  |         |   |  |           |   |  |               |   |  |       |  

| |                            |    
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        annual report | 127

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Chapter 12 Financial
  statements and other information

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|



Non-allocated
      Year
        ended at 31 Decemberoperating
        income2003
      
      
      2002
      
      
      2001Non-core disposals
      
      
      
      14
      
      
      26Exceptional
        real estate gain
      
      
      
      
      
      
      78Business initiatives
      (5
      )
      
      (4
      )
      
      (30
      )Write-downs
      
      
      
      
      
      
      (30
      )World Food Programme
      (5
      )Other costs
      (9
      )
      
      (5
      )
      
      (16
      )Total
      (19
      )
      
      5
      
      
      28(in millions) 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.




|2002                                             |        |   |  |          |   |  |            |   |  |              |   |  |               |   |  |         |  
|------------------------------------------------ | ------ | - |  | -------- | - |  | ---------- | - |  | ------------ | - |  | ------------- | - |  | ------- | -
|                                                 | Mail   |   |  | Express1 |   |  | Logistics1 |   |  | Intercompany |   |  | Non-allocated |   |  | Total   |  
|Net sales                                        | 3,949  |   |  | 4,119    |   |  | 3,577      |   |  |              |   |  | 17            |   |  | 11,662  |  
|Inter-company
      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 of
      other intangibles          | (6     | ) |  | (15      | ) |  |            |   |  |              |   |  |               |   |  | (21     | )
|Earnings from
      operations                   | 804    |   |  | 246      |   |  | 157        |   |  |              |   |  | 5             |   |  | 1,212   |  
|Amortisation of
      goodwill                   | (30    | ) |  | (54      | ) |  | (70        | ) |  |              |   |  |               |   |  | (154    | )
|Total operating
      income                     | 774    |   |  | 192      |   |  | 87         |   |  |              |   |  | 5             |   |  | 1,058   |  
|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 assets2                                    | 2,181  |   |  | 3,250    |   |  | 2,835      |   |  |              |   |  |               |   |  | 8,266   |  
|Total liabilities3                               | 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                                      
|2                                      
|3                                      

In 2002, non-allocated operating income amounted to a gain of 5 million.The
    largest element was the net profit on the sale of non core businesses (14 million), offset
    by 4
    million of net costs for business initiatives in China and 5 million of other




costs. Included in
    other costs is a release of 10 million accrual
    with respect to various claims and litigations that were either settled without
    cost or for a lower amount.




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|2001                                             |        |   |  |          |   |  |            |   |  |              |   |  |               |  |  |         |  
|------------------------------------------------ | ------ | - |  | -------- | - |  | ---------- | - |  | ------------ | - |  | ------------- |  |  | ------- | -
|                                                 | Mail   |   |  | Express1 |   |  | Logistics1 |   |  | Intercompany |   |  | Non-allocated |  |  | Total   |  
|                                                 |        |   |  |          |   |  |            |   |  |              |   |  |               |  |  |         |  
|Net sales                                        | 3,810  |   |  | 3,833    |   |  | 3,336      |   |  |              |   |  |               |  |  | 10,979  |  
|Inter-company
      sales                        | 12     |   |  | 38       |   |  | 6          |   |  | (56          | ) |  |               |  |  |         |  
|Other operating
      revenues                   | 74     |   |  | 39       |   |  | 11         |   |  |              |   |  | 115           |  |  | 239     |  
|                                                 |        |   |  |          |   |  |            |   |  |              |   |  |               |  |  |         |  
|Total
      operating revenues                   | 3,896  |   |  | 3,910    |   |  | 3,353      |   |  | (56          | ) |  | 115           |  |  | 11,218  |  
|Depreciation/impairment
      property           |        |   |  |          |   |  |            |   |  |              |   |  |               |  |  |         |  
|plant
      and equipment                        | (99    | ) |  | (111     | ) |  | (81        | ) |  |              |   |  |               |  |  | (291    | )
|Depreciation of
      other intangibles          |        |   |  | (7       | ) |  |            |   |  |              |   |  |               |  |  | (7      | )
|Earnings from
      operations                   | 781    |   |  | 157      |   |  | 190        |   |  |              |   |  | 28            |  |  | 1,156   |  
|Amortisation of
      goodwill                   | (19    | ) |  | (52      | ) |  | (68        | ) |  |              |   |  |               |  |  | (139    | )
|Total operating
      income                     | 762    |   |  | 105      |   |  | 122        |   |  |              |   |  | 28            |  |  | 1,017   |  
|Financial income
      / (expense)               |        |   |  |          |   |  |            |   |  |              |   |  |               |  |  | (93     | )
|Income tax                                       |        |   |  |          |   |  |            |   |  |              |   |  |               |  |  | (335    | )
|Results from investments
      in aff. companies |        |   |  |          |   |  |            |   |  |              |   |  |               |  |  | (1      | )
|Minority interests                               |        |   |  |          |   |  |            |   |  |              |   |  |               |  |  | (3      | )
|Net income                                       |        |   |  |          |   |  |            |   |  |              |   |  |               |  |  | 585     |  
|Goodwill paid
      in the year                  | 103    |   |  | 9        |   |  | 111        |   |  |              |   |  | 4             |  |  | 227     |  
|Intangible fixed
      assets 2                  | 212    |   |  | 1,336    |   |  | 1,294      |   |  |              |   |  | 5             |  |  | 2,847   |  
|Capital expenditure
      on property,           |        |   |  |          |   |  |            |   |  |              |   |  |               |  |  |         |  
|plant
      and equipment                        | 137    |   |  | 158      |   |  | 157        |   |  |              |   |  | 2             |  |  | 454     |  
|Property, plant
      and equipment              | 845    |   |  | 854      |   |  | 398        |   |  |              |   |  | 20            |  |  | 2,117   |  
|Investments in
      affiliated companies        | 48     |   |  |          |   |  | 40         |   |  |              |   |  | 32            |  |  | 120     |  
|Accounts receivable                              | 498    |   |  | 744      |   |  | 824        |   |  |              |   |  | 8             |  |  | 2,074   |  
|Total assets 3                                   | 2,342  |   |  | 3,257    |   |  | 2,855      |   |  |              |   |  |               |  |  | 8,454   |  
|Total liabilities
      4                        | 1,528  |   |  | 873      |   |  | 1,241      |   |  |              |   |  | 1,026         |  |  | 4,668   |  
|Number of employees                              | 68,081 |   |  | 39,197   |   |  | 31,285     |   |  |              |   |  |               |  |  | 138,563 |  
|                                                 |        |   |  |          |   |  |            |   |  |              |   |  |               |  |  |         |  

|(in
      millions,
      except employees)
|--------------------------------------------
|1                                           
|2                                           
|3                                           
|4                                           



30
      Differences
        between Dutch GAAP and USGAAP(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, that did not
    qualify as a liability under US GAAP. This difference resulted in a reconciliation
    to US GAAP shareholders equity. In 2001 we transferred the liability
    as per 1 January 2001 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 recognise
    the transfer payment to the insurance company as a deposit asset that will
    be charged to our statement of income based on the wage guarantees paid by
    the insurance company.




Business combinations
  and impairment of goodwill and other long-lived intangible assetsAccounting
    policies for business combinations and impairment of goodwill and other 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.
    As a result of weak economic conditions in some of the markets in which we
    operate, we experienced declines in operating income for some of our mail
    and logistics businesses during the first half of 2003. These declines prompted
    us to revise our long-term forecasts for some of these businesses. As a result,
    we have performed impairment reviews on the goodwill and property, plant and
    equipment of these businesses based on our revised forecasts. The impairment
    exercise was performed in accordance with SFAS No 142 Goodwill and other
    intangible assets and SFAS 144 Accounting for the Impairment of
    Long Lived Assets.




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Chapter 12 Financial
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The result of this
    review was that the carrying amounts of certain property, plant & equipment
    exceeded their fair values and a pre-tax impairment loss of 10 million was
    recognised. Fair values were determined based on current costs to purchase
    or replace the assets.




The result of the
    US GAAP goodwill impairment review was that the carrying amount of goodwill
    in certain reporting units exceeded the implied fair value. Fair values of
    the reporting units were determined based on the present value of expected
    future cash flows and compared to fair values of publicly traded companies
    within the same respective industries. This led to a pre-tax, non-cash 342 million reduction
    in the carrying value of our US GAAP goodwill balance. The impairments are
    allocated to our companys segments as indicated below:




|                       |            |  |  | Property,     |  |  |       | 
|---------------------- | ---------- |  |  | ------------- |  |  | ----- | 
|                       | Goodwill   |  |  | plant
      & |  |  |       | 
|                       | impairment |  |  | equipment     |  |  | Total | 
|                       |            |  |  |               |  |  |       | 
|Logistics division     |            |  |  |               |  |  |       | 
|France                 | 79         |  |  | 6             |  |  | 85    | 
|Central
      Europe   | 45         |  |  |               |  |  | 45    | 
|Nordics                | 21         |  |  |               |  |  | 21    | 
|Spain                  |            |  |  | 4             |  |  | 4     | 
|North
      America    | 197        |  |  |               |  |  | 197   | 
|                       |            |  |  |               |  |  |       | 
|Total
      impairment | 342        |  |  | 10            |  |  | 352   | 
|                       |            |  |  |               |  |  |       | 
|(in millions)         |            |  |  |               |  |  |       | 



The difference between
    the Dutch GAAP goodwill impairment and the US GAAP goodwill impairment of
    159 million, on
    a pre-tax, non-cash basis, was reflected as a decrease to net income in the
    reconciliation of our Dutch GAAP net income to that under US GAAP for the
    year ended 2003. The US GAAP goodwill
    impairment was 159 million higher
    than that recognised under Dutch GAAP primarily due to differences between
    the two tests such as:testing
    level for goodwill impairment, the requirement under US GAAP to recognise
    for the purpose of step 2 of the goodwill impairment test intangible assets
    that are not currently recognised in our accounts for Dutch GAAP purposes,
    and underlying differences in the goodwill balances between Dutch GAAP and
    US GAAP due primarily to the non-amortisation of US GAAP goodwill. For US GAAP purposes,
    the 197 million goodwill
    impairment in logistics North America gave rise to a tax credit in the income
    statement of 68 million since
    that goodwill amortisation is tax deductible.




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.




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At 31 December 2003,
    goodwill as determined under US GAAP is 69
    million higher (2002: 91
    million higher) than under Dutch GAAP.  This difference arises from the situation
    mentioned in the previous paragraph 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.  The following disclosures
      have been prepared on a US GAAP basis. The changes in the carrying amount
      of
      goodwill for the year ended
 31 December
2003, are as follows:


|                               | Mail |   | Express1 |  | Logistics1 |   | Total |  
|------------------------------ | ---- | - | -------- |  | ---------- | - | ----- | -
|                               |      |   |          |  |            |   |       |  
|Balance as of 1 January 2003   | 256  |   | 1,276    |  | 1,234      |   | 2,766 |  
|Additions                      | 35   |   | 4        |  | 18         |   | 57    |  
|Impairments                    |      |   |          |  | (342       | ) | (342  | )
|Disposals                      | (1   | ) |          |  |            |   | (1    | )
|Exchange rate differences      | (13  | ) |          |  | (88        | ) | (101  | )
|                               |      |   |          |  |            |   |       |  
|Balance as of 31 December 2003 | 277  |   | 1,280    |  | 822        |   | 2,379 |  
|                               |      |   |          |  |            |   |       |  

|(in
      millions)
|--------------------
|1                   



Pro-forma net income adjusted for goodwill amortisation

The following table shows US GAAP net income in prior years on a pro forma basis
to show the effects of non-amortisation of goodwill:


|                                                          |                       |  | Year
      ended at 31 December | 
|--------------------------------------------------------- | --------------------- |  | ------------------------------- | 
|                                                         
|                                                          |                       |  | 2003                            | 
|                                                          |                       |  |                                 | 
|Net
      income under US GAAP                            | -
      as reported - |  | 332                             | 
|Add-back: amortisation
      of goodwill                  |                       |  |                                 | 
|                                                          |                       |  |                                 | 
|Net
      income under US GAAP                            | - pro forma-          |  | 332                             | 
|                                                          |                       |  |                                 | 
|                                                          |                       |  |                                 | 
|Net income per
      ordinary share under US GAAP         | -
      as reported - |  | 0.70                            | 
|Net income per
      ordinary share under US GAAP         | -
      pro forma -   |  | 0.70                            | 
|Net income per
      diluted ordinary share under US GAAP | -
      as reported - |  | 0.70                            | 
|Net income per
      diluted ordinary share under US GAAP | -
      pro forma -   |  | 0.70                            | 
|                                                          |                       |  |                                 | 

|(in
      millions, except
      per share data) | 
|------------------------------------------------- | 



Other 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 intangible
    assets acquired in recent acquisitions required separate recognition from
    the related goodwill for US GAAP purposes. These 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 2003, other intangible assets under US GAAP were 
    26 million higher (2002: 8 million higher) than under Dutch GAAP, which considers
    these intangibles to be part of goodwill. In 2003, a 3 million (2002: 2)
    additional amortisation charge for these intangibles was required for US GAAP
    purposes.




The following other intangible asset disclosures have been prepared on a US GAAP
basis: As of 31 December 2003Grosscarrying
   
   Accumulatedamount
   
   amortisationSubject
      to amortisation:Software
   200
   
   
   100Prepayments on intangibles
   13
   
   
   1US GAAP other intangibles
   31
   
   
   5Total
   244
   
   
   106 (in
        millions)


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Chapter 12 Financial statements and other information

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At 31 December
    2003, we had no acquired intangible assets with indefinite useful lives. The aggregate
    amortisation expense for the year ended 31 December 2003 was47 million. The following
    table summarises the estimated amortisation expense for the coming five years:


|                    |          |  | Prepayments    |  | US GAAP other |  |       |  | 
|------------------- | -------- |  | -------------- |  | ------------- |  | ----- |  | 
|                    | Software |  | on intangibles |  | intangibles   |  | Total | 
|For the year ended: |          |  |                |  |               |  |       |  | 
|31 December 2004    | 40       |  | 12             |  | 4             |  | 56    |  | 
|31 December 2005    | 40       |  |                |  | 4             |  | 44    |  | 
|31 December 2006    | 20       |  |                |  | 4             |  | 24    |  | 
|31 December 2007    |          |  |                |  | 3             |  | 3     |  | 
|31 December 2008    |          |  |                |  | 2             |  | 2     |  | 
|> 31 December 2008  |          |  |                |  | 9             |  | 9     |  | 
|                    |          |  |                |  |               |  |       |  | 
|Total               | 100      |  | 12             |  | 26            |  | 138   |  | 
|                    |          |  |                |  |               |  |       |  | 

|(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 2003, adjustments were required to revalue our forward contract,
    cross currency swap, and interest rate swap for US GAAP purposes. Real estate salesUnder Dutch
GAAP, gains on the sale of real estate are recognised at the time of sale, when
economic risk is transferred to the buyer. Under US GAAP, gains on the sale of
real estate cannot be recognised until both economic risks and rewards of ownership
and legal ownership have been transferred to the buyer. This difference resulted
in an adjustment
to the US GAAP net income and shareholders equity to eliminate gains on
real estate sales that were recognised for Dutch GAAP and to recognise gains
on real estate sales that were deferred in the prior year once the economic risks
and rewards of ownership and legal ownership were transferred to the buyer in
the current year. 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 income statement over the period of the operating lease. This difference
resulted
in adjustments to the US GAAP net income and shareholders equity to defer
the gains on sale of the property and to realise these gains over the respective
lease terms.




Long-term contract incentives
Under 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 2003, 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 and 2003 employee stock option plans and our 2003 performance share
plan are performance-based. The final benefits to be awarded under these plans
may vary depending on target


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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 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. At 31 December 2003, 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 2003, 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 15. Other differences
Under 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 2003. 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 2003. 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. 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 2003 (2002: 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.






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Chapter
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Net income
    and shareholders equity reconciliation statements The 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 |  
|---------------------------------------------------------------------------- | ------------------------------- | -
|                                                                             |                                 |  
|                                                                             | 2003                            |  
|Net
      income under Dutch GAAP                                            | 300                             |  
|Adjustments for:                                                             |                                 |  
|Employment
      schemes                                                     | (11                             | )
|Amortisation
      of goodwill                                               | (9                              | )
|Other
      intangible assets depreciation                                   | (3                              | )
|Financial
      instruments                                                  | 13                              |  
|Real
      estate sale                                                       | (4                              | )
|Sale-lease-back
      transaction                                            | (1                              | )
|Depr.
      on restoration of previously recognised impairments              | 4                               |  
|Depr.
      of capitalised software                                          |                                 |  
|Stock-based
      compensation                                               |                                 |  
|Long
      term contract incentive payment                                   | 1                               |  
|Provisions                                                                   | 1                               |  
|Pensions
      curtailment                                                   |                                 |  
|Tax
      effect of adjustments 1                                            | 41                              |  
|                                                                             |                                 |  
|Net
      income under US GAAP                                               | 332                             |  
|Net income (in)per ordinary
      share and per ADR under US GAAP 2         | 0.70                            |  
|Net income (in)per diluted
      ordinary share and per ADS under US GAAP 3 | 0.70                            |  
|                                                                             |                                 |  

|(in millions,
    except per share data)
|-----------------------------------------
|1                                        
|2                                        
|3                                        



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|Shareholders equity                                                                                         | At 31 December |  
|------------------------------------------------------------------------------------------------------------ | -------------- | -
|                                                                                                             |                |  
|                                                                                                             | 2003           |  
|Shareholders equity
    under Dutch GAAP                                                                    | 2,969          |  
|Adjustments for:                                                                                             |                |  
|Employment schemes                                                                                           | 141            |  
|Goodwill                                                                                                     | 69             |  
|Other intangible assets depreciation                                                                         | (5             | )
|Financial instruments                                                                                        | 2              |  
|Real estate sale                                                                                             | (20            | )
|Sale-lease-back transaction                                                                                  | (5             | )
|Long term contract incentive payment                                                                         | (5             | )
|Restoration of previously recognised impairments, net of depreciation                                        | (7             | )
|Capitalised software                                                                                         |                |  
|Pensions curtailment                                                                                         | 2              |  
|Stock-based compensation                                                                                     |                |  
|Provisions                                                                                                   | 1              |  
|Deferred taxes on adjustments                                                                                | 4              |  
|                                                                                                             |                |  
|Shareholders equity
    under US GAAP                                                                       | 3,146          |  
|                                                                                                             |                |  
|(inmillions)                                                                                                |                |  
|1 Presented
      before the appropriation of net income due to an accounting change in the
    Netherlands. |                |  



Total
  shareholders
    equityShareholders equity
    under US GAAPat
        31 December 2001
   2,640Net income 2002 under US GAAP
   717Final dividend 2001 and interim dividend 2002
   (185
   )Translation adjustment
   (54
   )Revaluation of derivatives
   (9
   )Stock options exercised
   1Shareholders equity
    under US GAAPat
        31 December 2002
   3,110Net income 2003 under US GAAP
      332Final dividend 2002 and interim dividend 2003
   (204
   )Translation adjustment Dutch GAAP
      (68
   )Translation adjustment on US GAAP reconciling items
   (12
   )Revaluation of derivatives
   9Other
      (21
   )Shareholders equity
    under US GAAPat 31 December 2003
      3,146(in millions)


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Chapter
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|Comprehensive
      income under US GAAP                          | Year
      ended at 31 December |  
|----------------------------------------------------------------- | ------------------------------- | -
|                                                                  |                                 |  
|                                                                  | 2003                            |  
|Net
      income under US GAAP                                    | 332                             |  
|Unrealised forex
      gains and losses Dutch GAAP                | (68                             | )
|Unrealised forex
      gains and losses US GAAP reconciling items | (1                              | )
|Gains and losses
      on foreign currency hedges                 | 9                               |  
|Other                                                             | (20                             | )
|                                                                  |                                 |  
|Comprehensive
      income under US GAAP                          | 241                             |  
|                                                                  |                                 |  
|(in millions)                                                    |                                 |  



|Accumulated
      other comprehensive income, net                   | Year
      ended at 31 December |  
|------------------------------------------------------------------- | ------------------------------- | -
|of related
      income taxes (under US GAAP)                       |                                 |  
|                                                                    | 2003                            |  
|Opening
      accumulated comprehensive income                      | (98                             | )
|Unrealised forex
      gains and losses Dutch GAAP                  | (68                             | )
|Unrealised forex
      gains and losses US GAAP reconciling items   | (12                             | )
|Gains and losses
      on foreign currency hedges                   | 9                               |  
|Other                                                               | (20                             | )
|                                                                    |                                 |  
|Total
      acc. other comprehensive income, net of taxes (US GAAP) | (189                            | )
|                                                                    |                                 |  
|(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, will affect our consolidated financial statements for US GAAP reporting. In January 2003, the FASB issued 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 is effective immediately
  for all new variable interest entities created or acquired after 31 January
  2003. For variable interest entities created or acquired prior to 1 February
  2003, the provisions of FIN 46 must be applied for the first interim or annual
  period beginning after 1 January 2004. The company believes that the adoption
  of this standard will have no material impact on its financial statements.




In November 2002, the Emerging Issues Task Force (EITF) reached
  a consensus on Issue No. 00-21 (EITF 00-21), Revenue Arrangements
  with Multiple Deliverables. EITF 00-21 addresses certain aspects of the
  accounting by a vendor for arrangements under which the vendor will perform
  multiple revenue generating activities. EITF 00-21 will be effective for TPG
  beginning after January 1, 2004. We are currently evaluating the impact of
  adoption of EITF 00-21 on our financial position and results of operations. In August 2003,
    the FASB issued SFAS 150. This standard requires certain financial instruments,
    which under previous guidance could be accounted for as equity, to be classified
    as liabilities. Three types of freestanding financial instruments are affected:
    mandatorily redeemable financial instruments, obligations to repurchase the
    issuers equity shares by transferring assets, and certain obligations
    to issue a specified number of shares. Additional disclosures are also required
    about alternative ways of settling instruments and the capital structure of
    entities-all of whose shares are mandatorily redeemable. SFAS 150 is effective
    for all financial instruments entered into or modified after 31 May 2003 and
    otherwise is effective the first interim period beginning after 15 June 2003.
    However, the guidance applying to mandatorily redeemable non-controlling interest
    has been deferred.




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      annual report | 
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|   | TPG
      N.V. corporate balance sheets           |                     
|-- | ------------------------------------------------- | --------------------
|   |                                                   |                     
|   | Before
      proposed appropriation of net income | At
      31 December
|   |                                                   |                     
|   |                                                   | 2003                
|   | Assets                                            |                     
|31 | Fixed
      assets                                |                     
|   | Investments
      in group companies              | 3,405               
|   | Investments
      in affiliated companies         | 25                  
|   | Other loans
      receivable                      |                     
|   | Prepayments
      and accrued income              | 7                   
|   |                                                   |                     
|   | Total fixed
      assets                          |                     
|   |                                                   |                     
|   |                                                   |                     
|   | Current
      assets                              |                     
|   | Accounts receivable
      from group companies    | 680                 
|   | Other accounts
      receivable                   | 11                  
|   | Prepayments
      and accrued income              | 1                   
|   | Cash                                              | 3                   
|   |                                                   |                     
|   | Total current
      assets                        |                     
|   |                                                   |                     
|   | Total
      assets                                |                     
|   |                                                   |                     
|   |                                                   |                     
|   | Liabilities
      and group equity                |                     
|   | Shareholders
      equity                        |                     
|32 | Issued share capital                              | 230                 
|33 | Additional paid-in
      capital                  | 1,421               
|34 | Translation reserve                               | (130                
|35 | Other reserve                                     | 1,233               
|36 | Unappropriated
      net income                   | 215                 
|   |                                                   |                     
|   |                                                   |                     
|   | Provisions                                        |                     
|   | Other provisions                                  | 10                  
|   |                                                   |                     
|   |                                                   |                     
|   | Long-term
      liabilities                       |                     
|11 | Bond                                              | 1,000               
|   | Other long-term
      liabilities                 | 129                 
|   |                                                   |                     
|   |                                                   |                     
|12 | Current
      liabilities                         |                     
|   | State of the
      Netherlands:                   |                     
|   | ordinary
      loan                               |                     
|   | Subordinated
      loan                           |                     
|   | Other current
      liabilities                   | 19                  
|   | Accrued liabilities                               | 5                   
|   |                                                   |                     
|   | Total current
      liabilities                   |                     
|   |                                                   |                     
|   | Total
      liabilities and group equity          |                     
|   |                                                   |                     
|   | (in millions)                                    |                     

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 these financial statements.




Per
        1 January 2003 dividends proposed, but not yet declared, are to be presented
        as a component of equity instead of as a liability. The prior year balances
        are adjusted for comparison purposes.




| | 2003
        annual report | 137
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|TPG
      N.V. corporate statements of income
|---------------------------------------------
|                                             

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). At
        31 December2003
      
      2002
      
      2001Results from
        investments in group companies after taxes
      329
      
      
      604
      
      
      581Other income
        and expenses after
        taxes
      (29
      )
      
      (5
      )
      
      4Net
        income
      300
      
      
      599
      
      
      585(in 
        millions)


|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.




Consolidated companies are carried at net asset value. For the principles of
valuation of assets and liabilities and for the determination of result reference
is made to the notes to the consolidated balance sheet and statements of income.




|31 | Fixed
      assets:  3,437 (2002: 3,218)
|-- | -----------------------------------------

|                                  | Investmentsin
      groupcompanies |   | Investmentsin
      affiliatedcompanies |     | Other
      loansreceivable |  | Prepayments
      &accrued
      income |   | Total
|--------------------------------- | ---------------------------------- | - | --------------------------------------- | --- | --------------------------- |  | --------------------------------------- | - | -----
|                                  |                                    |   |                                         |    
|                                  |                                    |   |                                         |    
|Balance
      at 31 December 2001 | 2,651                              |   |                                         | 32  |                             |  | 9                                       |   |      
|Changes
      in 2002             |                                    |   |                                         |     |                             |  |                                         |   |      
|Results                           | 604                                |   |                                         | (5  | )                           |  |                                         |   |      
|Acquisitions/additions            |                                    |   |                                         | 8   |                             |  |                                         |   |      
|Disposals/decreases               |                                    |   |                                         |     |                             |  |                                         |   |      
|Withdrawals/repayments            |                                    |   |                                         |     |                             |  | (2                                      | ) |      
|Exchange rate
      differences   | (54                                | ) |                                         |     |                             |  |                                         |   |      
|Other changes                     | (35                                | ) |                                         |     |                             |  |                                         |   |      
|                                  |                                    |   |                                         |     |                             |  |                                         |   |      
|Total
      changes               | 515                                |   |                                         | 3   |                             |  | (2                                      | ) |      
|                                  |                                    |   |                                         |     |                             |  |                                         |   |      
|Balance
      at 31 December 2002 | 3,166                              |   |                                         | 35  |                             |  | 7                                       |   |      
|Changes
      in 2003             |                                    |   |                                         |     |                             |  |                                         |   |      
|Results                           | 329                                |   |                                         | (3  | )                           |  |                                         |   |      
|Acquisitions/additions            |                                    |   |                                         | 13  |                             |  |                                         |   |      
|Disposals/decreases               |                                    |   |                                         | (20 | )                           |  |                                         |   |      
|Withdrawals/repayments            |                                    |   |                                         |     |                             |  | (7                                      | ) |      
|Exchange rate
      differences   | (68                                | ) |                                         |     |                             |  |                                         |   |      
|Other changes                     | (22                                | ) |                                         |     |                             |  |                                         |   |      
|                                  |                                    |   |                                         |     |                             |  |                                         |   |      
|Total
      changes               | 239                                |   |                                         | (10 | )                           |  | (7                                      | ) |      
|                                  |                                    |   |                                         |     |                             |  |                                         |   |      
|Balance
      at 31 December 2003 | 3,405                              |   |                                         | 25  |                             |  |                                         |   |      
|                                  |                                    |   |                                         |     |                             |  |                                         |   |      
|(in millions)                    |                                    |   |                                         |     |                             |  |                                         |   |      

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32
      Issued
        share capital: 230
        million (2002: 230)Issued
        share capital amounted to  230 million at 31 December 2003 (2002: 230).The number of authorised,
        issued and outstanding shares by class of share at 31 December 2002 and
        31 December 2001 is as follows:


|                                             | Ordinary      |  | Preference B |               | Special
    share | 
|-------------------------------------------- | ------------- |  | ------------ | ------------- | ----------------- | 
|                                             |               |  |              |               |                   | 
|Authorised                                   | 1,200,000,000 |  |              | 1,199,999,999 |                   | 
|Issued and outstanding                       | 480,259,522   |  |              | 0             |                   | 
|Of which treasury shares held by the company | 5,148,850     |  |              | 0             |                   | 
|                                             |               |  |              |               |                   | 



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.The nominal value of ordinary
    shares is  0.48
    cents.We do not have share certificates for ordinary shares represented by
    the global note. Ordinary shares in registered form are transferred by means
    of a deed of transfer, and unless we are a party to the legal act underlying
    the transfer, our written acknowledgement of the transfer. Service of the
    deed on us is considered to have the same effect as an acknowledgement. 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 5,148,850 ordinary shares
at 31 December 2003. The State of the Netherlands is the holder of the special
share. At 31 December 2003, the State holds approximately 34.8% 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. For movements in issued share
capital reference is made to Consolidated statements of changes in shareholders equity. 33
      Additional
        paid in capital:  1,421
        (2002: 1,421)Additional
        paid-in capital is exempt for Dutch tax purposes. For movements in
    additional
paid in capital reference is made to Consolidated statements of changes
in shareholders equity.




34
      Translation
        reserve:-130
        (2002: -62)For
        movements in translation reserve reference is made to Consolidated
        statements of changes in shareholders equity.  35
      Other
        reserves:  1,233 (2002:844)For
        movements in other reserves reference is made to Consolidated statements
        of changes in shareholders equity.  36
      Unappropriated
        net income: 215
        (2002: 528)The
        profit for 2003 has been calculated as the net income for 2003 of TPG
        N.V. and all its subsidiaries.The 2003 unappropriated component is 215 million, containing the net income of  300 million and the
        paid interim dividend 2003 of  85 million. Subject
        to the approval of the general meeting of shareholders, the Board of Management
        proposes to add 73million to
        other reserves and to pay 142 million as
        final dividend. For movements in unappropriated net income reference is
        made to Consolidated statements of changes in shareholders
        equity.  37
      Wages
        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. 38
      Commitments
        not included in the balance sheet(No
        corresponding financial statement number)  Declaration
        of Joint and several liability
        TPG 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.VTNT Express
        Holdings B.V.TPG Headoffice
        B.V.




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        annual report | 139
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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. GuaranteesParental
  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, loan facilities
  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. 39
      Subsidiaries
        and affiliated companies at 31 December
        2003(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. 40
      Mail
        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. National
  postal regulationThe Netherlands
  implemented the 1997 European Union Postal Directive in its revised Postal Act
  of 28 October 1999.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, reserved postal services. The parliament also
  enacted a new 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, the government
  has amended the existing 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 Postal Act, the
  Postal Decree and the General Postal Regulations Decree became effective on
  1 June 2000. According to the implementation of the amended 1997 European Union
  Postal Directive, the General Postal Regulations Decree was changed in November
  2002, effective as of 1 January 2003. In 1997 the government
  established an independent Supervisory Authority for Post and Telecommunications,
  which is commonly called by its Dutch acronym OPTA.The responsibility for supervising
  our performance of the Mandatory Postal Services lies with OPTA. The Ministry of Economic
  Affairs is responsible for postal regulation and policy. 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
        and printed matter with a maximum weight of two kilograms; andpostal parcels
        with a maximum individual weight of 10 kilograms. In addition, bulk
  mail of items of correspondence up to an individual weight of 100 grams, which
  are conveyed against separately agreed rates, are part of the mandatory postal
  services. Mandatory postal services also cover services for registered and insured
  items and rental of 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 kilograms and of postal parcels with a maximum
  individual weight of 20 kilograms. 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 grams at a rate of less than three times the standard single
        rate for the lowest weight class of 20 grams (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.


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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. With respect to service
  levels, the 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 being 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 services for which the rate
  changes are proposed do not fall under the tariff freeze for mandatory services
  subject to the price cap system that was in place until November 2002. Until November 2002,
  a price cap system measured tariff developments in two different baskets of
  services, a total basket and a small users basket. The
  total basket comprised domestic mandatory postal services provided to all customers.The
  small users basket comprised a selection of the total basket of domestic mandatory
  postal services that is representative for consumers and small business users. We are required to
  comply with several specific obligations on reporting and financial accounting. 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 stated that
     in the event postal services would become 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 will 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 an integral vision of the Minister
    on the future regulation of the postal sector. The decision to freeze
    the tariffs controlled by the price cap system did not include the increase
    of tariffs that had been communicated to OPTA by the end of October 2002.
    All tariffs in the fully liberalised part of the Dutch postal market are outside
    the price cap system and were therefore not affected by this decision.




In November 2002 the
  Dutch government also announced its intention to fully liberalise  conditional
  on similar deregulation measures being implemented in the United Kingdom and
  Germany  the mail market in the Netherlands in 2007, as we had proposed
  in August 2002. Discussions about the path to liberalisation have started and
  are expected to lead to further regulatory clarity in early 2004. The legal framework
          in respect of price control of postal services, currently included in
          the General Postal Regulations Decree, was amended in order for the
          freeze of the relevant tariffs to become effective.This amendment was
          completed in on 21 September and made effective as of 1 January 2003.
          On 22 January 2004 the Dutch Minister of Economic Affairs published
          his vision on the postal market in the Netherlands. Among other things,
          this vision includes:a price freeze
        until 1 January 2007 on the mandatory postal services we are required
        to provide by law,a reduction,
        yet to be fully defined, in the scope of the mandatory postal services,from 2007, a
        price cap system for those reduced mandatory postal services, based on
        an inflation or consumer price index, andfrom 2007, the
        obligation to deliver bulk mail letters up to 50 grams will remain mandatory
        for an undefined transitional period without any rights for our company
        to offset this obligation. We believe that
    a price freeze for the next three years is unnecessary and further we believe
    that it will put undue pressure on the profitability of our Mail Netherlands
    activities.We will provide the Minister with our detailed comments and suggestions
    regarding his vision on the postal market. It is expected that the Ministers
    vision will be submitted to parliament for discussion by the end of March
    2004. If parliament adopts this vision, it will be finalised. Amsterdam,
        18 March 2004Board
        of Management
      Supervisory
        BoardM.P.
        Bakker
      R.J.N.
        AbrahamsenJ.G.
        Haars
      F.
        BernabèH.M.
        Koorstra
      J.M.T.
        CochraneD.G.Kulik
      R.
        DahanM.C.
        Lombard
      V.
        HalberstadtJ.H.M.
        HommenW.
        KokR.W.H.
        StombergM.TabaksblatTPG
        N.V.Neptunusstraat
        41-632132
        JA HoofddorpP.O
        Box 130001100
        KG AmsterdamThe
        Netherlands


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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 2003 dividend has been set at
    
    0.48 in cash per ordinary share of  0.48 par value. After deducting
    the interim dividend of  0.18 per ordinary share paid out in August
    2003, the final dividend will be  0.30 per ordinary share. Appropriation
        of net income2003Net income
      300Appropriation
        in accordance with the articlesof
        association:Dividend on
        special share (article 35. par 1) 
        0.032
      0Reserves adopted
        by the Board of Management andapproved by
        the Supervisory Board (article 35, par. 2)
      73Dividend on
        ordinary share
      227Interim dividend
        paid
      85Final
        dividend
      142(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, including:issuances
        of shares in our capital,restrictions
        on or exclusions of the pre-emptive rights of holders of our ordinary
        shares,mergers,
        demergers and dissolutions with respect to us and Royal TPG Post B.V.,certain
        capital expenditures,certain
        dividends and distributions, andcertain
        amendments to our articles of association and the articles of association
        of Royal TPG Post B.V., including any amendment with respect to
      a
        modification of the objects clause that relates to performance of the
        concession obligations,
      the
        creation of new classes of shares, profit sharing certificates or other
        securities entitling the holder to our earnings or shareholders
        equity,
      the
        amendment of the rights attached to the special share,
      the
        transfer or cancellation of the special share, and
      the
        cancellation of the preference shares B. 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 the rights attached to the 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. 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, andthe 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.




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However, we
          may within such nine-month period make a public announcement of our
          intention to issue ordinary shares, ifordinary 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 cooperation, merger or acquisition agreement, orthe 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
    eventsOn 8 January
    2004, we announced plans to introduce a further five Boeing 737-300 aircraft
    to its European air network. The five aircraft, leased for five years by TNT
    Airways from GE Capital Aviation Services will replace chartered aircraft
    currently operating in the TNT Express air network. The new B737s will
    be phased in over the next four years. Two will join the fleet in 2004, with
    further aircraft added in 2005, 2006 and 2007. On 13 February 2004,
    we have acquired the remaining 40% of the shares in DIMAR group. DIMAR is
    one of the leading providers of full-service direct marketing activities in
    the Czech Republic and Slovakia. We had already acquired a 60% stake in DIMAR
    in 2002. On 19 February 2004
    we have renewed our spare parts contract with Fiat for a five year period,
    ahead of the original expiry date in 2005. The contract is estimated to be
    worth euro 1 billion in revenues over the contract term and will inlcude packaging,
    storing and delivering of spare parts to dealers in Europe for Fiat Auto,
    as well as warehousing activities in Italy, France, UK, Spain, Poland, Austria
    and Greece.




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|Chapter
      13 Regulatory environment
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Mail
    regulation and concessionBecause 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, has been assigned to us in
  the Dutch Postal Act. 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 international provisions 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. At its 1999 congress,
    the UPU adopted changes to the terminal dues system, which became effective
    on 1 January 2001. These changes introduced different remuneration levels
    for industrialised countries and developing countries, thus 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 kilogram, while these
    costs are essentially a function of the number of postal items per kilogram.
    Neither does the system contain financial incentives to improve the quality
    of service. Within the UPU there is a growing concern that the current terminal dues system is not compliant with the WTOs Most Favoured Nation rules. A new terminal dues system, on which the 2004 UPU congress should decide, must be compliant with WTO requirements. Mindful of the shortcomings of the UPU terminal dues system, in 1996 European postal operators entered into a separate agreement. This so-called REIMS agreement provided for a more adequate terminal dues system between industrialised countries, based on 80% of domestic first-class rates for single items, depending on the quality of service. In 1997, however,
  the REIMS partners, with the exception of TPG, amended the agreement, altering
  the implementation of quality of service standards and introducing a faster
  rate of increase over the years of terminal dues to be paid as compared to the
  original agreement. In 1999, the European Commission approved this REIMS
  II agreement through 31 December 2001, but under explicit and strict conditions.
  Specifically, continuation after 2001 and final increases of the highest terminal
  dues rates (i.e. Level 1) above 70% of domestic tariffs were made subject to
  supporting




argumentation. The
    European Commission has recently exempted this agreement for a five-year 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 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 regulationIn
    1997, the Council of European Ministers and the European Parliament adopted
    a Postal Directive for the development of the internal European Union market
    of postal services and the improvement of quality of service. The 1997 Postal
    Directive, which became effective in 1998, 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 must comply. The 1997 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
    350 grams per item of correspondence at a price of less than five times the
    public rate in the first weight step (0-20 grams). In May 2000, the European Commission submitted a proposal to amend the 1997 Postal Directive with a view to achieving further liberalisation of the postal sector and reduction of the reserved area. However, due to continuing political differences among the European Union member states and in the European Parliament, discussion on the proposal is still ongoing. In
        October 2001, the European Council of Ministers reached a compromise,
        which substantially weakened the original European Commission proposal
        and resulted in the second Postal Directive 2002/39 EC, being an amendment
        to the first Postal Directive. The compromise delays full liberalisation
        of the postal market until at least 2009, depending on a study on the
        effects of liberalisation to be finalised by 2006, and contains only the
        following steps:2003: reserved
        service up to at most 100 grams at a price of less than three times the
        basic rate; outgoing cross-border items of correspondence and direct mail
        no longer reserved.2006: reserved
        service up to at most 50 grams at a price of less than two-and-a-half
        times the basic rate.




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National
    postal regulationThe Netherlands implemented
the 1997 European Union Postal Directive in its revised Postal Act of 28 October
1999.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,
reserved postal services. The parliament also enacted a new 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, the government has amended the existingGeneral
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 Postal Act, the Postal Decree and the General Postal Regulations Decree became
effective on 1 June 2000. According to the implementation of the amended 1997
European Union Postal Directive, the General Postal Regulations Decree was changed
in November 2002, effective as
of 1 January 2003. In 1997 the government established an independent Supervisory Authority for Post
and Telecommunications, which is commonly called by its Dutch acronym OPTA.The
responsibility for supervising our performance of the mandatory postal services
lies with OPTA. The Ministry of Economic Affairs is responsible for postal regulation and policy. 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
        and printed matter with a maximum weight of two kilograms; andpostal parcels
        with a maximum individual weight of 10 kilograms. In addition, bulk
    mail of items of correspondence up to an individual weight of 100 grams,
    which are conveyed against separately agreed rates, are part of the mandatory
    postal services. Mandatory postal services also cover services for registered
    and insured items and rental of 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 kilograms and of postal parcels with a maximum individual weight of 20 kilograms. 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 grams at a rate of less than three times the standard single
        rate for the lowest weight class of 20 grams (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 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. 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. With respect to service levels, the 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 being 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 services for
which the rate changes are proposed do not fall under the tariff freeze for mandatory
services subject to the price cap system that was in place until November 2002. Until November
    2002, a price cap system for mandatory postal services measured tariff developments
    in two different baskets of services, a total basket and a small
    users basket. The total basket comprised domestic mandatory postal services
    provided to all customers.The small users basket comprised a selection of
    the total basket of domestic mandatory postal services that is representative
    for consumers and small business users.


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The price cap system used a weighing factor for each service in both baskets.The levels of the indices for both baskets were not to exceed the official national index of wages for employees in the market sector. The development of the indices from the base year is illustrated below. Rates development and wages  We are required to comply with several specific obligations on reporting and financial accounting. 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
stated that  in the event postal services would become 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 will
be allowed. On19
June 2003, when the tariff freeze was discussed in parliament, the duration of
the freeze was limited to 1 January 2005, awaiting an integral vision of the
Minister on the future regulation of the postal sector. The decision to freeze the tariffs controlled by the price cap system did not
include the increase of tariffs that had been communicated to OPTA by the end
of October 2002. All tariffs in the fully liberalised part of the Dutch postal
market are outside the price cap system and were therefore not affected by this
decision. In November 2002 the Dutch government
also announced its intention to fully liberalise  conditional on similar
deregulation measures being implemented in the United Kingdom and Germany  the
mail market in the Netherlands in 2007, as we had proposed in August 2002. Discussions
about the path to liberalisation have started and are expected to lead to further
regulatory clarity in early 2004.




The legal
          framework in respect of price control of postal services, currently
          included in the General Postal Regulations Decree, was amended in order
          for the freeze of the relevant tariffs to become effective.This amendment
          was completed on 21 September 2003 and made effective retroactively
          as of 1 January 2003. On 22 January 2004, the Dutch Minister of Economic
          Affairs published his vision on the postal market in the Netherlands.
          Among other things, this vision includes:a price freeze
        until 1 January 2007 on the mandatory postal services we are required
        to provide by lawreduction,
        yet to be fully defined, in the scope of the mandatory postal services,from 2007,
        a price cap system for those reduced mandatory postal services, based
        on an inflation or consumer price index, andfrom 2007,
        the obligation to deliver bulk mail letters up to 50 grams will remain
        mandatory for an undefined transitional period, without any rights for
        our company to offset this obligation. We believe that
    a price freeze for the next three years is unnecessary and it will put undue
    pressure on the profitability of our Mail Netherlands activities.We will provide
    the Minister with our detailed comments and suggestions regarding his vision
    on the postal market. It is expected that the Ministers vision will
    be submitted to parliament for discussion by the end of March 2004. In order
    to become final, parliament must adopt this vision, possibly after amendment
    of it. Accounting & other
  financial obligationsOur obligations on reporting include the establishment of an annual report on the performance of the mandatory postal services, providing, inter alia, an overview of the financial results of the mandatory postal services.This reporting must be reviewed by an independent auditor appointed by OPTA.
Our obligations on financial
    accounting 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,
    to be appointed by OPTA, which declares that our financial accounting system
    complies with the above obligation
Underlying this accounting
    system and the financial reports to OPTA there is a revised system for allocating
    costs and revenues to the different types of services.This revised system
    for allocating the revenues and costs must comply with the accounting rules
    laid down in the 1997 Postal Directive and was submitted to OPTA for approval.
    OPTA formerly approved the new system, but stipulated in its approval decision
    certain additional obligations, which, in our opinion, for the most part
  went beyond the competence of OPTA.


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After
  a formal complaint procedure and an appeal to the competent court, the District
  Court in Rotterdam has set aside some of the more important additional obligations
  imposed by OPTA and ordered OPTA to revise their additional obligations accordingly.
  See chapter 14  Legal proceedings  OPTA proceedings.  Value
    added tax on postal servicesIn May
    2003 the European Commission presented a proposal ((COM) 2003 final) to amend
    Directive 77/388/EC regarding value added tax on services provided in the
    postal sector. On 1 June 2000,
    as required by the EU Directive 97/67/EC, the European Union Postal Directive,
    changed postal legislation was implemented in the Netherlands. At that time
    the VAT exemption on all services outside the mandatory postal services could
    no longer be applied and the standard VAT rate of currently 19% became applicable
    on those services.There were effects on the tariffs of services other than
    mandatory postal services at that time, mainly impacting VAT exempt business
    customers and organisations such as charities. However, the impact of the
    disappearance of the VAT exemption in the year 2000 seems to be very limited. At present, we
    are not allowed to charge VAT on postal items covered by the mandatory postal
    services.The flip side of this is that for this part of this business 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
    procurementThe European
    Commission has adopted a package of amendments to simplify and modernise the
    public procurement directives in May 2000. New texts of the directives are
    expected to be adopted by the European Parliament at the end of January 2004.
    Until now we had 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 the public procurement directives.The new directive
    co-ordinating the procurement procedures of entities operating in the water,
    energy, transport and postal services sectors applies to our activities that
    are not exposed to competition. However, the article in the directive with
    respect to the implementation leaves to the Member States the possibility
    of postponing the deadline of implementation until 1 January 2009.The Netherlands
    intends to make use of this possibility.This means that we will not be subject
    to the directive with our postal activities in the Netherlands as long as
    the directive is not 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.These rules are primarily enforced by the European Commission,
    which cooperates with the national competition authorities, which for the
    Netherlands is the Netherlands Competition Authority, the European Court of
    Justice and by the national courts. 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 for enterprises on the Dutch market 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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|Chapter
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Major shareholders and related party transactions GeneralTo our
    knowledge, no-one, 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 12 March 2004, the persons known by us to own more than
    5% of the indicated class of shares: Identity of
        person or group
      
      
      Number
        ownedTitle
        of class
      
      
      
      
      %Ordinary shares
      
      The
        State ofthe
        Netherlands
      
      
      167,073,810
      
      
      34.8
      %Special share
      
      The
        State ofthe
          Netherlands
      
      
      1
      
      
      100
      % In addition, as
    of 12 March 2004, we held 5,148,850 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 164  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 StateDuring
    March 2001, the Dutch State announced that it sold a total of 40,250,000 of
    our ordinary shares, thus reducing its ownership interest in our outstanding
    ordinary shares from approximately 43.3% to approximately 34.9% (due to the
    payment of a stock dividend in May 2001, this ownership was diluted further
    to approximately 34.8%). At such time, the State also announced its intention
    to reduce its involvement with us while continuing to safeguard the public
    interest in the postal concession.




In 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. 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 of holders of our ordinary
        shares;mergers,
        demergers and dissolutions with respect to us and Royal TPG Post B.V.;certain
        capital expenditures;certain
        dividends and distributions; andcertain amendments
          to our articles of association and the articles of association of Royal
          TPG Post B.V., including any amendment to the articles of association
          with respect to
      a
        modification of the objects clause that relates to performance of the
        concession obligations,
      the
        creation of new classes of shares, profit sharing certificates or other
        securities entitling the holder thereof to the earnings and / or shareholders
        equity of the company,
      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.




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As part of its
    intention to reduce its involvement in our affairs, the State is considering
    the possibility of limiting the applicability of rights attached to the special
    share to apply only to our subsidiary for postal activities. Memorandum
    and articles of associationFollowing is a brief
    description of certain provisions of our articles of association 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,appoints members
        of the supervisory boardappoints and
        dismisses members of the board of management,adopts the annual
        accounts, andmust 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: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, andto 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,
        and1,199,999,999
        preference shares B.Each
        of the above shares has a par value of 0.48.




As of the date
    of this annual report there were issued 480,259,522 ordinary shares, including
    5,148,850 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 149. 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. Proposed amendments to our articles of associationOur Board
    of Management will submit a proposal to the annual general meeting of shareholders
    to be held on 7 April 2004, to amend our articles of association in order
    to bring them in line with the Dutch Corporate Governance Code dated 9 December
    2003 of the committee Corporate Governance. Furthermore, it is proposed to
    include an indemnity provision into the articles of association.This will
    provide an indemnity by our company of each member of the Board of Management
    and of the Supervisory Board against any and all liabilities, claims, judgements,
    fines and penalties incurred by the board member as a result of any civil,
    criminal or administrative action, brought by any party other than our company
    itself or its group companies, in relation to acts or omissions in or related
    to his capacity as a board member of the Board of Management or the Supervisory
    Board. Members of the Board of Directors and of the Supervisory Board will
    not be indemnified with respect to claims in so far as they relate the gaining
    in fact of personal profits, advantages or remuneration to which he was not
    legally entitled, or if the member of the Board shall have been adjudged to
    be liable for wilful misconduct (opzet) or intentional recklessness
    (bewuste roekeloosheid). In addition, the indemnity shall not cover
    internal liability, i.e. liability of a member of the Board towards
    our company. The proposed changes to our articles of association will also
    include some technical amendments. The foundation for the protection of TPG and preference shares BOn 9
    May 2003 the Foundation for the Protection of TNT Post Group changed its name
    to The Foundation for the Protection of TPG.The 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


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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 TPG Protection Foundation has a call option to acquire
    a number of preference shares  not exceeding the total issued amount
    of ordinary shares and the special share, minus one and minus any shares already
    issued to the TPG Protection 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), J.J.M.
    Maeijer (deputy chairman), S.C. Kortmann and R. Pieterse. 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 shares We 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 1 April 2003, the annual general meeting
    of shareholders granted the Board of Management the authority to issue these
    ordinary shares. This authority will terminate on 1 October 2004. 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 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 shares Voting
    rights and general meetings of shareholders We 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 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




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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 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 149 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
    rights Our articles
    of association provide that within five months after the end of our financial
    year, the Board of Management must prepare annual accounts accompanied by
    an annual report, which must then be adopted 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 annual accounts. 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 distributed as a dividend to the holders
    of ordinary shares. 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) shall be dealt with and
    explained as a separate agenda item at the shareholders meeting. This
    policy can be viewed at our website. As of 2005, the
    resolution to pay dividend shall be dealt with as a separate item on the agenda
    of the annual general meeting of shareholders. Liquidation
    rights In 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 shares We may
          acquire our own shares, subject to the requirements of Dutch law and
          our articles of association, if:




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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, andafter 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 1 October 2004.
    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
    provision None of our
    ordinary shares is subject to any redemption provisions. Sinking
    fund provision None 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 assessments All of our
    outstanding shares are fully paid and non-assessable. Discriminating
    provisions There are
    no discriminating provisions against any of our shareholders as a result of
    owning a number of substantial shares. Pre-emptive
    rights Except 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 capital Upon 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. 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. As of 2005, after
    amendment of the articles of association, the release from liabilities of
    members of the Board of Management and of members of the Supervisory Board
    will be separate items on the agenda of the annual general meeting of shareholders. Amendments
    of the articles of association, legal merger and dissolution A 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
    149  Ownership interests of the State of the Netherlands
    need the prior approval of the holder of the special share. Large
    company regime Pursuant to
    the Enabling Act as currently in force, we are subject to the full large
    company regime. 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




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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 havea
    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. 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. 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 vennoot-schappen 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 capital The 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 149  The ownership interests of the State of
    the Netherlands. On 19 February 2004
    we, through our TNT Automotive Logistics subsidiary in Italy, have renewed
    our spare parts contract with Fiat for a five year period, ahead of the original
    expiry date in 2005. The contract is estimated to be worth euro 1 billion
    in revenues over the contract term. It will include packaging, storing and
    delivering of spare parts to dealers in Europe for Fiat Auto, as well as warehousing
    activities in Italy, France, UK, Spain, Poland, Austria and Greece. Significant
    subsidiariesTPG N.V. is the parent
    company of the group. The following table sets forth, as of 12 March 2004,
    the name and jurisdiction of incorporation of our significant subsidiaries. Company
      Country
      
      EquityinterestRoyal TPG
        Post B.V.
      Netherlands
        Netherlands
        Netherlands
        Netherlands
        Germany
      
      100
      %TNT Express
        Holdings B.V.
      
      100
      %TNT Logistics
        Holdings B.V.
      
      100
      %TNT Holdings
        B.V.
      
      100
      %TNT Holdings
        Deutschland GmbH
      
      100
      %




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Property,
  plants & equipment We use approximately
  1,933 buildings.

Mail
  Our mail division uses
  536 sorting centres and distribution depots.

The principal mail
  facilities are as follows:

|Location                                  | Owned/leased |  | Principal
      Use |                                           | Site
      Area
|----------------------------------------- | ------------ |  | ------------------- | ----------------------------------------- | ---------------
|Amsterdam-Schiphol,
      the Netherlands | Leased       |  |                     | Sorting
      centre (international mail) |                
|Amsterdam, the
      Netherlands          | Owned        |  |                     | Sorting
      centre (letters)            |                
|s-Hertogenbosch,
      the Netherlands   | Owned        |  |                     | Sorting
      centre (letters)            |                
|The Hague, the
      Netherlands          | Owned        |  |                     | Sorting
      centre (letters)            |                
|Nieuwegein,
      the Netherlands         | Owned        |  |                     | Sorting
      centre (letters)            |                
|Rotterdam, the
      Netherlands          | Owned        |  |                     | Sorting
      centre (letters)            |                
|Zwolle, the
      Netherlands             | Owned        |  |                     | Sorting
      centre (letters)            |                
|Amsterdam, the
      Netherlands          | Owned        |  |                     | Sorting
      centre (parcels)            |                
|Dordrecht, the
      Netherlands          | Owned        |  |                     | Sorting
      centre (parcels)            |                
|Zwolle, the
      Netherlands             | Owned        |  |                     | Sorting
      centre (parcels)            |                
|Arnhem, the
      Netherlands             | Owned        |  |                     | Sorting
      centre (registered mail)    |                
|                                          |              |  |                     |                                           |                

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

ExpressOur express division
  uses 836 depots, road and air hubs.
  The principal express facilities are as follows:

|Location                | Owned/leased |  | Principal
      Use |                                   | Site
      Area
|----------------------- | ------------ |  | ------------------- | --------------------------------- | ---------------
|                        |              |  |                     | Maintenance
      Hangar and      |                
|Liège,
      Belgium    | Leased       |  |                     | TNT
      Airways Head Office     |                
|Liège,
      Belgium    | Owned        |  |                     | Hub
      and office              |                
|Wiesbaden, Germany      | Owned        |  |                     | Sorting
      centre and road hub |                
|Arnhem, the Netherlands | Owned        |  |                     | International
      road hub      |                
|Brussels, Belgium       | Leased       |  |                     | Sorting
      centre and road hub |                
|                        |              |  |                     |                                   |                

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

LogisticsOur logistics division
  uses 508 warehouses, representing 7,045,000-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.

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Employees The following table
    sets forth certain data on our work force
  for each of the years in the three-year period ended 31 December 2003.

Number of
  employees and full time equivalents (FTEs)

|                                                                 | Year
        ended at 31 December | 
|---------------------------------------------------------------- | --------------------------------- | 
|                                                                 |                                   | 
|                                                                 | 2003                              | 
|Employees at year-end
      1                                    | 163,028                           | 
|Mail                                                             | 80,613                            | 
|Express
      2                                                  | 43,723                            | 
|Logistics
      2                                                | 38,692                            | 
|                                                                 |                                   | 
|Employees of proportionately
      consolidated joint ventures 3 | 7,363                             | 
|                                                                 |                                   | 
|Number of external
      agency staff at year end (estimate) 4   | 4,038                             | 
|                                                                 |                                   | 
|FTEs year
      average 1 4                                     | 121,299                           | 
|Mail                                                             | 44,328                            | 
|Express
      2                                                  | 39,476                            | 
|Logistics
      2                                                | 37,495                            | 
|                                                                 |                                   | 
|FTEs of
      proportionately consolidated joint ventures 3 4   | 6,275                             | 
|                                                                 |                                   | 
|Employees (at
      year end) per geographic region:             |                                   | 
|Netherlands                                                      | 69,005                            | 
|Rest
      of Europe                                             | 69,558                            | 
|                                                                 |                                   | 
|Europe
      in total                                            | 138,563                           | 
|Asia                                                             | 5,881                             | 
|Australia                                                        | 5,819                             | 
|USA
      & Canada                                               | 6,920                             | 
|Rest
      of the world                                          | 5,845                             | 
|                                                                 |                                   | 
|Total                                                            | 163,028                           | 
|                                                                 |                                   | 

|1 | Including
      temporary employees on our payroll.                                                                                                                                                                                                                         
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2 | Figures
      for 2001 and 2002 have been restated to reflect the transfer of Innight
      services from express to logistics.                                                                                                                                             
|3 | On
      a 100% basis.                                                                                                                                                                                                                                                      
|4 | FTE's
      (full time equivalents) are monthly calculated and based on the total hours
      worked divided by the locally agreed standard workingweeks or contracts.
      The yearly average is based on the summation on the montly numbers and divided
      by twelve.
|  |                                                                                                                                                                                                                                                                             
|  |                                                                                                                                                                                                                                                                             

Labour
    relationsEuropean region A 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, except for a strike in France in 1999 and a one day strike within
  a joint venture in Belgium in 2003, any material work stoppages in recent years. 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.




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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 than 50% 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 in Australia, experienced any material work stoppages in recent years. Legal
    proceedings MailOPTA proceedingsSeparate accounting
  Pursuant
  to the General Postal Regulations Decree, we are required to inform the OPTA,
  by a separate annual report about our financial results from both the reserved
  postal services and the other mandatory postal services.The report is to be
  based on the separate internal accounts for the costs and the revenues of each
  of these
  types of services.The purpose is to make sure that the requirements of at arms length
  basis, proportionality and completeness are met. Our system for allocating
  the costs and the revenues of our postal services requires the approval of
  OPTA,
  which OPTA gave in December 2000. As we disagreed with some of the conditions
  attached to the approval decision, we submitted a complaint to OPTA in the
  beginning of 2001. 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 the additional obligations on 16
    September 2003 consistent with our view. As a result,TPG fulfilled all obligations
    with the status quo of the allocation system as it was in November 2002. Provision 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. According to us, 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.




Other proceedingsDecision on tariff freezeThe administrative decision of 21 September 2003 of the Minister of Economic Affairs on the temporary tariff freeze (until 1 January 2005) has been formalised through a change of the General Postal Regulations Decree published on 6 October 2003.We decided to lodge an appeal against this administrative decision addressed to our company, which has formally been submitted to the Minister on 30 January 2004. According to us there is no legal basis for the tariff freeze decided in the Postal Law while the decision severely interferes with the freedom of our entrepreneurship. ExpressSubcontractor 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.
    On 17 December 2001, when a Bordeaux court ruled in our favour, ordering the
    release of our French express subsidiaries from all charges. In another case
    the court ruled against TNT Express International and its regional operations
    director. Both lodged an appeal.The ruling of the Bordeaux court was upheld
    by the court of appeal in Bordeaux by judgement of 27 January 2004. UK tax
    investigationWe are in ongoing discussions with the UK Inland Revenue on certain tax
    matters relating to certain of our UK subsidiaries. See chapter 2 Information
    on the company  Group overview. Ordinary 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. Taxation GeneralThe 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,


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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 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. 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 16 October 2003 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 nonresident of the Netherlands is based on facts,
    as well as on several




fictions
    in Dutch tax legislation.The general corporate income tax rate is currently
    34.5%, (although the first  22,689 of taxable profit is taxed at 29%). 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 dividends
  Dividends
  (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. As
          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 13 October 1993 (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, andthe person can
        be considered to be the beneficial owner of 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


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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. 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, andthat 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.  Dutch
          personal and corporate income taxThe
          Personal Income Tax Act 2001 entered into force on 1 January 2001, replacing
          the Income Tax Act 1964 and the Net Wealth Tax Act 1964. Under this
          personal income tax regime, 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, andBox 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 Netherlands Box 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%. Changes
          under the new Income Tax Act relevant for investors in the ordinary
          shares or ADSs include the following: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.The elements
        of a substantial interest are considered to form a substantial interest.Received/derived
        stock dividend 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%.


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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 Netherlands 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 entered into on or after 27 April 2001, 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. 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 the Netherlands,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, actief vermogensbeheer),
        orFrom part of
        a substantial interest of the shareholder in the company and this substantial
        interest does not form part of the 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 tax
  Companies resident in the Netherlands
  A 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 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%, 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 gains Residents of the
    Netherlands In principle, capital gains
    derived from the sale of the ordinary shares or ADSs by an individual shareholder
    whoresides,
    or is deemed to reside, in the Netherlands are not subject




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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 Netherlands resident entity, any capital gains
    derived from the sale of the ordinary shares or ADSs are subject to corporate
    income tax at 34.5%, 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 nonresident 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, ordo 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% for entities, unless the substantial interest forms part
of the business assets of an enterprise of the shareholder. The Netherlands right 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, orhas 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 to whom 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 or deemed resident of the Netherlands,
        andthe 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. 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 whois 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,
        anddoes 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 its securities holdings, a person that holds ordinary shares or ADSs
    as part of a straddle or a hedging or conversion transaction,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,


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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 future actions
    that may be taken by the United States Treasury Department. For purposes of tax treaties and the Code, 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 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. We do not maintain calculations of our earnings and profits under United
    States federal income tax principles. 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 valueof
    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 Congres. 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  Withholding 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) Computation of 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 carries on business in the Netherlands, or


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is
        effectively connected with a fixed base in the Netherlands from which
        the holder performs independent personal services.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),
        oris 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. 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 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 May 6, 2003 and before January 1, 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, orprovides
        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 tax liability. 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




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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. Other
    information for shareholdersInformation
    to the shareholdersThe 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. We may hold briefing
    meetings with our major institutional shareholders in the Netherlands, the
    UK and the US, usually twice a year after the half year and full year results
    announcements, to ensure that the investing community receives a balanced
    and complete view of the Groups performance and the issues faced by
    the business. Briefings on quarterly results are given via teleconference
    and are accessible by telephone or via our website. Briefings are similarly
    given to update the market between each quarterly announcement. For further
    information visit our website at www.tpg.com. 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 attended 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, whereby our
    group compliance officer shall always be involved. 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
  financial information (quarterly, half-yearly or annual figures). 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. As from 2004 our website
  will provide a summary of the minutes of all 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. Since 4 January 1999,
  the share price of the ordinary shares has been quoted on Euronext Amsterdam
  in euro rather than in Dutch guilders.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.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.




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The following table sets forth the high and low trading prices for our ordinary shares on Euronext Amsterdam and the ADSs on the New York Stock Exchange for the periods indicated: Euronext
      
      
      NYSEHigh
      
      Low
      
      High
      
      Low
      
      
      
      $
      
      $1999
      35.40
      
      
      21.20
      
      
      40.00
      
      
      22.882000
      31.19
      
      
      22.31
      
      
      30.94
      
      
      19.442001
      28.29
      
      
      16.46
      
      
      26.50
      
      
      16.252002
      25.08
      
      
      14.98
      
      
      22.72
      
      
      15.302003
      19.34
      
      
      11.71
      
      
      23.59
      
      
      13.10  2001
      Euronext
      
      
      NYSEHigh
      
      Low
      
      High
      
      Low
      
      
      
      $
      
      $1st
      Quarter
      28.29
      
      
      22.09
      
      
      26.56
      
      
      19.702nd
      Quarter
      26.80
      
      
      23.17
      
      
      23.83
      
      
      20.203rd
      Quarter
      25.39
      
      
      16.46
      
      
      22.61
      
      
      16.254th
      Quarter
      24.50
      
      
      20.31
      
      
      21.73
      
      
      18.33  2002
      Euronext
      
      
      NYSEHigh
      
      Low
      
      High
      
      Low
      
      
      
      $
      
      $1st
      Quarter
      25.08
      
      
      21.65
      
      
      22.08
      
      
      19.322nd
      Quarter
      25.07
      
      
      20.65
      
      
      22.63
      
      
      19.703rd
      Quarter
      23.00
      
      
      16.55
      
      
      22.72
      
      
      16.284th
      Quarter
      19.35
      
      
      14.98
      
      
      18.50
      
      
      15.30  2003
      Euronext
      
      NYSEHigh
      
      Low
      
      High
      
      Low
      
      
      
      $
      
      $1st
      Quarter
      16.00
      
      
      11.71
      
      
      17.00
      
      
      13.102nd
      Quarter
      15.74
      
      
      13.53
      
      
      18.65
      
      
      15.103rd
      Quarter
      17.62
      
      
      14.83
      
      
      20.08
      
      
      17.134th
      Quarter
      19.34
      
      
      16.11
      
      
      23.59
      
      
      19.14




2003
      Euronext
      
      
      NYSEHigh
      
      Low
      
      High
      
      Low
      
      
      
      $
      
      $August
      17.62
      
      
      16.26
      
      
      20.08
      
      
      18.26September
      17.60
      
      
      16.23
      
      
      19.75
      
      
      18.55October
      18.55
      
      
      16.11
      
      
      21.25
      
      
      19.14November
      18.92
      
      
      17.26
      
      
      22.00
      
      
      20.72December
      19.34
      
      
      18.14
      
      
      23.59
      
      
      21.862004January
      19.54
      
      
      18.15
      
      
      24.55
      
      
      22.59February
      19.15
      
      
      17.18
      
      
      24.51
      
      
      21.72March (through12
        March 2004)
      18.33
      
      
      17.01
      
      
      22.16
      
      
      21.00 Average daily volume
  (in shares) in 2003 was as follows: 20031st
      Quarter
      1,356,4442nd
      Quarter
      1,242,1023rd
      Quarter
      1,404,3514th
      Quarter
      1,272,351 The highest quotation
  during the year was19.34 in December
  2003 and the lowest11.71 in March 2003. A total of 5,674,500 shares in the form of American Depository
  Receipts (ADRs) were traded on the New York Stock Exchange, compared with 4,272,000
  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. Year
      High
      
      Low
      
      Averagerate1(US$
        per1)1999
      1.1812
      
      
      1.0016
      
      
      1.06532000
      1.0335
      
      
      0.8270
      
      
      0.92282001
      0.9535
      
      
      0.8370
      
      
      0.89552002
      1.0485
      
      
      0.8594
      
      
      0.94512003
      1.2597
      
      
      1.0361
      
      
      1.1411 1
      Average of the
        noon buying rates on the last day of each month during the year.




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Month
      High
      
      Low(US$
          per1)August 2003
      1.1390
      
      
      1.0871September 2003
      1.1650
      
      
      1.0845October 2003
      1.1833
      
      
      1.1596November 2003
      1.1995
      
      
      1.1417December 2003
      1.2597
      
      
      1.1956January 2004
      1.2853
      
      
      1.2389February 2004
      1.2848
      
      
      1.2426March
        2004 (through 12 March)
      1.2431
      
      
      1.2088 The noon
    buying rate on 12 March 2004 was USD 1.2191 per1.00. 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
        performance2003
      
      2002Stock
        price (in)High
      19.34
      
      
      25.08Low
      11.71
      
      
      14.98Close
      18.57
      
      
      15.45Earnings per
        outstandingshare
        incents
      63.1
      
      
      126.1Dividend incents
      48.0
      1
      
      40.0Dividend pay-out
        ratio (as a %)
      76.1
      
      
      31.7Dividend yield
        (based onclosing
        
           rate for the year)
      2.58
      
      
      2.59P/E ratio
      29.41
      
      
      12.26Number of issued
        shares
      480,259,522
      
      
      480,259,522Stock market
        capitalisation(inbillions)
      8.823
      
      
      7.420 1
    Proposed.




Our relative performance to the Euronext Amsterdam (AEX) at closing prices during 2003 (AEX index rebased to our company)



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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 ADSs. 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 shareswere
    held as of 12 March 2004: Forum
   Number          of shares
   
   Percentage of          outstanding          ordinary
    sharesBearer shares
   307,365,260
   
   
   64.00
   %Non-ADS registered shares
   167,076,767
   
   
   34.79
   %ADSs1
   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, this number 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.




At 31 December 2003, the breakdown of shareholders / ADS holders was: *
        The State of the Netherlands owned 34.8% of the ordinary shares at 31
        December 2003.Source:
      Bloomberg Professional In 2003, 336.6 million TPG shares were traded on the Euronext Amsterdam market (2002: 302.2 million).




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Peer
    group comparison For 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 World Net (DPWN) with activities in
    mail, express and logistics; the United Kingdom-based company Exel, with activities
    in the field of logistics; as well as the two United States-based express
    carriers FedEx (FDX) and United Parcel Services (UPS). For this peer group,
    the comparative performance in terms of total shareholder returns in 2003
    is charted below.  Dividend
    2003 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 euros. Exchange rate movements will affect the amounts received by ADS
     holders on conversion by the depository of such cash dividends. Dividend
    TPG (in)




Financial
        calendar for 200419
      February
    Announcement
      of 2003 Full Year results7 April
    TPG Annual General
      Meeting of Shareholders13 April
    Ex-dividend listing
      of TPG shares21 April
    Payment of final
      dividend26 April
    Publication of
      2004 first quarter results2 August
    Publication of
      2004 half year results25 October
    Publication of
      2004 third quarter results Documents
    on displaySECWe 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 SEC at Room 1024, 450 Fifth Street, N.W.,Washington, D.C.,
20549. You may also receive copies of these materials by mail from the SECs
Public Reference Branch at 450 Fifth Street, N.W., Washington, D.C., 20549. For
more information on the public reference rooms, call the SEC at 1-800-SEC-0330.
Our reports and other information filed with the SEC are also available to the
public from commercial document retrieval services and the website maintained
by the SEC 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, New York, 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. Futhermore, our website
offers special sections with information about Corporate Governance and Investor
Relations and hyperlinks to the website of Euronext Amsterdam, SEC, AFM and other
public institutions. Our interactive site
    is continuously refined to better reflect those sections of specific interest
    to investors. It is possible to subscribe via the website to regular e-mail
    distribution lists for updates about our company and special related subjects. We also invite
    you to visit the sites of our two main trading brands: www.tnt.com, www.tpgpost.nl.


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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 2003, 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.




ContactsMailing addressTPG Investor RelationsP.O. Box 130001100 KG AmsterdamThe NetherlandsVisiting addressNeptunusstraat
    41-632132 JA HoofddorpThe NetherlandsTelephone
   +31 20 500 6455Fax
   +31 20 500 7515E-mail
   investorrelations@tpg.comInternet site
   www.tpg.com




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|TPG
      in figures from 1999                                      | Year
      ended at 31 December
|------------------------------------------------------------------- | -------------------------------
|                                                                    |                                
|                                                                    | 2003                           
|                                                                    |                                
|Total operating
      revenues                                      | 11,866                         
|Mail                                                                | 3,915                          
|Express2                                                            | 4,251                          
|Logistics2                                                          | 3,735                          
|Intercompany
      / non allocated                                  | (35                            
|                                                                    |                                
|Total operating
      expenses                                      | 11,099                         
|Salaries
      / social security contributions                      | 4,163                          
|Depreciation,
      amortisation and impairments                    | 711                            
|Other
      expenses                                                | 6,225                          
|                                                                    |                                
|Total operating
      income                                        | 767                            
|As
      % of total operational revenues                            | 6.5                            
|Net income                                                          | 300                            
|                                                                    |                                
|Capital expenditure
      on PPE                                    | 287                            
|Average total
      capital                                         | 8,091                          
|Return on average
      total capital                               | 9.5                            
|Gearing at year
      end3                                          | 26.4                           
|Interest cover
      (times)                                        | 8.3                            
|                                                                    |                                
|Fixed assets                                                        | 5,057                          
|Current assets                                                      | 2,858                          
|Total assets                                                        | 7,915                          
|                                                                    |                                
|Group equity3                                                       | 2,986                          
|Provisions4                                                         | 296                            
|Pension liability4                                                  | 521                            
|Long-term liabilities                                               | 1,661                          
|Current liabilities                                                 | 2,451                          
|Total liabilities
      and group equity3                           | 7,915                          
|                                                                    |                                
|Return on assets                                                    | 9.7                            
|Net return on
      equity3                                         | 10.0                           
|                                                                    |                                
|Net cash provided
      by operating activities                     | 937                            
|Net cash used
      in investing activities                         | (373                           
|Net cash used
      by financing activities                         | (436                           
|Changes in cash
      and cash equivalents                          | 128                            
|                                                                    |                                
|Capital expenditures
      on major fixed assets as % of            |                                
|turnover                                                            | 3.0                            
|Capital expenditure
      on investments as % of turnover           | 0.6                            
|Cash conversion
      efficiency                                    | 7.9                            
|                                                                    |                                
|Number of ordinary
      shares on diluted basis(in
      millions) | 475.4                          
|Net income per
      diluted ordinary share ()                     | 0.63                           
|Total shareholder
      return(%)                                   | 23.5                           
|                                                                    |                                

|(inmillions, unless otherwise stated)
|--------------------------------------
|1                                     
|2                                     
|3                                     
|4                                     



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Glossary
    of terms 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


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|Chapter
      15 Cross reference table to Form 20F
|--------------------------------------------------

|     |                                                         |                                        | 
|---- | ------------------------------------------------------- | -------------------------------------- | 
|     |                                                         |                                        | 
|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                                 | 2-4                                    | 
|3B   | Capitalisation and indebtedness                         | N/a                                    | 
|3C   | Reasons for the offer and use of proceeds               | N/a                                    | 
|3D   | Risk factors                                            | 64-69                                  | 
|     |                                                         |                                        | 
|4    | Information on the company                              |                                        | 
|4A   | History and development of the company                  | 8-9,
      16-20, 24-26, 30-32         | 
|4B   | Business overview                                       | 8-9,
      16-20, 24-26, 30-32         | 
|4C   | Organisational structure                                | 8-9,
      16-20, 24-26, 30-32         | 
|4D   | Property, plants and equipment                          | 155                                    | 
|     |                                                         |                                        | 
|     |                                                         |                                        | 
|5    | Operating and financial review and prospects            |                                        | 
|5A   | Operating results                                       | 8-15,
      16-23, 24-29, 30-36, 70-84 | 
|5B   | Liquidity and capital resources                         | 74,75                                  | 
|5C   | Research and development, patents and licences          | N/a                                    | 
|5D   | Trend information                                       | 8-15,
      16-23, 24-29, 30-36        | 
|5E   | Off-balance sheet arrangements                          | 75                                     | 
|5F   | Tabular disclosure of contractual obligations           | 105                                    | 
|5G   | Safe harbour [forward looking statements]               | 63-64                                  | 
|     |                                                         |                                        | 
|     |                                                         |                                        | 
|6    | Directors, senior management and employees              |                                        | 
|6A   | Directors and senior management                         | 40,
    45,46                          | 
|6B   | Compensation                                            | 47-59,
    39,42                       | 
|6C   | Board practices                                         | 37,38                                  | 
|6D   | Employees                                               | 156                                    | 
|6E   | Share ownership                                         | 112-118                                | 
|     |                                                         |                                        | 
|7    | Major shareholders and related party transactions       |                                        | 
|7A   | Major shareholders                                      | 149,150                                | 
|7B   | Related party transactions                              | 149,
      150, 77                     | 
|7C   | Interests of experts and counsel                        | N/a                                    | 
|     |                                                         |                                        | 
|8    | Financial information                                   |                                        | 
|8A   | Consolidated statements and other financial information | 85-145                                 | 
|8B   | Significant changes                                     | 11,
      39, 154                      | 
|     |                                                         |                                        | 
|     |                                                         |                                        | 

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|
|
|

|    |                                                                                    | Page
      number          | 
|--- | ---------------------------------------------------------------------------------- | -------------------------- | 
|9   | The offer
      and listing                                                        |                            | 
|9A  | Offer and listing
      details                                                    | 164-165                    | 
|9B  | Plan of distribution                                                               | N/a                        | 
|9C  | Markets                                                                            | 1, 164                     | 
|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                                       | 150-154                    | 
|10C | Material contracts                                                                 | 154                        | 
|10D | Exchange controls                                                                  | 154                        | 
|10E | Taxation                                                                           | 157-164                    | 
|10F | Dividends and
      paying agents                                                  | N/a                        | 
|10G | Statement by experts                                                               | N/a                        | 
|10H | Documents on display                                                               | 168,
      169             | 
|10I | Subsidiary information                                                             | N/a                        | 
|    |                                                                                    |                            | 
|11  | Quantitative
      and qualitative disclosures about market risk                   | 83-84                      | 
|    |                                                                                    |                            | 
|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                                                      | 39                         | 
|    |                                                                                    |                            | 
|16A | Audit
      committee financial expert                                             | 42                         | 
|    |                                                                                    |                            | 
|16B | Code of
      ethics                                                               | 60-62                      | 
|    |                                                                                    |                            | 
|16C | Principal
      accountant fees and services                                       | 43,
      120 (note 20)    | 
|    |                                                                                    |                            | 
|16D | Exemptions
      from the listing standards for audit committees                   | N/a                        | 
|    |                                                                                    |                            | 
|16E | Purchases
      of equity securities by the issuer and affiliated purchaser        | N/a                        | 
|    |                                                                                    |                            | 
|    | Part III                                                                           |                            | 
|    |                                                                                    |                            | 
|17  | Financial
      statements                                                         | N/a                        | 
|    |                                                                                    |                            | 
|18  | Financial
      statements                                                         | 85-144                     | 
|    |                                                                                    |                            | 
|19  | Exhibits                                                                           | filed with
        the SEC | 
|    |                                                                                    |                            | 
|    |                                                                                    |                            | 

| | 2003
        annual report | 173
| | -------------------------- | ---

---





Back to Contents

|Item
      19: | EXHIBITS                                                                                                                                                                                                                     
|-------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                                                                              
|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.,
      as Fiscal 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.                                                                                                                                                                                   
|               |                                                                                                                                                                                                                              
|4.4            | Employment
      Agreement of J.G. Haars.                                                                                                                                                                                    
|               |                                                                                                                                                                                                                              
|4.5            | Employment
      Agreement of H.M. Koorstra.5                                                                                                                                                                                
|               |                                                                                                                                                                                                                              
|4.6            | Participation
      Agreement dated 20 December 2002 between TNT Post Groep N.V. and the Stichting
      Pensioenfonds TNT Post Groep (English Summary of Dutch agreement).6                                                 
|               |                                                                                                                                                                                                                              
|4.9            | Fiat
      Spare Parts Renewal agreement dated 19 February 2004 between TNT Automotive
      Logistics S.p.A and Fiat Auto S.p.A. (English translation of Italian agreement).7                                               
|               |                                                                                                                                                                                                                              
|8.1            | Significant
      Subsidiaries (see Chapter 14  Additional Information).                                                                                                                                                  
|               |                                                                                                                                                                                                                              
|11.1           | Code of
      ethics for senior financial officers (see The TPG Code of Business Principles,
      Chapter 9  Corporate code of business principles and 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.                                                                                                              
|               |                                                                                                                                                                                                                              
|12.3           | Certification
      by Group Managing Director Mail pursuant to Section 302 of the Sarbanes
      -Oxley Act of 2002.                                                                                                        
|               |                                                                                                                                                                                                                              

|                                                                                                                                                                                                                                                                                
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1Incorporated
      by reference to Exhibit 2.1 to TPGs Annual Report on Form 20-F filed
      with the SEC on 13 March 2001.                                                                                                                                                  
|2Incorporated
      by reference to Exhibit 2.3 to TPGs Annual Report on Form 20-F filed
      with the SEC on 4 March 2002.                                                                                                                                                   
|3Incorporated
      by reference to Exhibit 4.1 to TPGs Annual Report on Form 20-F filed
      with the SEC on 13 March 2001.                                                                                                                                                  
|4Incorporated
      by reference to TPGs Form 6-K furnished to the SEC on 15 March 2001.                                                                                                                                                                                       
|5Incorporated
      by reference to Exhibit 4.3 to the amendment to TPGs Annual Report
      on Form 20-F filed with the SEC on 1 July 2002.                                                                                                                                   
|6Incorporated
      by reference to Exhibit 4.4 to TPGs Annual Report on Form 20-F filed
      with the SEC on 21 February 2003.                                                                                                                                               
|7Certain
      portions have been omitted based upon a request for confidential treatment
      pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
      The non public information has been filed with the Securities and Exchange
      Commission.

---



Back to Contents

|12.4 | Certification
      by Group Managing Director Express pursuant to Section 302 of the Sarbanes
      - Oxley Act of 2002.                                               
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                         
|12.5 | Certification
      by Group Managing Director Logistics pursuant to Section 302 of the Sarbanes
      - Oxley Act of 2002.                                             
|     |                                                                                                                                                                         
|13.1 | Certification
      by Chief Excecutive 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.         
|     |                                                                                                                                                                         
|13.3 | Certification
      by Group Managing Director Mail pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     
|     |                                                                                                                                                                         
|13.4 | Certification
      by Group Managing Director Express pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  
|     |                                                                                                                                                                         
|13.5 | Certification
      by Group Managing Director Logistics pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

---



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.

|                          | TPGN.V.                                                 
|------------------------- | --------------------------------------------------------
|                          |                                                         
|                          |                                                         
|                          | By: /s/
      M.P. Bakker                               
|                          | Name: M.P.
      Bakker                                 
|                          | Title: Chairman
      of the Board of Management and CEO
|Date: 31
      March 2004 |                                                         

---



Exhibit
  1.1

---



1

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

11 April
  2003















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 11 April 2003 before G.W.Ch. Visser, civil law notary in Amsterdam, in respect of which a ministerial Statement of No objections was granted on 3 April 2003, 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) under taking 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 r
      e-ceive 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 C ertificate, (iv) the Ne-cigef -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 Certif i-cate,
      (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.                                            | Article
      50 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 Super vis ory 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
      shar e-holders 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 shar e-holders
      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 par a-graph shall
      not be applicable to preference shares B issued pursuant to a resolution
      of the general meeting.                         
|------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|9.                                                      | Article
      51 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 article 53, paragraph 1, 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 article 52. 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.                                                      | Article
      52 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 article 53, paragraph 1.                                                                                                
|                                                        |                                                                                                                                                                                                                                                                                                                                                                                                    
|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 compan y. 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.                                                      | Articles
      53 and 54 shall also be applicable to paying up 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 article 56, paragraph 3.
|   |                                                                                                                                                                                                                                                                                                                                                              
|4. | Articles
      55 to 62 inclusive and article 68 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 article 63 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
      pr ospec-tive 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 par a-graph 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 vot e 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 wit h 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 r e-ferred
      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.                                                    
|                                                                                    |                                                                                                                                                                                                                                                                                                                                                         
|The
      remuneration and other terms of employment of each member of the Board of



---



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 may formulate by-laws containing further regulations
      on the decision-making by the Board of Management. 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 PTT Post Holdings 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 PTT Post Holdings 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
      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 an
      d 3 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.
|------------------------------------
|                                    
|1.                                  
|                                    
|2.                                  
|                                    
|Article
      28. Appointment.      
|                                    
|1.                                  
|                                    
|2.                                  
|                                    
|3.                                  
|                                    
|4.                                  
|                                    
|5.                                  
|                                    
|                                    
|                                    
|6.                                  
|                                    
|7.                                  
|                                    

---



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 Super visory 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 Nether-lands
      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 there with.
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2.                                                                                                                | The
      Board of Management shall provide the Supervisory Board in good time with
      the information necessary for the performance of its duties.                                                                                                                                                                                                                                                                                                 
|                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3.                                                                                                                | 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 repr e-sented 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. The Supervisory Board may
      draw up by-laws governing the procedure for holding meetings and making
      decisions.                                                                                                                                  
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.                                                                       | The Supervisory Board may draw up by-laws governing the procedure for
      holding meetings and making decisions.                                                                                                                                                                                                                                                                                                  
|                                                                         
|CHAPTER
      X                                                          
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                     
|Financial
      statements and annual report. Profit.                    
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                     
|Article
      33. Financial year. Financial statements and annual report.
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                     
|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 pr e-pare
      the financial statements and shall lay them open for inspection by the shareholders
      at the office of the company. Within that period the Board of
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                     

---



18



|                                                                                     | 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.                                                                                   | Articles
      64 to 67 inclusive shall also be applicable to the financial stat e-ments
      and the annual report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Article
        34. Submission to the general meeting and the central works council.
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|1.                                                                                   | The Supervisory
      Board shall submit the financial statements determined by it to the general
      meeting for approval.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|2.                                                                                   | Simultaneously,
      the Supervisory Board submits the financial statements determined by it
      to the central works council for discussion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.                                                                                   | The financial
      statements require the approval of the general meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.                                                                                   | After approval
      of the financial statements, the general meeting shall pass a resolution
      concerning release of the members of the Board of Management and the members
      of the Supervisory Board from liability for the exercise of their respective
      duties, 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. The scope of a release from liability shall
      be subject to limitations by virtue of the law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|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 one point above the aver age
      twelve monthly EURIBOR (EURO Interbank Offered Rate) - weighted to reflect
      the num ber of days for which the payment have applied - over the financial
      year to which the distribution relates. 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 and publis
      hed 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 Supervis ory Board, of
      at least one-quarter of a percentage point and at most one percentage point,
      depending on the prevailing market cond i-tions. 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 shar eholders' 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 distributed
      as dividend on the ordinary shares.                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|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.                                                                                   | Article
      68 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. | release
      from liability of members of the Board of Management and members of the
      S upervisory Board;                                    
| |    |                                                                                                                                                    
| | d. | 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;                                                                                                                                                                                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                            | e.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 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 article 63, paragraph
      6, 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 connec tion 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 desig nated in the notice convening the
      meeting or at another payment office as referred to in the Rules relating
      to Securities.
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|8.                                                                                                                                                                                                                                                                          | Shareholders
      representing alone, or in the aggregate, at least one percent (1%) of the
      issued capital, 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 shall in principal be honoured by the Board of Management or the
      Supervisory Board on the condition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                            | a.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | that
      the shareholders have a reasonable interest in the items to be considered;                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                           

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21



|                                                                                                                                            | b.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | that the
      placing on the agenda is not in conflict with an orderly course of the meeting
      and that there shall be no grave interests of the company which resist against
      the placing on the agenda;
|------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                    
|                                                                                                                                            | c.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | that the
      request has been filed in writing with the Board of Management or the chairman
      of the Supervisory Board at least sixty days prior to 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 shar e-holders
      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 notifi-cation 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.                                                                                                                                                                                                                                               
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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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 par a-graph
      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 Nethe rlands 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 speci-fied
      in the statement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|6. | The date
      stated in the notice convening the meeting as referred to in par a-graphs
      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 shar e-holders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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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 ba
      llot 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 article 69 shall also apply to the general meeting of share-holders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|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 article
      52, paragraph 3.                                                                                                                                                                                          
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|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 .                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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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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|                                                                                                                                                                                                    

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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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|CHAPTER
      XIVStatutory
      requirements.Article
      49. General.
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.                                                                       | This chapter
      sets forth the statutory requirements of mandatory rules of law, contained
      in Book 2 of the Netherlands Civil Code as they apply to the company on
      the sixth day of August two thousand and one. The transcription is neither
      verbatim nor complete.                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.                                                                       | The sections
      put in brackets are sections of Book 2 of the Netherlands Civil Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Article
      50. Share registers (Section 85).                         
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.                                                                       | Each register
      shall record the date on which the shareholders acquired the shares, the
      date of acknowledgement or service of the instrument of transfer and the
      amount paid up on each share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.                                                                       | Part of
      the register of holders of ordinary shares may be kept outside the Netherlands
      in compliance with applicable legislation or pursuant to the rules of an
      exchange.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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26

|3.                                                                               | In each
      register the names and addresses of persons who have a right of usufruct
      or pledge in respect of shares recorded therein shall be recorded, stating
      which of the rights attached to the shares are vested in them pursuant to
      article 19, paragraph 1. The registers shall regularly be kept up-to-date.
      A record shall also be made in the register of holders of preference shares
      B of the grant of each release from liability for any paying up not yet
      made.                                                                   
|-------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|4.                                                                               | Upon request
      and at no cost, the Board of Management shall provide shar eholders, usufructuaries
      and pledgees with an extract from the register in respect of their rights
      to a share. If the share is subject to a right of usufruct or a right of
      pledge, the extract shall state the person in whom the rights referred to
      in article 19, paragraph 1, are vested.                                                                                                                                                                                    
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5.                                                                               | The Board
      of Management shall deposit the registers at the office of the company for
      inspection by the shareholders and by the usufructuaries and pledgees in
      whom the rights referred to in article 19, paragraph 1, are vested. All
      of this shall not apply to the part of the register for ordinary shares
      referred to in paragraph 2. The information in respect of shares which have
      not been paid up in full shall be available for public inspection; a copy
      or an extract of such information shall be provided at no more than cost.
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Article
      51. Issue of shares and rights to subscribe to shares (Section 96)
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|1.                                                                               | For a resolution
      of the general meeting to issue shares or to designate a corporate body
      as referred to in article 12 to be valid, a prior or simultaneous resolution
      of approval by each group of holders of shares of the same class whose rights
      are prejudiced as a result of the issue, shall be required.                                                                                                                                                                                                                                                
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2.                                                                               | Within eight
      days after a resolution of the general meeting to issue shares or designate
      a corporate body, the company shall deposit the full text of the resolution
      in question at the office of the commercial register.                                                                                                                                                                                                                                                                                                                                           
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3.                                                                               | Within eight
      days after each issue of shares, the company shall report the same to the
      office of the commercial register stating the number and class.                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|4.                                                                               | The preceding
      provisions of this article shall apply mutatis mutandis to the granting
      of rights to subscribe to shares, but shall not apply to the issue of shares
      to a person exercising a previously acquired right to subscribe to shares.                                                                                                                                                                                                                                                                                                                        
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Article
      52. Issue terms Pre-emptive rights (Sections 96a and 97)          
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|1.                                                                               | If an announcement
      is made as to the amount to be issued and only a lesser amount can be placed,
      the latter amount shall be placed only if the conditions of issue expressly
      provide therefor.                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2.                                                                               | Each holder
      of ordinary shares shall have a pre-emptive right on any issue of ordinary
      shares pro rata to the aggregate amount of his ordinary shares. He shall,
      however, have no pre-emptive right in respect of shares issued for a non-cash
      contribution. He shall also have no pre-emptive right in respect of shares
      issued to employees of the company or of a group company.                                                                                                                                                                      
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3.                                                                               | Notice of
      any issue in respect of which there is a pre-emptive right and the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

---



27

|                                                                | period during
      which such right can be exercised shall be published in the State Gazette
      (Staatsco
      urant)
      and in a nationally distributed daily newspaper.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4.                                                              | The pre-emptive
      right may be exercised during a period of at least two weeks after the date
      of publication of such notice in the State Gazette.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|5.                                                              | If a proposal
      to restrict or exclude the pre-emptive right is put to the general meeting,
      the reasons for the proposal and the selection of the intended issue price
      shall be explained in writing.                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|6.                                                              | If less
      than one-half of the issued capital is represented at the meeting, a majority
      of at least two-thirds of the votes cast shall be required for a resolution
      of a general meeting to restrict or exclude the pre-emptive right or to
      designate a corporate body authorised to do so. Within eight days after
      the resolution, the full text thereof shall be deposited at the office of
      the commercial register.                                                                                                                                                                                     
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|7.                                                              | On the grant
      of rights to subscribe to ordinary shares, the holders of ordinary shares
      shall have a pre-emptive right; paragraphs 2 to 6 inclusive shall apply
      mutatis mutandis. Shareholders shall have no pre-emptive right in respect
      of shares to be issued to a person who exercises a previously acquired right
      to subscribe to shares.                                                                                                                                                                                                                                                                  
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Article
      53. Paying up on shares (Sections 80, 80a).      
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|1.                                                              | Persons
      who are professionally engaged in the placing of shares for their own account
      may be permitted, by agreement, to pay less than the nominal amount for
      the shares subscribed to by them, provided that not less than ninety-four
      percent (94%) of such amount is paid in cash on subscription to the shares
      at the latest.                                                                                                                                                                                                                                                                              
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2.                                                              | Paying up
      in cash for shares must be made in Netherlands currency, unless the company
      agrees to paying up in a foreign currency.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.                                                              | If paying
      up on shares is made in a foreign currency, the obligation to pay up shall
      be fulfilled to the extent of the sum for which the amount being paid up
      is freely convertible into Netherlands currency. The basis of determination
      shall be the rate of exchange on the date of paying up. The company may
      demand that paying up is made at the rate of exchange on a fixed date within
      two months before the last date on which paying up must be made, provided
      the shares or depositary receipts shall, upon issue, be listed without delay
      on an exchange outside the Netherlands.
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4.                                                              | Within two
      weeks after paying up is made in a foreign currency, the company shall deposit
      at the office of the commercial register a statement as referred to in section
      93a, paragraph 6 of Book 2 of the Netherlands Civil Code.                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Article
      54. Non-cash contribution (Sections 80b and 94b).
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|1.                                                              | If a non-cash
      contribution has been agreed, a valuation of such contribution on economic
      standards must be possible. A right to the performance of                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

---



28

|                                                                                                                   | work or
      services may not be contributed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2.                                                                                                                 | A non-cash
      contribution must be made without delay after subscription to a share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3.                                                                                                                 | The company
      shall prepare a description of the non-cash contribution, stating the value
      attributed thereto and the methods of valuation employed, as prescribed
      by section 94a, paragraph 1 of Book 2 of the Netherlands Civil Code. The
      description must relate to the condition of the contribution on a date no
      earlier than five months before the date on which the shares are subscribed
      to. The members of the Board of Management shall sign the description; if
      the signature of one or more of them is missing this shall be stated, giving
      the reason therefor.
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.                                                                                                                 | An auditor
      must issue a certificate in respect of the description of the contribution
      pursuant to section 94a, paragraph 2 of Book 2 of the Netherlands Civil
      Code.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|5.                                                                                                                 | A description
      and auditor's certificate shall not be required in the case referred to
      in section 94b, paragraph 3 of Book 2 of the Netherlands Civil Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|6.                                                                                                                 | Within eight
      days after the date on which the shares were subscribed to, the auditor's
      certificate in respect of the contribution or a copy thereof shall be deposited
      at the office of the commercial register stating the names of the contributors
      and the amount of the part of the issued capital paid up in that manner.                                                                                                                                                                                                                                                                    
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|7.                                                                                                                 | The provisions
      of paragraphs 3, 4 and 6 shall not apply to the extent that the contribution
      consists of shares or depositary receipts issued for shares or rights convertible
      into shares or profit sharing certificates of another legal entity for which
      the company has made a public offer, provided such sec uri-ties or part
      thereof are listed on a stock exchange or are regularly traded over-the-counter.                                                                                                                                                                         
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Article
      55. Subscription by the company to its own shares to be issued (Section 95).                        
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|1.                                                                                                                 | The company
      may not subscribe to its own shares to be issued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2.                                                                                                                 | Shares to
      which the company subscribes in breach of the preceding par a-graph shall
      devolve on the date of subscription on the members of the Board of Management
      jointly. Each of them shall be jointly and severally liable for the paying
      up in full on such shares with statutory interest as from that date.                                                                                                                                                                                                                                                                                 
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3.                                                                                                                 | If a person
      subscribes to a share in his own name but for the account of the company,
      he shall be deemed to subscribe to the same for his own account.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Article
      56. Acquisition by the company of its own shares or depositary receipts
      therefor (Section 98).
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|1.                                                                                                                 | The acquisition
      by the company of shares in its capital which are not fully paid up or depositary
      receipts therefor shall be null and void.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2.                                                                                                                 | For the
      purposes of article 15, paragraph 1 sub a, the amount of the shar e-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

---



29

|                                                                      | holders'
      equity according to the last adopted balance sheet shall be determined less
      the purchase price of shares in the capital of the company or depositary
      receipts therefor and distributions to others from profits or reserves due
      by it and its subsidiaries after the balance sheet date. If more than six
      months have elapsed since the end of the financial year without the financial
      statements being adopted, then an acquisition in accordance with article
      15, paragraph 1, shall not be permitted.                                                                                                                                                                                                                                                                                                                  
|--------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3.                                                                    | An acquisition
      for consideration can only take place if the general meeting has authorised
      the Board of Management thereto. This authorisation shall remain valid for
      not more than eighteen months. The general meeting must specify in the authorisation
      the number of shares or depositary receipts therefor which may be acquired,
      the manner in which they may be acquired and the limits within which the
      price must be set.                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4.                                                                    | No authorisation
      as referred to in the preceding paragraph shall be required for the acquisition
      of shares or depositary receipts therefor as referred to in article 15,
      paragraph 2. Such shares or depositary receipts therefor must be listed
      on an exchange.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|5.                                                                    | Article
      15 paragraph 1 and the paragraphs 1, 2 and 3 of this article shall not apply
      to shares which the company acquires by universal succession of title.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Article
      57. Consequences of wrongful acquisition (Section 98a).
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|1.                                                                    | An acquisition
      of shares in breach of article 15, paragraph 1 and article 56, paragraphs
      2 and 3 shall be null and void. The members of the Board of Management shall
      be jointly and severally liable to a bona fide transferor who sustains any
      loss as a result of such nullity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2.                                                                    | Depositary
      receipts for shares which the company has acquired in breach of article
      15, paragraph 1 and article 56, paragraphs 2 and 3, shall, simultaneously
      with the acquisition, devolve on the members of the Board of Management
      jointly. Each of them shall be jointly and severally liable to compensate
      the company for the purchase price and the statutory interest thereon as
      from such date.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3.                                                                    | The company
      may, jointly with its subsidiaries, hold shares in its capital exceeding
      one-tenth of the issued share capital for no more than three years after
      it has acquired its own shares or depositary receipts therefor for no consideration
      or by universal succession of title; its own shares or depositary receipts
      therefor which it holds as pledgee shall be included in such calculation.
      Any shares or depositary receipts held by the company in excess of the amount
      permitted shall devolve on the members of the Board of Management jointly
      at the end of the last day of such three-year period. Each of them shall
      be jointly and severally liable to compensate the company for the value
      of the shares or depositary receipts at such date with statutory interest
      as from such date.
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4.                                                                    | The preceding
      paragraph shall apply mutatis mutandis to each of its own                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---



30

|                                                                                                                                                                                                                                                                                                           | shares or
      depositary receipts therefor which is not fully paid up, which has been
      acquired by the company by universal succession of title and which it has
      not disposed of or cancelled within three years thereafter.                                                                                                                                                                                                                              
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5.                                                                                                                                                                                                                                                                                                         | The third
      paragraph shall apply mutatis mutandis to each of its own shares or depositary
      receipts therefor which the company has acquired pursuant to paragraph 2
      of article 15 without the authorisation of the general meeting and which
      it holds for one year.                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                          
|Article
      58. Acquisition for the company's account (Section 98b).                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                          
|If
      a third party, in its own name, acquires shares in the capital of the company
      or depositary receipts therefor for the company's account, it must immediately
      transfer the same to the company against payment. The second paragraph of
      article 57 shall apply mutatis mutandis.
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Article
      59. Financing and guarantees (Section 98c).                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|1.                                                                                                                                                                                                                                                                                                         | The company
      may not grant loans, provide collateral, guarantee the price, bind itself
      jointly and severally or otherwise with or for third parties for the purpose
      of the subscription to or acquisition of shares in its own capital or depositary
      receipts therefor by third parties. This prohibition shall also extend to
      its subsidiaries.                                                                                          
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2.                                                                                                                                                                                                                                                                                                         | This prohibition
      shall not apply if shares or depositary receipts are acquired by or for
      the account of employees of the company or of a group company.                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Article
      60. Subsidiaries (Sections 98, 98c and 98d).                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|1.                                                                                                                                                                                                                                                                                                         | A subsidiary
      may not, for its own account, subscribe or cause the subscription to shares
      in the capital of the company. Subsidiaries may only acquire or cause the
      acquisition of such shares or depositary receipts therefor for their own
      account insofar as the company itself may acquire its own shares or receipts
      therefor pursuant to articles 15 and 56, without prejudice to the provisions
      of paragraph 5 of article 57.
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2.                                                                                                                                                                                                                                                                                                         | In the event
      of a breach of the preceding paragraph, the members of the Board of Management
      shall be jointly and severally liable to compensate the subsidiary for the
      purchase price with statutory interest thereon as from the date of the subscription
      to or acquisition of the shares or depositary receipts therefor. Payment
      of the compensation shall be made against the transfer of such shares or
      depositary receipts.  
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                           | A member
      of the Board of Management need not pay any compensation for the purchase
      price if he can prove that the company cannot be held responsible for such
      subscription or acquisition.                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3.                                                                                                                                                                                                                                                                                                         | A subsidiary
      may,                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| | a.                                                                                | after it
      has become a subsidiary, or                                                                                                                                              
| | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                   |                                                                                                                                                                                         
| | b.                                                                                | after, as
      a subsidiary, it has acquired shares or depositary receipts therefor in
      the capital of the company for no consideration or by universal succession
      of title,
| |                                                                                   |                                                                                                                                                                                         
| | not
      jointly with the company and its other subsidiaries hold or cause to be



---



31

|                                                                                                                 | held for
      its own account shares or depositary receipts constituting more than one-tenth
      of the issued capital for no more than three years. The members of the Board
      of Management shall be jointly and severally liable to compensate the subsidiary
      for the value of any shares or depositary receipts in excess of the permitted
      amount which it holds or causes to be held at the end of the last day of
      such three years, with statutory interest thereon as from that date onwards.
      Payment of the compensation shall be made against the transfer of the shares
      or depositary receipts. A member of the Board of Management need not pay
      such compensation if he can prove that the company cannot be held responsible
      for the fact that the shares or depositary receipts are still being held.
|---------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Article
      61. Pledge of the company's own shares or depositary receipts therefor
      (Section
      89a) .
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The
      company may accept a pledge of its own shares or depositary receipts therefor
      only if:          
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|a.                                                                                                               | the shares
      to be pledged are fully paid up,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|b.                                                                                                               | the nominal
      amount of its own shares and the depositary receipts therefor to be pledged
      to it and of those already held and pledged to it do not together amount
      to more than one-tenth of the issued capital and,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|c.                                                                                                               | the general
      meeting has approved the pledge agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Article
      62. Voting rights in respect of the company's own shares (Sections 118 and 24d).                  
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|1.                                                                                                               | No vote
      may be cast at a general meeting of shareholders in respect of a share belonging
      to the company or a subsidiary thereof or in respect of a share for which
      either of them holds the depositary receipts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                 | The voting
      rights of usufructuaries and pledgees of shares belonging to the company
      and its subsidiaries shall, however, not be excluded if the usufruct or
      pledge was established before the share became the property of the company
      or a subsidiary thereof. No vote may be cast by the company or a subsidiary
      thereof in respect of a share to which it has a right of usufruct or pledge.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2.                                                                                                               | When determining
      the extent to which the shareholders vote, are present or are represented
      or to which the share capital is contributed or represented, no account
      shall be taken of shares in respect of which the law provides that no vote
      may be cast.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Article
      63. Reduction of capital (Sections 99 and 100).                                                   
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|1.                                                                                                               | A resolution
      of the general meeting to reduce the capital shall designate the shares
      to which the resolution applies and shall make provisions for the implementation
      of the resolution.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2.                                                                                                               | Any reduction
      of the nominal amount of the shares without repayment and without a release
      of the obligation to pay up must be made proportioned to all shares of the
      same class. Such requirement of proportionality may be                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



---



32

|                                                                                                                                       | waived if
      all shareholders concerned so agree.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.                                                                                                                                     | Any partial
      repayment on shares or a release of the obligation to pay up must be made
      proportional to all shares concerned. Such requirement of proportionality
      may be waived if all shareholders concerned so agree.                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.                                                                                                                                     | A resolution
      of the general meeting to reduce the capital shall require a prior or simultaneous
      resolution of approval by each group of shareholders of the same class whose
      rights are prejudiced.                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|5.                                                                                                                                     | A resolution
      of the general meeting to reduce the capital shall require a majority of
      at least two-thirds of the votes cast if less than one-half of the issued
      capital is represented at the meeting. This provision shall apply mutatis
      mutandis to a resolution as referred to in paragraph 4.                                                                                                                                                                                                                                          
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|6.                                                                                                                                     | The convening
      notice or further announcement as referred to in article 40, paragraph 6,
      in respect of a general meeting of shareholders at which a resolution referred
      to in this article is to be taken shall state the object of the reduction
      of capital and the manner of implementation.                                                                                                                                                                                                                                              
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                       | Simultaneously,
      a copy of the proposal to reduce the capital, containing th e proposed amendment
      verbatim, must be deposited at the office of the company for inspection
      by and copies must be made available free of charge to shareholders and
      holders of depositary receipts, until the end of the meeting.                                                                                                                                                                                                                             
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|7.                                                                                                                                     | The resolutions
      of the general meeting referred to in this article shall be deposited at
      the office of the commercial register and a notice of the deposit shall
      be published in a nationally distributed daily newspaper.                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|8.                                                                                                                                     | The company
      must provide security for, or otherwise guarantee, the payment of the claim
      of any creditor who demands the same, failing which the opposition referred
      to in the following paragraph shall be upheld. This shall not apply if the
      payment of the creditor's claim is sufficiently secured or if the financial
      condition of the company provides sufficient security that the claim shall
      be paid.                                                                                                                 
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|9.                                                                                                                                     | A resolution
      to reduce the issued capital shall not take effect as long as opposition
      may be instituted as referred to in section 100, paragraph 3 of Book 2 of
      the Nether lands Civil Code. If opposition has been instituted on time,
      the resolution shall take effect only upon the withdrawal of the opposition
      or upon an order setting aside the opposition becoming enforceable. The
      deed of amendment of the articles of association required for the reduction
      of the capital may not be executed prior thereto.
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.                                                                                                                                    | No security
      as referred to in section 100, paragraph 4, of Book 2 of the Netherlands
      Civil Code needs to be provided if the company, on account of losses incurred,
      reduces its capital to an amount which is not less than its shareholders'
      equity, in which case the resolution shall take immediate effect.                                                                                                                                                                                                                            
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Article
      64. Financial statements and annual report (Section 101 and Part 9 of Book
      2 of the
      Netherlands Civil Code).
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



---



33

|1.                                                                       | The financial
      statements shall be signed by the members of the Board of Management and
      the members of the Supervisory Board; if one or more of their signatures
      is missing, this shall be stated, giving the reasons therefor.                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.                                                                       | Part 9 of
      Book 2 of the Netherlands Civil Code shall also apply to the financial statements
      and the annual report.                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Article
      65. Auditor (Section 393).                                
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.                                                                       | The company
      shall assign an auditor to audit the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.                                                                       | The general
      meeting is empowered to make such assignment. If no such assignment is made
      by that meeting, the Supervisory Board or, if there are no members of the
      Board in office or if it fails to make an assignment, the Board of Management
      shall be empowered to do so.                                                                                                                                                                                                                    
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                         | The assignment
      may be withdrawn at any time by the general meeting and by the person who
      made the assignment; assignments made by the Board of Management may also
      be withdrawn by the Supervisory Board.                                                                                                                                                                                                                                                                                             
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.                                                                       | The auditor
      shall report on his audit to the Supervisory Board and the Board of Management.                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.                                                                       | The auditor
      shall convey the results of his audit in a report attesting to the financial
      statements giving a true and fair view.                                                                                                                                                                                                                                                                                                                                                                            
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|5.                                                                       | The financial
      statements may not be determined or approved if the Supervisory Board respectively
      the general meeting has been un able to take cognisance of the auditor's
      report, unless section 393, paragraph 6 of Book 2 of the Netherlands Civil
      Code has been applied.                                                                                                                                                                                                                     
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Article
      66. Deposition at the office of the company (Section 102).
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.                                                                       | The financial
      statements as prepared, the annual report and the information to be added
      pursuant to section 392, paragraph 1 of Book 2 of the Nether-lands Civil
      Code must be available at the office of the company from the date of notice
      convening the annual meeting. Shareholders and holders of depositary receipts
      may inspect the documents there and obtain a copy thereof free of charge.                                                                                      
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.                                                                       | Until the
      deposition referred to in article 67, paragraph 1, has taken place, the
      documents, insofar as the same must be published after adoption, may also
      be inspected by any third party, who may obtain a copy thereof at no more
      than cost.                                                                                                                                                                                                                                                
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Article
      67. Publication (Sections 103 and 394).                   
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.                                                                       | The financial
      statements must be published within eight days after adoption. Publication
      shall be made by depositing a copy drawn up entirely in the Dutch language,
      or if such a text has not been prepared, a copy in French, German or English,
      at the office of the commercial register which is held by the Chamber of
      Commerce authorized under the 1996 Trade Register Act (Handelsregisterwet
      1996).
      The dates of adoption and approval must be annotated on the copy.
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.                                                                       | If the financial
      statements have not been adopted and approved in confor-                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         



---



34

|                                                                             | mity with
      the statutory provisions within seven months from the end of the financial
      year, the Board of Management shall publish the financial stat e-ments as
      prepared in the manner provided in paragraph 1 without delay; it shall be
      stated on the financial statements that the same have not yet been adopted
      or approved.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3.                                                                           | If the general
      meeting has extended the period for preparation of the financial statements
      pursuant to article 33, paragraph 2, the preceding paragraph shall take
      effect two months after the end of such extended period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.                                                                           | Simultaneously
      with and in the same manner as the financial statements, a copy of the annual
      report and of the other information referred to in section 392 of Book 2
      of the Netherlands Civil Code shall be published in the same language.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                             | The preceding
      sentence shall not apply, except for the information referred to in paragraphs
      a, c, f and g of section 392, paragraph 1, if the documents are kept for
      public inspection at the office of the company and a complete or partial
      copy thereof is obtainable on request at no more than cost. The company
      shall file a notice of this fact for registration in the commercial register.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|5.                                                                           | The company
      shall publish its half -yearly and quarterly figures as soon as the same
      are available. This obligation shall not apply as long as such figures are
      made available only to the members of the Board of Management and the Supervisory
      Board and, if the company has established a works council, to such works
      council.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Article
      68. Distributions to shareholders (Sections 103, 104 and 105).
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|1.                                                                           | Distributions
      to shareholders may only be made up to a maximum of the distributable part
      of the shareholders' equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2.                                                                           | A deficit
      may be offset against a statutory reserve only to the extent permitted by
      law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3.                                                                           | Any distribution
      of profits shall be made after the adoption of the financial statements
      from which it appears that the same is permitted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.                                                                           | Interim
      distributions may only be made if the requirement of the first par a-graph
      has been met as evidenced by an interim statement of assets and liabilities.
      This shall relate to the condition of such assets and liabilities on a date
      no earlier than the first day of the third month preceding the month in
      which the resolution to distribute an interim dividend is published. It
      shall be prepared on the basis of generally accepted valuation methods.
      The amounts to be statutorily reserved shall be included in such statement
      of assets and liabilities. It shall be signed by the members of the Board
      of Management; if one or more of their signatures is missing, this shall
      be stated, giving the reason therefor. The statement of assets and liabilities
      shall be deposited at the office of the commercial register within eight
      days after the day on which the resolution to distribute an interim dividend
      is published.
|                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



---



35

|5.                                                                        | For the
      computation of the profit distribution, the shares held by the company in
      its own capital shall not be included, unless the Board of Management resolves
      otherwise, which resolution shall be subject to the approval of the Supervisory
      Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|6.                                                                        | Resolutions
      to make interim and other distributions shall be published without delay.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|7.                                                                        | A claim
      of a shareholder in respect of a distribution shall be statutebarred on
      the expiration of five years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Article
      69. General meetings of shareholders (Sections 13 and 117).
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|1.                                                                        | The members
      of the Supervisory Board and the members of the Board of Management shall,
      in that capacity, have an advisory vote at the general meeting of shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.                                                                        | The ruling
      pronounced by the chairman at the meeting in respect of the outcome of a
      vote shall be decisive. The same shall apply to the contents of a res olution
      passed, to the extent that the vote related to a proposal not made in writing.
      If, however, immediately after the ruling is pronounced, its correctness
      is contested, another vote shall be taken if so desired by the majority
      of the meeting or, if the original vote was not taken by roll-call or by
      ballot, by someone present who was entitled to vote. As a result of such
      new vote, the legal consequences of the original vote shall lapse.                                                                                                                                                               
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Transitory
      provision.                                              
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|1.                                                                        | Share certificates
      for bearer shares, in issue on the sixth day of August two thousand and
      one shall, up to the same nominal amount, be registered on the Necigef Global
      Certificate against surrender of the share certificates (K-certificates)
      provided with all uncalled dividend coupons and talons and, as the case
      may be, against surrender of the share certificates (CF-certificates) provided
      with simplified dividend sheets. After the thirty-first day of October two
      thousand one rights to dividends and other distributions attached to bearer
      shares, in issue on the sixth day of August two thousand and one, can only
      be exercised if the bearer shares concerned have been surrender in accordance
      with the foregoing provisions of this paragraph.
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.                                                                        | The Board
      of Management can issue duplicates for documents as referred to in paragraph
      1 of this article which are damaged, lost, stolen or destroyed. For this
      issuance the Board of Management may stipulate conditions including giving
      guarantees and charging costs to the applicant. Upon issuing duplicates
      the original documents shall be deemed worthless vis-à-vis the company.
      The new document shall clearly state that it is a duplicate.                                                                                                                                                                                                                                                                                                                                          
|                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



---

**Exhibit 4.3**

---



Employment
  Agreement

The
  undersigned:

|1.  | TPG
      N.V.,with
      its registered office in Amsterdam, represented by Mr. M. Tabaksblat, as
      Chairman of the Supervisory Board, hereinafter "the Company";
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                       
|and |                                                                                                                                                                       
|    |                                                                                                                                                                       
|2.  | Mr.M.P.
      Bakker,
      born on 1 August 1961, residing, at De Lairesselaan 82 in Rotterdam, the
      Netherlands, hereinafter "the Executive";                  

Whereas:

|- | The Executive
      entered the employment of one of the predecessors of the Company on 14 October1991;                                                                                                                  
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                          
|- | In relation
      to the demerger of Koninklijke PTT Nederland N.V. the Executive entered
      the employment of PTT Post B.V. on 29 June 1998 by operation of law;                                                     
|  |                                                                                                                                                                                                                          
|- | The Supervisory
      Board decided to appoint the Executive as a member of the Board of Management
      effective 29 June 1998;                                                                                        
|  |                                                                                                                                                                                                                          
|- | In its meeting
      of 2 November 2001 the Supervisory Board decided to appoint tile Executive
      as Chairman of the Board of Management and Chief Executive Officer ("CEO")
      of the Company on 1 November 2001;
|  |                                                                                                                                                                                                                          
|- | The parties
      desire to lay down the salary and other applicable conditions of employment
      in this agreement.                                                                                                   

Declare
  to have agreed as follows:

|1. | Date
      of Commencement of Employment and Position                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | The Executive
      entered into the employment of the Company on 29 June 1998, by operation
      of law, maintaining his original seniority date, in the positio n of member
      of the Board of Management. Since 1 November 2001, the Executive has held
      thie position of Chairman of the Board of Management and CEO.
|   |                                                                                                                                                                                                                                                                                                                                   
|2. | Duration
      of the Agreement and Notice of Termination                                                                                                                                                                                                                                                                         
|   | The agreement
      has been entered into for an indefinite period. The agreement may be terminated
      with due observance of a notice period of three months for the Executive
      and six months for the Company.                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                   
|   | This agreement
      shall terminate in any event, without notice being required, on the first
      day of the month following the date on which the Executive reaches the age
      of 65 unless the Executive's pension scheme provides for a different date.                                                                  
|   |                                                                                                                                                                                                                                                                                                                                   
|3. | Salary                                                                                                                                                                                                                                                                                                                            
|   | The Executive's
      base salary is EUR 726,050 gross per year, applicable from: 2 November 2001.
      A holiday allowance of 8% is included in the base salary.                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                   
|4. | Short
      Term Incentive Bonus Plan                                                                                                                                                                                                                                                                                             
|   | The bonus
      incentive plan for the members of the Board of Management as is established
      from time to time by the Supervisory Board, applies to the Executive. The
      bonus incentive plan is outlined in Exhibit A to this agreement.                                                                                

---



|5.  | Long
      Term Incentive Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The rules
      of the relevant share option plan of TNT Post Groep N.V., and its underlying
      regulations and criteria for granting options, as these are established
      from time to time by the Supervisory Board, apply to the Executive. The
      share option plan is outlined in Exhibit B to this agreement. Any and all
      tax consequences related to the granting and/or exercise of share options
      shall be for the account of the Executive. The Executive shall only exercise
      his options after consultation with the Compliance Officer and after approval
      of the Chairman of the Supervisory Board. Any shares acquired by the Executive
      as a result of exercising options may only be sold, if the Executive does
      not possess inside information at that moment. In addition, such shares
      may not be sold in a closed period. The TPG Code entitledVoorkoming
      Misbruik Voorwetenschap(prevention
      of insider trading) applies to the Executive, as well as the rules of the
      TPG Stock Option Personnel Plan.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|6.  | Long
      Term Incentive Share Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The rules
      of the relevant performance share plan of TNT Post Groep N.V. and its underlying
      regulations and criteria for granting shares, as these are established from
      time to time by the Supervisory Board, apply to the Executive. The performance
      share plan is outlined in Exhibit C to this agreement. Any and all tax consequences
      related to the granting and/or sale of shares shall be for the account of
      the Executive. Any shares acquired by the Executive may only be sold, if
      the Executive does not possess inside information at that moment. In addition,
      such shares may not be sold in a closed period. The TPG Code entitledVoorkoming
      Misbruik Voorwetenschap(prevention
      of insider trading) and the rules of the TPG performance share plan apply
      to the Executive.                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|7.  | Holidays                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Executive
      shall be entitled to 25 holiday days each calendar year, to be increased
      in accordance with the terms of the TPG Collective Labour Agreement in the
      Netherlands. When taking holiday days, the Executive shall consult with
      the other members of the Board of Management, and he shall take into account
      the interests of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|8.  | Company
      Car                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company
      shall provide the Executive with a company car commensurate with his position
      under conditions established from time to time by the Supervisory Board.
      As CEO of TPG the executive is entitled to a company car with a maximum
      catalogue price of € 110,000, inclusive BPM and VAT. Delivery costs
      and alarm system installation costs will be met by the company. All the
      costs of fuel and normal maintenance shall be for the account of the employer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|9.  | Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The expenses
      incurred by the Executive in the execution of his business tasks shall be
      reimbursed by the Company on receipt of a specified statement of expenses
      and supporting receipts. In addition, the Company shall pay an expense allowance
      of EUR 885 per month for out-of-pocket expenses. Any tax consequences, related
      1:0 this arrangement are for the account of the Executive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10. | Telephone
      Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Company
      shall pay the costs related to the costs of a private telephone provided
      that the fixed fiscal amount("forfait")shall
      be treated as taxable income. In addition, the company shall pay the costs
      of a mobile telephone and fax or other tools of communication related to
      the position of the Executive. Any tax consequences, related to this arrangement,
      are for the account of the Executive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

---



|11. | Insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The Executive
      may participate in the collective medic al insurance scheme taken out by
      the Company. If the Executive participates, 50% of the premium shall be
      for the account of the Company and paid on a monthly basis, taking into
      account insurance coverage consisting of General Practitioner (GP), pharmacy
      and specialist medical care based on class II A for adults and class II
      for co-insured children.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company
      shall take out liability insurance for managing directors for the benefit
      of the Executive. The conditions shall be in accordance with the policy,
      a copy of which shall be forwarded to the Executive. The costs of this insurance
      shall be for the account of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company
      shall take out an accident insurance for the benefit of the Executive. The
      conditions shall be in accordance with the policy, a copy of which shall
      be forwarded to the Executive. The costs of this insurance shall be for
      the account of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|12. | Disability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | In the event
      of a disability of the Executive as defined in article 7:629 of the Dutch
      Civil Code, for a maximum period of twelve months applicable from the first
      day of the disability the Company shall pay the salary as defined in article
      3, provided that this payment ends per the day that the Executive makes
      use of the applicable early retirement/pension arrangement. Periods of disability
      with an interruption of not more than four weeks shall be regarded as linked
      together. If after the period of twelve months the Executive remains disabled,
      the arrangement on disability pension applies as laid down in Exhibit D.                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Executive
      shall not be entitled to the salary payment referred to above, if and to
      the extent that he can validly claim damages in connection with his disability
      from a third party on account of loss of salary and if and to the extent
      that the payments by the Company referred to above exceed the minimum obligation
      referred to in article 7:629 sub I of the Dutch Civil Code. In this event,
      the Company shall satisfy payment solely by means of an advanced payment
      on the compensation to be received from the third party and upon assignment
      by the Executive of his rights to damages vis-à-vis the third party
      concerned up to the total amount of advanced payments made. The advanced
      payments shall be set off by the Company if the compensation is paid or,
      as the case may be, in proportion.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|13. | Pension                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The
      Company has taken out insurance to cover its pension scheme and disability
      pension insurance, for the benefit of the Executive under the conditions
      laid down in Exhibit D to this agreement.                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|14. | Early
      retirement                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The
      Executive is eligible for an allowance pursuant to the early retirement
      scheme under the conditions set forth in Exhibit E.                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|15. | Applicable
      Provisions of the TPG-CAO                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The
      TPG Collective Labour Agreement is not applicable, with the exception of
      tile provisions relating to the following subjects: availability under special
      circumstances, relinquishment of rights pertaining to inventions, the jubilee
      bonus, the premium saving plan, the wage saving plan, the collective accident
      insurance, the life assurance and the cost allowance regulation in event
      of removal.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|16. | Duties                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The
      Executive is obliged to fulfil his tasks properly, taking into account the
      law, the articles of association of the Company and the decisions, instructions,
      guide lines, etc. promulgated by the appropriate bodies of the Company.                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The
      Executive shall fully devote himself and his energy to promoting the interests
      of the Company.                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                 

---



|17. | No
      additional occupation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Without
      the prior written consent of the Chairman of the Supervisory Board, the
      Executive shall not be engaged or involved in any manner, in any profession
      or enterprise, inclusive of any direct or indirect financial interests in
      any other enterprise, with the exception of ownership of common shares of
      such enterprise registered at a Stock Exchange. The Executive shall refrain
      from accepting remunerated or time-consuming non-remunerated work activities
      with or for thj.rd parties without the prior written consent of the Chairman
      of the Supervisory Board.                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|18. | Supervisory
      Board memberships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Any
      external Supervisory Board memberships may not contravene the interests
      of the company and the Executive will not hold more than two memberships
      at the salme time. With respect to accepting external Supervisory Board
      memberships, the Executive shall require the prior written consent of the
      Chairman of the Supervisory Board. Before accepting any memberships, the
      Executive shall send full information regarding the membership to the Chairman
      of the Supervisory Board.                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|19. | Confidentiality
      and Documents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | For
      the duration of this agreement and after this agreement has been terminated
      tlle Executive shall keep confidential any information concerning the Company
      or any affiliated company which has become known to the Executive as a result
      of his employment with the Company, such to any individual including other
      personnel of the Company or an affiliated company, unless such personnel
      must be informed iin connection with their work activities for the Company
      or for an affiliated company.                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The
      Executive shall not have or keep in his possession any documents and/or
      correspondence and/or data carriers and/or copies in any manner whatsoever,
      which belong to the Company or to other companies affiliated with the Company
      and which have been made available to the Executive as a result of his employment,
      except insofar as and for as long as necessary for the performance of his
      work for the Company. In any event the Executive will be obliged to return
      to the Company immediately, without necessitating the need for any request
      to be made in this regard, any and all such documents and/or correspondence
      and/or data carriers and/or copies at termination of this agreement or on
      suspension of the Executive from active duty for whatever reason.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|20. | Non-Competition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Without
      the prior explicit written consent of the Company, the Executive shall not
      be engaged or involved in any manner, directly or indirectly, for a period
      of two years after the effective date of termination of the employment agreement
      in any enterprise which conducts activities in a field similar to or otherwise
      competes with that of the Company or any affiliated company, nor shall the
      Executive have any financial interest in any manner, directly or indirectly,
      in such enterprise, except for ownership of common shares of such enterprise
      registered at a Stock Exchange. This obligation applies to any work activities
      or involvement of the Executive within the territory of the European Union.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|21. | Penalty                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | In
      the event the Executive breaches the obligations as expressed in articles
      17, 18, 19 or 20, the Executive shall contrary to article 7:650 sub 3, 4
      and 5 of the Dutch Civil Code, without notice of default being required,
      pay to the Company for each such breach a penalty equal to an amount of
      EUR 100,000 plus a penalty of EUR 5,000 for each day such breach occurs
      and continues, notwithstanding any other rights the Company may have. The
      Company is entitled to claim full damages by way of alternative to the penalty.                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---



|22.                                                                                         | Severance payment in case of a Change in Control                                                                                                                                                                                                                                                                                                                                                                                                     
|------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                            | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                            | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                            | In
      this Clause "Change in Control" means the acquisition by any person, or
      persons, acting in concert of more than 50 per cent of the issued share
      capital of the Company conferring the right to attend and vote at general
      meetings of the Company or the substantial reorganisation of Company following
      the sale of the whole or a part of the company and resulting in no or a
      lesser position for Executive
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                            | In
      this Clause "Terminal Payment" means the aggregate of the following amounts:                                                                                                                                                                                                                                                                                                                                                                
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                            | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                            | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                            | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                            | No
      further payments will be made as a direct result of a Change in Control,
      including tax reimbursement on early exercise of stock options, the procedure
      for which is described in the rules applicable to the scheme.                                                                                                                                                                                                            
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|23.                                                                                         | Amendments,
      Previous Agreements and prevailing language                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                            | Any
      amendments and/or supplements to this agreement can only be made by way
      of a written document signed by both parties.                                                                                                                                                                                                                                                                                                                
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                            | This
      agreement supersedes all previous agreements between the Executive and the
      Company and/or any affiliated company and takes their place.                                                                                                                                                                                                                                                                                             
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|24.                                                                                         | Governing
      Law                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                            | This
      agreement is governed by the laws of the Netherlands.                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|This
      agreement has been signed and executed in Hoofddorp in duplicate this 12-8-2002.

|The
      Company:                      | The Executive:       
|--------------------------------------- | ---------------------
|Mr. M. Tabaksblat                       | Mr. M.P.
      Bakker
|Chairman
      of the Supervisory Board |                      

---



Appendix
  ATo the employment agreement
  between TPG N.V. and Mr. M.P. Bakker
  date: 12-8-2002.

re:Bonus
  incentive plan Board of Management TPG N.V.

|1. | Each
      year, within one week of the Supervisory Board meeting approving the annual
      accounts with respect to the relevant fiscal year, the Supervisory Board
      shall award a bonus to the members of the Board of Management.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2. | This
      bonus is based on the base salary referred to in article 3 of the employment
      agreement. The bonus shall not be taken into account for the calculation
      of pension rights, allowances, etc. The target bonus amounts
      to 60% of the yearly base salary.                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3. | The
      calculation of the bonus takes place on the basis of the growth rate of
      the earnings per share in accordance with the budget. Each year this budget
      shall be determined in a meeting of the Supervisory Board in the year preceding
      the relevant fiscal year and the members of the Board of Management shall
      be informed accordingly. In the meeting of the Remuneration Committee of
      the Supervisory Board following the adoption of the annual accounts with
      respect to the relevant fiscal year, the actual results of the budgeted
      targets shall be established and the bonus shall be determined based on
      these.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4. | The
      bonus shall be calculated as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | - | below 90% of target:          | no bonus                                         
| | - | ----------------------------- | -------------------------------------------------
| | - | 90% of
      target:          | 50% of the
      yearly salary                   
| | - | 100% of
      target:         | 60% of the
      yearly salary (= target bonus)
| | - | 120% of
      target or more: | 75% of the
      yearly salary                   

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | With
      respect to percentages between 90 and 100, 100 and 120 respectively, as
      established by the Supervisory Board, the bonus shall be determined pro
      rata.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                              
|5. | The
      bonus shall be paid as follows: 75% in cash and 25% in TPG ordinary shares
      (the Shares). If at least 50% of the Shares allocated are held
      for a period of three years, then the company will match these Shares by
      granting additional Shares on a 1: 1 basis. The terms and conditions for
      matching are laid down in the rules of the applicable matching plan. The
      payment in Shares and matching in Shares will take place under the express
      condition that at the time of payment or match, such securities transactions
      are allowed to be executed by the company and grantee under the law and
      in particular article 46 and next of the Wet Toezicht Effectenverkeer 1995
      (prohibition of insider trading) and the TPG rules concerning inside information.
      If in a year these transactions can not be executed without violating the
      just mentioned legal provisions, before August 31, the bonus will be paid
      in cash only (100%).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                              
|6. | A
      bonus shall only be due and payable, if:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | the member
      of the Board of Management remains in the service of the company for the
      full fiscal year;                                                                                                                                                                                                                                                                                                            
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | the member
        of the Board of Management is not at any time during the : fiscal year,
        suspended or relieved of their duties;                                                                                                                                                                                                                                                                                    
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | until such
      time as the decision referred to in paragraph I of this regulation has been
      reached, the Company has not given notice of teffi1ination of the employment
      agreement because of an urgent cause as referred to in article 7:677 Civil
      Code or has not meanwhile sought court teffi1ination of the employment agreement
      for a serious cause in the meaning of article 7:685 Civil Code.

|   |                                                                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|7. | The Remuneration
      Committee has the discretion to grant bonus outside of the above rules of
      the bonus scheme in case of exceptional circumstances.

In the event
  of commencement of the employment agreement, reaching the pensionable age or
  termination of the employment agreement by mutual consent during the fiscal
  year, the bonus shall, by way of an exception to the above rules, be calculated
  pro rata and paid accordingly.

---



Appendix
  BTo the employment agreement
  between TPG N.V. and Mr. M.P. Bakker
  date: 12-8-2002.

re:Share
  Option Plan TPG N. V.

|1. | Each
      year, within one week of the Supervisory Board meeting approving the annual
      accounts with respect to the relevant fiscal year, pursuant to a proposal
      made by the Remuneration Committee of the Supervisory Board, the Supervisory
      Board shall grant options on shares of TPG N .V. to the members of the Board
      of Management. The granting of TPG shares will take place under the express
      condition that at the time of granting, such securities transactions are
      allowed to be executed by the company and the grantee under the law and
      in particular under article 46 and next of the Wet Toezicht Effectenverkeer
      1995 (prohibition of insider trading) and the TPG rules concerning inside
      information.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2. | The
      number of share options is determined annually by the Supervisory Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3. | The
      exercise of the options after the vesting period is subject to performance
      criteria. Each time options are granted the performance criteria and targets
      will be determined in a meeting of the Supervisory Board in the year preceding
      the relevant fiscal year and the members of the Board of Management shall
      be informed accordingly. The Supervisory Board is entitled to make adjustments
      to the performance schedule if it is appropriate to do so in its opinion.                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4. | Members
      of the Board of Management shall be obliged to accept the Options and/or
      SARs granted to them.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|5. | No
      options shall be granted to any eligible member of the Board who is within
      one year of retirement at his or her contractual (early) retirement date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|6. | The
      terms and conditions for granting options are laid down in the share option
      plan rules These rules are determined by the Supervisory Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|7. | Options
      will only be granted, if:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

---



Appendix
  C To the employment agreement
  between TPG N .V. and Mr. M.P. Bakker 
  date: 12-8-2002.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Re: | Performance
      Share Plan TPG N.V.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|1.  | Each
      year, after the Supervisory Board meeting approving the annual accounts
      with respect to the relevant fiscal year, pursuant to a proposal made by
      the Remuneration Committee of the Supervisory Board, the Supervisory Board
      shall grant performance shares of TPG N .v. to the members of the Board
      of Management. The granting of TPG shares will take place under the express
      condition that at the time of granting, such securities transactions are
      allowed to be executed by the company and the grantee under the law and
      in particular under article 46 and next of the Wet Toezicht Effectenverkeer
      1995 (prohibition of insider trading) and the TPG rules concerning inside
      information.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2.  | The
      number of shares is determined annually by the Supervisory Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|3.  | The
      release of the shares after the performance period is subject to performance
      criteria. Each time shares are granted the performance criteria and targets
      will be determined in a meeting of the Supervisory Board in the year preceding
      the relevant fiscal year and the members of the Board of Management shall
      be informed accordingly. The Supervisory Board is entitled to make adjustments
      to the performance schedule if it is appropriate to do so in its opinion.                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.  | Members
      of the Board of Management shall be obliged to accept the Shares granted
      to them.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|5.  | No
      shares shall be granted to any eligible member of the Board who is within
      one year of retirement at his or her contractual (early) retirement date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|6.  | The
      terms and conditions for granting shares are laid down in the rules applicable
      to the performance share plan. These rules are determined by the Supervisory
      Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|7.  | Shares
      will only be granted, if:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | the
        member of the Board of Management remains in the service of the company
        for the full fiscal year;                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | the member of the Board of Management is not suspended or relieved of their
      duties;                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | until such time as the: decision referred to in paragraph I of this regulation
      has been reached, the Company has not given notice of termination of the
      employment agreement because of an urgent cause as referred to in article
      7:677 Civil Code or has not meanwhile sought court termination of the employment
      agreement for a serious cause in the meaning of article 7:685 Civil Code.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                     

---



Appendix
  D To the employment agreement
  between TPG N .V. and Mr. M.P. Bakker 
  date: 12-8-2002.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|re: | The
      pension scheme                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|1.  | General                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|1.1 | The
      Executive is eligible for old-age pension, supplementary old-age pension,
      disability pension, continuance of pension build-up in case of disability
      and on behalf of his spouse and children for spouse and orphan' s pension
      in accordance with the clauses of the pension scheme of the Stichting Ondernemingsfonds
      TPG, theReglement
      Overgangsbepalingen(regulations
      on transitional provisions) and the addendum to the latter.                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|1.2 | In all cases that are not dealt with in this appendix the clauses of the
      pension regulations of the Stichting Ondernemingspensioenfonds TPG, the
      regulations on transitional provisions and the addendum to the latter apply.
      In event of any differences as to the interpretation of any clause the management
      of the Stichting Pensioenfonds TPG shall decide after consultation with
      the Company, taking into account the requirements of reasonableness and
      fairness.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2.  | Basis
      for the calculation of the rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2.1 | The
      pensionable salary equals the yearly salary as agreed to in article 3 of
      the employment agreement taking into account the agreed increases less the
      franchise described below.                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The
      fixed sum equals 12 times the statutory minimum wage per month for a person
      of 23 years of age under theWet
      Minimum Loon en Minimum Vakantiebijslag(Minimum
      Wage and Minimum Holiday Allowance Act) that is in force on I January of
      the year of determining the basis of pension increased by the holiday allowance
      determined per the same date.                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2.2 | The basis of the pension rights for single persons equals the difference
      between:                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 24 times the sum of the amount of the old-age pension meant in paragraph
      10 sub b of article 9 of theAlgemene
      Ouderdomswet(General
      Old Age Pensions Act) and the accompanying holiday allowance, meant in paragraph
      9 sub d of article 29 of the aforementioned Act, and
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                 
|    | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 12 times the sum of the amount of the old-age pension, meant in paragraph
      10 sub a of article 9 of theAlgemene
      Ouderdomswetand
      the accompanying holiday allowance, meant in paragraph 9 sub c of article
      29 of the same Act.                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                 
|3.  | Old-age
      pension                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.1 | The
      old-age pension commences on the first day of the calendar month in which
      the Executive reaches the age of 65 and is paid out up to and including
      the last day of the month in which the Executive dies.                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.2 | The
        yearly old-age pension amounts to 2% of the last determined pensionable
        salary per each full year of participation (maximum 35 years). For a part
        of the year the yearly old-age pension will be determined pro rata.                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4.  | Supplementary
      old-age pension                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4.1 | The
      supplementary old-age pension commences on the first day of the calendar
      month in which the Executive reaches the age of 65, if and as long as pursuant
      to theAlgemene
      Ouderdomswetan
      amount is received on the basis of paragraph 10 sub a of article 9 of that
      Act. The supplementary old-age pension is paid out up to and including the
      last day of the month in which the Executive dies.                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

---



|4.2 | The yearly
      supplementary pension amounts to 2.5% of the last determined basis of the
      pension rights for singles for each full year of participation. For a part
      of the year the yearly supplementary old-age pension will be determined
      pro rata.                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5.  | Spouse
      pension                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5.1 | After the
      death of the Executive his spouse is entitled to widow's pension if the
      marriage has taken place before the first day of the month in which the
      Executive has reached the age of 65.                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5.2 | The widow's
      pension commences on the first day of the month following the month of the
      Executive's death and is paid out up to and including the month in which
      the spouse dies.                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5.3 | The widow's
      pension amounts to 70% of the old-age pension. If the Executive dies before
      the first day of the month in which he would have reached the age of 65,
      participation will be presumed to have taken place until reaching that day
      on the basis of the last determined pensionable salary.                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|6.  | Orphan's
      pension                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|6.1 | After the
      death of the Executive his children are entitled to orphan's pension.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|6.2 | The orphan's
      pension commences the first day of the month following the month in which
      the Executive dies and will be paid out up to and including the month in
      which the child reaches the age of 18. If and as long as the child is entitled
      to student grants and loans("studiefinanciering")the orphan's
      pension will be paid out up to and including the month in which the child
      reaches the age of 27. The orphan's pension will, however, be paid out not
      later than up to and including the month in which the child concerned dies.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|6.3 | The orphan's
      pension amounts to 14% of the old-age pension. The provisions in the second
      sentence of the third paragraph of article 5 apply accordingly.                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|7.  | Disability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|7.1 | The Executive
      will be entitled to disability pension and continuance of pension build-up
      during disability according to the provisions in the pension regulations
      of the Stichting Ondernemingspensioenfonds TPG.                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|8.  | Participant's
      contribution                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|8.1 | No contribution
      is due from the Executive for the costs of the pension arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

---



Appendix
  E To the employment agreement
  between TPG N.V. and Mr. M.P. Bakker 
  date: 12-8-2002.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|re: | The
      early retirement scheme                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.  | General                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|1.1 | If after
      consultation with the Company, upon the request of the Executive, the employment
      agreement is terminated on or after the date of retirement as described
      in article 3 of this arrangement, the Executive is eligible for an allowance
      pursuant to the Early Retirement Scheme. A request for termination of the
      employment agreement must be addressed to the Company one year before the
      intended retirement date.                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.  | Basis
      for calculation of the rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.1 | The basis
      for paying out the early retirement allowance equals the yearly salary agreed
      to in article 3 of the employment agreement taking into account the increases
      agreed to.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.  | The
      allowance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.1 | The allowance
      pursuant to the Early Retirement Scheme commences on the fIrst day of the
      calendar month, following the first annual meeting of the Company that takes
      place after the Executive has reaching the age of 62 and in which meeting
      takes place accounting for and discharging of (the actions of) the Board
      of Management of the Company over the previous year or, if later, the date
      on whic h the employment agreement is terminated. The allowance ends on
      the first day of ) the month in which the Executive has reached the age
      of 65 or, if earlier, on the last day of the month in which the Executive
      dies.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.2 | The yearly
      allowance pursuant to the Early Retirement Scheme amounts to 70% of the
      last determined basis for the allowance, including other acquired rights
      of the Executive with respect to the period of paying the early retirement
      allowance.                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.3 | The allowance
      pursuant to the Early Retirement Scheme will be adapted yearly in accordance
      with the adaptation of the commenced pensions pursuant to the relevant article
      in the pension regulations of the Stichting Ondememingspensioenfonds TPG.                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.  | Continued
      pension build up                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.1 | During the
      period that the Executive is eligible for an allowance pursuant to the Early
      Retirement Scheme participation in the pension arrangement is continued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.2 | During
      the period that the Executive is eligible for an allowance pursuant to the
      Early Retirement Scheme the pensionable salary will be adapted yearly in
      accordance with the adaptation of commenced pensions pursuant to the relevant
      article in the pension regulations of the Stichting Ondernemingspensioenfonds
      TPG.                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|5.  | Participant's
      Contribution                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | No contribution
      is due from the Executive for the costs of the Early Retirement Scheme.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|6.  | Termination
      of Employment Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|6.1 | If, for
      whatever reason irrespective of whether the initiative is taken by the Company
      or the Executive, the employment agreement is terminated before the retirement
      date described in article 3.1 of this regulation all rights to an allowance
      pursuant to the Early Retirement Scheme become null and void, unless the
      Executive and the Company agree otherwise. The allowance is therefore conditional
      upon the employment agreement being continued until the first day of the
      commencement of the early retirement scheme.                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---

Exhibit 4.4

---



Employment
  Agreement

The
  undersigned:

|1.                                       | TPG N.V.,
      with its registered office in Amsterdam, represented by Mr. M. Tabaksblat,
      as Chairman of the Supervisory Board, hereinafter "the Company";                                                                                                                                                    
|---------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                         |                                                                                                                                                                                                                                                                                                                      
|and                                     
|                                         |                                                                                                                                                                                                                                                                                                                      
|2.                                       | Mr. J.G.
      Haars, born on 22 September 1951, resid ing at Mevrouw Leinweberlaan 51
      in Driebergen-Rijsenburg, the Netherlands, hereinafter "the Executive";                                                                                                                                                 
|                                         |                                                                                                                                                                                                                                                                                                                      
|Whereas:                                
|                                         |                                                                                                                                                                                                                                                                                                                      
|-                                        | The Company
      offered the Executive to join the Company as member of the Board of Management
      and Chief Financial Officer ("CFO"), as confirmed in the offer letter from
      the Chief Executive Officer ("CEO") of the Company dated 15 April 2002,
      which offer has been accepted by the Executive;
|                                         |                                                                                                                                                                                                                                                                                                                      
|-                                        | In its meeting
      of 24 April 2002 the Supervisory Board decided to appoint the Executive
      as a member of the Board of Management and CFO of the Company effective
      I August 2002;                                                                                                                      
|                                         |                                                                                                                                                                                                                                                                                                                      
|-                                        | The parties
      desire to lay down the salary and other applicable conditions of employment
      in this agreement.                                                                                                                                                                                               
|                                         |                                                                                                                                                                                                                                                                                                                      
|Declare
      to have agreed as follows:
|                                         |                                                                                                                                                                                                                                                                                                                      
|1.                                       | Date
      of Commencement of Employment and Position                                                                                                                                                                                                                                                                
|                                         |                                                                                                                                                                                                                                                                                                                      
|                                         | The Executive
      shall enter into the employment of the Company on I August 2002 in the position
      of member of the Board of Management and CFO, reporting to the CEO.                                                                                                                                        
|                                         |                                                                                                                                                                                                                                                                                                                      
|2.                                       | Duration
      of the Agreement and Notice of Termination                                                                                                                                                                                                                                                            
|                                         |                                                                                                                                                                                                                                                                                                                      
|                                         | The agreement
      has been entered into for an indefinite period. The agreement may be terminated
      with due observance of a notice period of three months for the Executive
      and six months for the Company.                                                                                             
|                                         |                                                                                                                                                                                                                                                                                                                      
|                                         | This agreement
      shall terminate in any event, without notice being required, on the first
      day of the month following the date on which the Executive reaches the age
      of 60 unless the Executive's pension scheme provides for a different date.                                                     
|                                         |                                                                                                                                                                                                                                                                                                                      
|3.                                       | Salary                                                                                                                                                                                                                                                                                                               
|                                         |                                                                                                                                                                                                                                                                                                                      
|                                         | The Executive's
      base salary is EUR 450,000 gross per year .A holiday allowance of 8% is
      included in the base salary.                                                                                                                                                                                     
|                                         |                                                                                                                                                                                                                                                                                                                      
|4.                                       | Short
      Term Incentive Bonus Plan                                                                                                                                                                                                                                                                                
|                                         |                                                                                                                                                                                                                                                                                                                      
|                                         | The bonus
      incentive plan for the members of the Board of Management as is established
      from time to time by the Supervisory Board, applies to the Executive. TJi1e
      bonus incentive plan is outlined in Exhibit A to this agreement.                                                                 
|                                         |                                                                                                                                                                                                                                                                                                                      
|                                         | For the
      calendar year 2002, however, the Executive shall receive a guaranteed bonus
      of 50% of the annual base salary provided that any fiscal year 2002 bonus
      paid by the current employer of the Executive will be deducted from this
      guaranteed bonus.                                     
|                                         |                                                                                                                                                                                                                                                                                                                      

---



|5.  | Long
      Term Incentive Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The rules
      of the relevant share option plan of TNT Post Groep N.V., and its ul1derlying
      regulations and criteria for granting options, as these are established
      from time to time by the Supervisory Board, apply to the Executive. The
      share option plan is outlined in Exhibit B to this agreement. Any and all
      tax consequences related to the granting and/or exercise of share options
      shall be for the account of the Executive. The Exe cutive shall only exercise
      his options after consultation with the compliance officer and after the
      approval of the Chairman of the Supervisory Board. Any shares acquired by
      the Executive as a result of exercising options may only be sold, if the
      Executive does not possess inside information at that moment. In addition,
      such shares may not be sold in a closed period. The TPG Code entitledVoorkoming
      Misbruik Voorwetenschap(prevention
      of insider trading) applies to the Executive, as well as the rules of the
      TPG Stock Option Personnel Plan. The parties have agreed that at the first
      possible opportunity (date of commencement of employment: 1 August 2002)
      the Executive shall be granted 20,000 options.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|6.  | Long
      Term Incentive Share Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The rules
      of the relevant performance share plan of TNT Post Groep N .V. and its II
      underlying regulations and criteria for granting shares, as these are established
      from time to time by the Supervisory Board, apply to the Executive. The
      performance share plan is outlined in Exhibit C to this agreement. Any and
      all tax consequences related to the granting and/or sale of shares shall
      be for the account of the Executive. Any shares acquired by the Executive
      may only be sold, if the Executive does not possess inside information at
      that moment. In addition, such shares may not be sold in a closed period.
      The TPG Code entitledVoorkoming
      Misbruik Voorwetenschap(prevention
      of insider trading) and the rules of the TPG performance share plan apply
      to the Executive.                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The parties
      have agreed that at the first possible opportunity the Executive shall be
      granted a number of shares valued at EUR 90,756.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|7.  | Holidays                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Executive
      shall be entitled to 25 holiday days each calendar year, to be increased
      in accordance with the terms of the TPG Collective Labour Agreement in the
      Netherlands. When taking holiday days, the Executive shall consult with
      the other members of the Board of Management, and he shall take into account
      the interests of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|8.  | Company
      Car                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company
      shall provide the Executive with a company car commensurate with his position
      under conditions established from time to time by the Supervisory Board.
      As a member of the Board of Management the Executive is entitled to a company
      car with a maximum catalogue price of EUR 79,500 inclusive of BPM and VAT.
      Delivery costs and alarm system installation costs will be met by the Company.
      All the costs of fuel and normal maintenance shall be for the account of
      the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|9.  | Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The expenses
      incurred by the Executive in the execution of his business tasks shall be
      reimbursed by the Company on receipt of a specified statement of expenses
      and supporting receipts. In addition, the Company shall pay an expense allowance
      of EUR 550 per month for out-of-pocket expenses. Any tax consequences, related
      to this arrangement are for the account of the Executive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10. | Telephone
      Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company
      shall pay the costs related to the costs of a private telephone provided
      that the fixed fiscal amount("forfait")shall
      be treated as taxable income. In addition, the Company shall pay the costs
      of a mobile telephone and fax or other tools of communication related to
      the position of the Executive. Any tax consequences, related to this arrangement,
      are for the account of the Executive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|11. | Insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Executive
      may participate in the collective medical insurance scheme taken out by
      the Company. If the Executive participates, 50% of the premium shall be
      for the account of the Company and paid on a monthly basis, taking into
      account insurance coverage consisting of General Practitioner (GP), pharmacy
      and specialist medical care based on class II B for adults and class III
      for co-insured children.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

---



|    | The Company
      shall take out liability insurance for managing directors for the benefit
      of the Executive. The conditions shall be in accordance with the policy,
      a copy of which shall be forwarded to the Executive. The costs of this insurance
      shall be for the account of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company
      shall take out an accident insurance for the benefit of the Executive. The
      conditions shall be in accordance with the policy, a copy of which shall
      be forwarded to the Executive. The costs of this insurance shall be for
      the account of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|12. | Disability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | In the
      event of disability of the Executive as defined in article 7:629 of the
      Dutch Civil Code, the Company shall pay to the Executive from the first
      day of disability 100% of the base salary as defined in article 3 up to
      a maximum of twelve months, provided that this payment ends per the day
      that the Executive makes use of the applicable early retirement/pension
      arrangement. Periods of disability with an interruption of not more than
      four weeks shall be regarded as linked together. If after the period of
      twelve months the Executive remains disabled, the arrangement on disability
      pension applies as laid down in Appendix D.                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Executive
      shall not be entitled to the salary payment referred to above, if and to
      the extent that he can validly claim damages in connection with his disability
      from a third party on account of loss of salary and if and to the extent
      that the payments by the Company referred to above exceed the minimum obligation
      referred to in article 7:629 sub 1 of the Dutch Civil Code. In this event,
      the Company shall satisfy payment solely by means of an advanced payment
      on the compensation to be received from the third party and upon assignment
      by the Executive of his rights to damages vis-à-vis the third party
      concerned up to the total amount of advanced payments made. The advanced
      payments shall be set off by the Company if the compensation is paid or,
      as the case may be, in proportion.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|13. | Pension                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company
      has taken out insurance to cover its pension scheme and disability pension
      insurance, for the benefit of the Executive under the conditions laid down
      in Exhibit D to this agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|14. | Applicable
      Provisions of the TPG-CAO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The TPG
      Collective Labour Agreement is not applicable, with the exception of the
      reference in article 7 and with the exception of the provisions relating
      to the following subjects: availability under special circumstances, relinquishment
      of rights pertaining to inventions, the jubilee bonus, the premium saving
      plan, the wage saving plan, the collective accident insurance, the life
      assurance and the cost allowance regulation in event of removal.                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|15. | Duties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Executive
      is obliged to fulfil his tasks properly, taking into account the law, the
      articles of association of the Company and the decisions, instructions,
      guide lines, etc. promulgated by the appropriate bodies of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Executive
      shall fully devote himself and his energy to promoting the interests of
      the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|16. | No
      additional occupation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Without
      the prior written consent of the Chairman of the Supervisory Board, the
      Executive shall not be engaged or involved in any manner, in any profession
      or enterprise, inclusive of any direct or indirect financial interests in
      any other enterprise, with the exception of ownership of common shares of
      such enterprise registered at a Stock Exchange. The Executive shall refrain
      from accepting remunerated or time-consuming non-remunerated work activities
      with or for third parties without the prior written consent of the Chairman
      of the Supervisory Board.                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

---



|17. | External
      Supervisory Board Memberships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Any external
      Supervisory Board memberships may not contravene the interests of the Company
      and the Executive will not hold more than two memberships at the same time.
      With respect to accepting external Supervisory Board memberships, the Executive
      shall require the prior written consent of the Chairman of the Supervisory
      Board. Before accepting any memberships, the Executive shall provide full
      information regarding the proposed membership to the Chairman of the Supervisory
      Board.                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|18. | Confidentiality
      and Documents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | For the
      duration of this agreement and after this agreement has been terminated
      the Executive shall keep confidential any information concerning the Company
      or any affiliated company which has become known to the Executive as a result
      of his employment with the Company, such to any individual including other
      personnel of the Company or an affiliated company, unless such personnel
      must be informed in connection with their work activities for the Company
      or for an affiliated company.                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Executive
      shall not have or keep in his possession any documents and/or correspondence
      and/or data carriers and/or copies in any manner whatsoever, which belong
      to the Company or to other companies affiliated with the Company and which
      have been made available to the Executive as a result of his employment,
      except insofar as and for as long as necessary for the performance of his
      work for the Company. In any event the Executive will be obliged to return
      to the Company immediately, without necessitating the need for any request
      to be made in this regard, any and all such documents and/or correspondence
      and/or data carriers and/or copies at termination of this agreement or on
      suspension of the Executive from active duty for whatever reason.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|19. | Non-Competition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Without
      the prior explicit written consent of the Company, the Executive shall not
      be engaged or involved in any manner, directly or indirectly, for a period
      of two years after the effective date of termination of the employment agreement
      in any enterprise which conducts activities in a field similar to or otherwise
      competes with the core activities of the Company or any affiliated company,
      nor shall the Executive have any financial interest in any manner, directly
      or indirectly, in such enterprise, except for ownership of common shares
      of such enterprise registered at a Stock Exchange. This obligation applies
      to any work activities or involvement of the Executive within the territory
      of the European Union.                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|20. | Penalty                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | In the
      event the Executive breaches the obligations as expressed in articles 16,
      17, 18 or 19, the Executive shall contrary to article 7:650 sub 3,4 and
      5 of the Dutch Civil Code, without notice of default being required, pay
      to the Company for each such breach a penalty equal to an amount of EUR
      100,000 plus a penalty of EUR 5,000 for each day such breach occurs and
      continues, notwithstanding any other rights the Company may have. The Company
      is entitled to claim full damages by way of alternative to the penalty .                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|21. | Severance
      Payment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | If the
      Company gives notice of termination of this agreement for reasons which
      are not found in acts or omissions which allow summary dismissal for an
      urgent cause as referred to in article 7:677/678 of the Dutch Civil Code,
      the Company shall make available to the Executive a severance payment. This
      severance payment shall be equal to the aggregate of the following amounts:                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| | i. | Twenty-four
      months base salary at the annual rate of salary payable immediately before
      termination. If termination takes place within two years from retirement,
      then the Executive will, instead of the twenty-four months base salary,
      receive full salary up to the date of retirement;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                   

---



|    | ii.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Two times
      the average of the bonuses paid to the Executive in respect of the three
      consecutive financial periods of the Company completed immediately before
      termination. If termination takes place before the moment on which the Executive
      has been in the service of the Company for three consecutive financial periods
      or more, the average shall be calculated on the basis of the financial periods
      of the Company completed after the date of the commencement of this employment
      agreement. If
      termination takes place within two years from retirement, then the Executive
      shall receive the average bonus pro rata up to the date of retirement instead
      of two times the average;
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | iii.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | A sum calculated
      actuarially by the relevant pension scheme's actuary (acting as an expert
      and not as an arbitrator) representing two years pension contribution. This
      shall only come into force if the Executive is not within two years of his
      natural retirement date. If he is within two years of this date, then the
      Company pension contributions will be paid up to retirement.                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | If
      termination takes place during the first two years of service, the special
      bonus for the TPG compensation of the pension gap in the amount of EUR 690,840
      gross shall be deducted from the above aggregate amount, such as follows:
      100% of this amount if the termination of this agreement takes place in
      the first year of service, 50% of this amount if the termination of this
      agreement takes place in the second year of service.                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The
      severance payment shall be made available by way of lump sum within one
      month from the effective date of termination of the employment agreement
      and shall be made less any statutory withholdings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|22. | Severance
      Payment in Case of a Change in Control                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | If
      the Executive gives notice of termination of this agreement within three
      months following a Change in Control and as a direct result of this Change
      in Control, provided the Executive is willing to stay on up to six months
      following the Change in Control, then the Executive shall be entitled to
      receive immediately after termination, a Terminal Payment. The Terminal
      Payment, which shall be made less any statutory withholdings, shall be received
      by the Executive in full and final settlement of all claims arising out
      of the Executive's employment with tile Company and/or any subsidiary of
      the Company or its termination.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In
      this Clause "Change of Control" means the acquisition by any person, or
      persons, acting in concert of more than 50 per cent of the issued share
      capital of tile Company conferring the right to attend and vote at general
      meetings of the Company or the substantial reorganisation of Company following
      the sale of the whole or a part of the company and resulting in no or a
      lesser position for Executive.                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In
      this Clause "Terminal Payment" means the aggregate of the following amounts:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Twenty-four months base salary at the annual rate of salary payable immediately
      before termination. If termination takes place within two years from retirement,
      then the Executive will, instead of the twenty-four months base salary,
      receive full salary up to the date of retirement;                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Two times the average of the bonuses paid to the Executive in respect of
      the three consecutive financial periods of the Company completed immediately
      before termination. If termination takes place before the moment on which
      the Executive has been in the service of the Company for three consecutive
      financial periods or more, the average shall be calculated on the basis
      of the financial periods of the Company completed after the date of the
      commencement of this employment agreement. If
      termination takes place within two years from retirement, then the Executive
      shall receive an average bonus pro rata up to the date of retirement instead
      of two times the average;       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | A
      sum calculated actuarially by the relevant pension scheme's actuary (acting
      as an expert and not as an arbitrator) representing two years' pension contribution
      by the Company. This shall only come into force if the Executive is not
      within two years of his natural retirement date. If he is within two years
      of this date, then the Company pension contributions will be paid up to
      retirement.                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

---



|    | No further
        payments will be made as a direct result of a Change in Control, including
        tax reimbursement on early exercise of stock options, the procedure for
        which is described in the rules applicable to the scheme.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|23. | Special
      Sign-On Bonus and Executive Education Course 2002 at Stanford                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The company
      recognises that the executive will suffer a loss of income as a direct result
      of the termination of his previous employment. The income would have consisted
      of (a right to) shares granted by his previous employer under certain stock
      option plans and stock award plans. The value of these rights and/or shares
      lost as a result of the termination of the Executive's previous employment
      has b<~en calculated at EUR 633,246. The Company shall pay to the Executive
      as a compensation for the loss of this income a one-time amount of EUR 633,246.
      This compensation shall be paid either in cash or by way of an annuity payment
      in accordance with article 11, section 1, subsection g, of the Wet op de
      loonbelasting. Any tax on this amount shall be for the account of the Executive.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Company
      shall pay for the costs of the Executive Education Course at Stanford University
      as planned and referred to in the offer letter dated 15 April 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|24. | Amendments
      and Previous Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Any amendments
      and/or supplements to this agreement can only be made by way of a written
      document signed by both parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | This agreement
      supersedes all previous agreements between the Executive and the Company
      and/or any affiliated company and takes their place.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|25. | Governing
      Law                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | This agreement
      is governed by the laws of the Netherlands.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

This agreement
  has been signed and executed in Hoofddorp in duplicate this 9-8-2002.

|The
      Company:                      | The Executive:      
|--------------------------------------- | --------------------
|Mr. M. Tabaksblat,                      | Mr. J.G.
      Haars
|Chairman
      of the Supervisory Board |                     

---



Appendix
  A To the employment agreement
  between TPG N.V. and Mr. J.G. Haars 
  date: 9-8-2002.

|re: | Bonus
      incentive plan Board of Management TPG N.V.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|1.  | Each year,
      within one week of the Supervisory Board meeting approving the annual accounts
      with respect to the relevant fiscal year, the Supervisory Board shall award
      a bonus to the members of the Board of Management.                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2.  | This bonus
      is based on the base salary referred to in article 3 of the employment agreement.
      The bonus shall not be taken into account for the calculation of pension
      rights, allowances, etc. The "target bonus" amounts to 60% of the yearly
      base salary.                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3.  | The calculation
      of the bonus takes place on the basis of the growth rate of the earnings
      per share in accordance with the budget. Each year this budget shall be
      determined in a meeting of the Supervisory Board in the year preceding the
      relevant fiscal year and the members of the Board of Management shall be
      informed accordingly. In the meeting of the Remuneration Committee of the
      Supervisory Board following the adoption of the annual accounts with respect
      to the relevant fiscal year, the actual results of the budgeted targets
      shall be established and the bonus shall be determined based on these.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|4. |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | The
      bonus shall be calculated as follows:                                                                                                                                                                                                                                                                                                                                                                          
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | below 90% of target:                                                                                                                                                                                                                                                                                                                                                                                                     
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 90% of
      target:                                                                                                                                                                                                                                                                                                                                                                                                     
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 100% of
      target:                                                                                                                                                                                                                                                                                                                                                                                                    
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 120% of
      target or more:                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | With
      respect to percentages between 90 and 100, 100 and 120 respectively, as
      established by the Supervisory Board, the bonus shall be determined pro
      rata.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5. | The
      bonus shall be paid as follows: 75% in cash and 25% in TPG ordinary shares
      ("the Shares"). If at least 50% of the Shares allocated are held for a period
      of three years, then the company will match these Shares by granting additional
      Shares on a 1:1 basis. The terms and conditions for matching are laid down
      in the rules of the applicable matching plan. The payment in Shares and
      matching in Shares will take place under the express condition that at the
      time of payment or match, such securities transactions are allowed to be
      executed by the company and grantee under the law and in particular article
      46 and next of the Wet Toezicht Effectenverkeer 1995 (prohibition of insider
      trading) and the TPG rules concerning inside information. If in a year these
      transactions can not be executed without violating the just mentioned legal
      provisions, before August 31, the bonus will be paid in cash only (100%).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|6. | A
      bonus shall only be due and payable, if:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | the
      member of the Board of Management remains in the service of the company
      for the full fiscal year;                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | the
      member of the Board of Management is not at any time during the fiscal year,
      suspended or relieved of their duties;                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | until
      such time as the decision referred to in paragraph 1 of this regulation
      has been reached, the Company has not given notice of termination of the
      employment agreement because of an urgent cause as referred to in article
      7:677 Civil Code or has not meanwhile sought court termination of the employment
      agreement for a serious cause in the meaning of article 7:685 Civil Code.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                          
|7. | The
      Remuneration Committee has the discretion to grant bonus outside of the
      above rules of the bonus scheme in case of exceptional circumstances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                          

In the event
  of commencement of the employment agreement, reaching the pensionable age or
  1ermination of the employment agreement by mutual consent during the fiscal
  year, the bonus shall, by way of an exception to the above rules, be calculated
  pro rata and paid accordingly.

---



Appendix
  B To the employment agreement
  between TPG N.V. and Mr. J.G. Haars 
  date: 9-8-2002.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|re: | Share
      Option Plan TPG N.V.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|1.  | Each year,
      within one week of the Supervisory Board meeting approving the annual accounts
      with respect to the relevant fiscal year , pursuant to a proposal made by
      the Remuneration Committee of the Supervisory Board, the Supervisory Board
      shall grant options on shares of TPG N.V. to the members of the Board of
      Management. The granting of TPG shares will take place under the express
      condition that at the time of granting, such securities transactions are
      allowed to be executed by the company and the grantee under the law and
      in particular under article 46 and next of the Wet Toezicht Effectenverkeer
      1995 (prohibition of insider trading) and the TPG rules concerning inside
      information.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2.  | The number
      of share options is determined annually by the Supervisory Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3.  | The exercise
      of the options after the vesting period is subject to performance criteria.
      Each time options are granted the performance criteria and targets will
      be determined in a meeting of the Supervisory Board in the year preceding
      the relevant fiscal year and the members of the Board of Management shall
      be informed accordingly. The Supervisory Board is entitled to make adjustments
      to the performance schedule if it is appropriate to do so in its opinion.                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.  | Members
      of the Board of Management shall be obliged to accept the Options and/or
      SARs granted to them.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|5.  | No options
      shall be granted to any eligible member of the Board who is within one year
      of retirement at his or her contractual (early) retirement date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|6.  | The terms
      and conditions for granting options are laid down in the share option plan
      rules These rules are determined by the Supervisory Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|7.  | Options
      will only be granted, if:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | - | the member
      of the Board of Management remains in the service of the company for the
      full fiscal year;                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | the member
      of the Board of Management is not suspended or relieved of his duties;                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | until such
      time as the decision referred to in paragraph I of this regulation has been
      reached, the Company has not given notice of termination of the employment
      agreement because of an urgent cause as referred to in article 7:677 Civil
      Code or has not meanwhile sought court termination of the employment agreement
      for a serious cause in the meaning of article 7:685 Civil Code.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                          

---



Appendix
  CTo the employment agreement
  between TPG N.V. and Mr. J.G. Haars 
  date: 9-8-2002.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|re: | Performance
      Share Plan TPG N.V.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|1.  | Each
      year, after the Supervisory Board meeting approving the annual accounts
      with respect to the relevant fiscal year, pursuant to a proposal made by
      the Remuneration Committee of the Supervisory Board, the Supervisory Board
      shall grant performance shares of TPG N.V. to the members of the Board of
      Management. The granting of TPG shares will take place under the express
      condition that at the time of granting, such securities transactions are
      allowed to be executed by the company and the grantee under the law and
      in particular under article 46 and next of the Wet Toezicht Effectenverkeer
      1995 (prohibition of insider trading) and the TPG rules concerning inside
      information.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2.  | The
      number of shares is determined annually by the Supervisory Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.  | The
      release of the shares after the performance period is subject to performance
      criteria. Each time shares are granted the performance criteria and targets
      will be determined in a meeting of the Supervisory Board in the year preceding:
      the relevant fiscal year and the members of the Board of Management shall
      be informed accordingly. The Supervisory Board is entitled to make adjustments
      to the performance schedule if it is appropriate to do so in its opinion.                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.  | Members
      of the Board of Management shall be obliged to accept the Shares granted
      to them.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|5.  | No
      shares shall be granted to any eligible member of the Board who is within
      one year of retirement at his or her contractual (early) retirement date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|6.  | The
      terms and conditions for granting shares are laid down in the rules applicable
      to the performance share plan. These rules are determined by the Supervisory
      Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|7.  | Shares
      will only be granted, if:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | the
      member of the Board of Management remains in the service of the company
      for the full fiscal year;                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | the member of the Board of Management is not suspended or relieved of their
      duties;                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | until such time as the decision referred to in paragraph I of this regulation
      has been reached, the Company has not given notice of termination of the
      employment agreement because of an urgent cause as referred to in article
      7:677 Civil Code or has not meanwhile sought court termination of the employment
      agreement for a serious cause in the meaning of article 7:685 Civil Code.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                    

---



Appendix
  D To the employment agreement
  between TPG N.V. and Mr. J. G. Haars. 
  Date: June 20th, 2003

The pension
  scheme.

1.     General

1.1.   The
  Executive is eligible for old age pension, extra old age pension, supplementary
  old age pension, disability pension, continuance of pension build-up in case
  of disability and on behalf of his spouse and children for spouse and orphan's
  pension in accordance with the clauses of the pensionscheme of the Stichting
  Ondernemingspensioenfonds TPG, the Reglement Overgangsbepalingen (regulations
  on transitional provisions) and the addendum to the latter.

1.2   In
  all cases that are not dealt with in this appendix the clauses of the pension
  regulations ofr-the Stichting
  Ondernemingspensioenfonds TPG, the regulations on transitional provisions and
  the addendum to the latter apply. In event of any differences as to the interpretation
  of any clause the management of the Stichting Ondememingspensioenfonds TPG shall
  decide after consultation with the Company, taking into account the requirements
  of reasonableness and fairness.

2.     Old
  age pension

2.1.   The
  old age pension commences on the first day of the calendar month in which the
  Executive reaches the age of 60 and is paid out up to and including the month
  in which the Executive dies.

2.2   The
  yearly old age pension is based on the so called "eindloonregeling" and amounts
  per each full year of participation 2% of the pension basis as mentioned in
  the pensionscheme of the Stichting Ondernemingspensioenfonds TPG. For a part
  of a year the yearly old age pension will be determined pro rata. The mentioned
  percentage is applicable as long as legally possible according to the Dutch
  Wage Tax Act. Years of participation include also fictitious years of participation
  caused by a transfer of value (waardeoverdracht).

2.3   The
  extra old age pension is based on the so called "middelloonregeling" and amounts
  per each full year of participation 2.25% of the extra pension basis. This extra
  pension basis is the average bonus over the last 7 years with a maximum of20%
  of regular salary of the last year.

The mentioned
  percentage is applicable as long as legally possible according to the Dutch
  Wage Tax Act. Only the actual years of participation are included.

2.4   The
  supplementary old age pension as mentioned in the pensionscheme of the Stichting Ondernemingspensioenfonds
  TPG amounts per each full year of participation 2% of the franchise, as long
  as legally possible according to the Dutch Wage Tax Act.

3.     Pensionable
  salary

3.1.   The
  pensionable salary is the regular annual salary, including holiday allowance.

---



Exhibit
  4.9

Spare
  Parts Renewal agreement dated 19 February 2004 between TNT Automotive
  Logistics S.p.A and Fiat Auto S.p.A. (English translation of Italian agreement)

(Rinnovo
  Contratti di Servizio)



|                                                                                                           | Parties:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|1.                                                                                                         | Fiat Auto S.p.A.,
      (hereinafter FIAT
      AUTO) acting in the name and on behalf of
      itself and all the companies controlled by it (hereinafter the Controlled
      Companies, which shall mean all such controlled
      companies, and FIAT AUTO Group
      shall mean both the Controlled Companies and Fiat Auto which are parties
      to the contracts (hereinafter the Contracts)
      indicated in Exhibit A hereto, which is an integral part of
      this agreement (hereinafter the Agreement),
      and                                                  
|                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2.                                                                                                         | your company TNT (hereinafter
      TNT),
      acting in the name and on behalf of itself and of all the companies controlled
      by it (hereinafter the TNT Controlled Companies
      which shall mean all such controlled companies, and TNT
      Group shall mean both the TNT Controlled Companies
      and TNT), which are parties to the Contracts indicated in Exhibit A
      hereto.                                                                                                                                                                                       
|                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Witnesseth
      that:                                                                                    
|With regard
      to the Contracts, the FIAT AUTO Group agreed with the TNT Group, inter alia,
      that:
|-                                                                                                          | each and all of the
      Contracts shall have a uniform expiration date, and that                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-                                                                                                          | for any aspect not
      expressly regulated in this Agreement, each and all of the Contracts shall
      contain the same provisions as those contained in the Contracts currently
      in force, with the exception of the Greece and Poland Contracts,
      each of whom shall be separated in two distinct contracts: one concerning
      the transportation activities, and the other concerning the warehousing
      activities, in accordance with the UK Contract blueprint (hereinafter
      the UK
      Contract), included in the list of Contracts
      under Exhibit A

Now, therefore, the parties
  agree as follows:

|1. | The premises
      and exhibits are an integral part of this Agreement.                                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Each
      of the Contracts is hereby renewed until December 31, 2008. The procedure
      for the renewal of each of the Contracts shall be the following:[*
      ]*
|3. | Each
      Contract will continue to be regulated by the tariffs therein indicated,
      with the following exceptions:                                              
|-  | the Efficiency
      Plan contemplated in the following article 4 of this Agreement shall be
      applied to the tariffs;                                            
|-  | the parties
      shall agree on amendments to the structure and value of the tariffs, provided
      that these amendments shall carry no economic impact.           

---

---





|4. | The Efficiency
      Plan contemplated in this Agreement shall apply to all Contracts. The plan
      is subdivided in a technical and a commercial part:                                                                                                                                                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|-  | the technical
      part is developed in the Technical Schedules attached hereto as Exhibit
      B, which specifically indicate which party shall be responsible
      for the implementation of the savings. Failure by FIAT AUTO to implement
      the activities to be carried out by it shall cause a delay in the application
      of the savings for a corresponding period of time.
|-  | The commercial
      part is developed as a reduction of the tariffs in force for each Contract
      in accordance with the following schedule:                                                                                                                                                                                                                                               

| | [*
      ]*                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The savings
      shall apply to the tariffs in force for each service, unless the parties
      agree otherwise.                                                                                                                                                                                                                        
| | The agreed-upon
      tariffs shall be negotiated on a yearly basis, considering:                                                                                                                                                                                                                                                        
| | -                                                                                                                                                                                                                                                                                                                                        
| | -                                                                                                                                                                                                                                                                                                                                        
| | it remaining
      understood that the tariffs in force at the time shall continue to apply
      pending negotiations. However, once the agreement on the new tariffs will
      be reached, the new tariffs shall apply effective from January 1 of the
      relevant year, and appropriate balances shall be carried out to this end.

|5. | FIAT
      AUTO and TNT are jointly committed to the permanent research of further
      technical savings, also in consideration of TNTs competitiveness.
      Any technical savings generated during the course of the Contracts, not
      included in the technical schedules attached to the Efficiency Plan, and
      which will result from the activity of the permanent FIAT AUTO/TNT working
      group, shall be subdivided 50% between the FIAT AUTO Group and the TNT Group
      (net of investments).                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | Should
      FIAT AUTO decide, further to the adoption of new strategies, to introduce
      structural variations (e.g.[ * ]) to the methods of distribution and warehousing
      of the spare parts, with a consequent impact on the revenues, costs, and
      volumes managed by TNT, the parties shall meet in order to evaluate [ *
      ] for TNT, and the appropriate method for the [ * ]. [ * ]*By way of example, changes such as the shift from
      weekly stock order to daily stock order shall not
      be considered structural variations.
|7. | In addition
      to the Contractual tariffs and to the Efficiency Plan, FIAT AUTO agrees
      to pay to TNT, as consideration for studies, designs and implementation
      of the projects included in the attached technical schedules, an amount
      of [ * ]*.                                                                                                                                                                                                                                                                                              
|   | The above
      sum shall, however, be invoiced gradually, during the entire course of implementation
      of the Efficiency Plan. Therefore, based on a shared forecast, the invoicing
      timeframe of the sum of [ * ]*shall be the following:                                                                                                                                                                                                                                                                                                                

---

---





| | -                                                                                                                                                                                                                                                 | [ * ]
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----
| | It is
      understood that, should the implementation of the Efficiency Plan undergo
      material changes, the Parties may re-negotiate the above invoicing timeframe,
      but only in view of an acceleration of payments in favour of TNT.

|8. | FIAT
      AUTO Group recognises that the TNT Group has implemented, and will implement,
      important investments in order to provide the services included in the Contracts
      at the conditions of this Agreement. It recognises, furthermore, that the
      agreement reached among the parties on the Efficiency Plan is based on the
      possibility for the TNT Group to depreciate these investments during the
      entire period of duration of the Contracts. Therefore, the Parties agree
      that, if all or some of the Contracts will terminate for whatever reason
      prior to their natural expiration date of December 31, 2008, FIAT AUTO will
      pay to TNT an indemnity for the failure by TNT to fully depreciate its investments.
      This indemnity is irrevocably quantified in the amounts, fixed and unchangeable,
      indicated in Exhibit C to this Agreement, with the exception
      of any investments that presently are not contemplated.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9. | The parties
      declare their availability in participating to studies aimed at the optimization
      of flows at Fiat Group level.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Should you agree on the
  above, please retype this document on your letterhead which, together with the
  Exhibits, is to be addressed to our company as a sign of your acceptance.

Best regards,

Fiat Auto

Exhibits:

|A: | List
      of the Contracts being renewed                                           
|-- | ------------------------------------------------------------------------------------
|B: | Technical
      schedules of the Efficiency Plan**                                  
|C: | Fixed
      amounts to be paid to TNT in case of early termination of the Contracts.

---

---





|Fiat Auto | Exhibit A | Extension of Spare Parts Contract
|--------- | --------- | ---------------------------------
|TNT       |          



|Country       |  | TNT Party                                |  | FIAT Party              |  | Name of contract                                               |  | Date       | 
|------------- |  | ---------------------------------------- |  | ----------------------- |  | -------------------------------------------------------------- |  | ---------- | 
|Great Britain |  | TNT Autologistics Limited                |  | FiatAuto UK Limited     |  | Warehousing Services Contract UK - Fiat Auto Spare Parts       |  | 4/18/2003  | 
|Great Britain |  | TNT Autologistics Limited                |  | Fiat Auto UK Limited    |  | Transportation Services Contract UK - Fiat Auto Spare Parts    |  | 4/18/2003  | 
|France        |  | TNT Automotive Logistics S.A.            |  | Fiat Auto (France) S.A. |  | Warehousing Services Contract Vatry - Fiat Auto Spare Parts    |  | 9/19/2001  | 
|France        |  | TNT Automotive Logistics S.A.            |  | Fiat Auto (France) S.A. |  | Transportation Services Contract Vatry - Fiat Auto Spare Parts |  | 9/20/2001  | 
|Spain         |  | TNT Automotive Logistics EspanaS.A.      |  | Fiat Auto Espana S.A.   |  | Warehousing Services Contract Spain - Fiat Auto Spare Parts    |  | 9/19/2001  | 
|
|
|Spain         |  | TNT Automotive Logistics EspanaS.A.      |  | Fiat Auto Espana S.A.   |  | Transportation Services Contract Spain - Fiat Auto Spare Parts |  | 9/20/2001  | 
|
|
|Austria       |  | TNT Logistics Austria GMBH               |  | Fiat Automobil GMBH     |  | Service Contract                                               |  | 7/14/1999  | 
|Italy         |  | TNT Automotive Logistics S.p.A.          |  | FiatAuto S.p.A.         |  | Fiat Auto Spare Parts Management Contract                      |  | 9/18/2001  | 
|
|
|Greece        |  | TNT Automotive Logistics S.A.            |  | Fiat Auto Hellas S.A.   |  | Performance of Services Contract                               |  | 2/16/1996  | 
|Poland        |  | TNT Automotive Logistics PolandSp.z.o.o. |  | Fiat Auto Poland S.A.   |  | Service Contract                                               |  | 10/17/1996 | 
|
|

---





|FIAT AUTO |           | Renewal of Spare Parts Contract
|--------- | --------- | -------------------------------
|TNT       | Exhibit C |                                





|year of termination of  |  |                    |       |   |        |   |       |   |    |   |        |   |         |   |        |   |       |   |  |  |  |  |  |  |  | 
|----------------------- |  | ------------------ | ----- | - | ------ | - | ----- | - | -- | - | ------ | - | ------- | - | ------ | - | ----- | - |  |  |  |  |  |  |  | 
|                        |  |                    | Italy |   | France |   | Spain |   | UK |   | Poland |   | Austria |   | Greece |   | Total |  
|contract                |  | years from 01/2004 |       |   |        |   |       |   |    |   |        |   |         |   |        |   |       |   |  |  |  |  |  |  | 
|prior to 31/12/2004     |  | 1                  | [*    | ] | [*     | ] | [*    | ] | [* | ] | [*     | ] | [*      | ] | [*     | ] | [*    | ]
|01/01/2005 - 31/12/2005 |  | 2                  | [*    | ] | [*     | ] | [*    | ] | [* | ] | [*     | ] | [*      | ] | [*     | ] | [*    | ]
|01/01/2006 - 31/12/2006 |  | 3                  | [*    | ] | [*     | ] | [*    | ] | [* | ] | [*     | ] | [*      | ] | [*     | ] | [*    | ]
|01/01/2007 - 31/12/2007 |  | 4                  | [*    | ] | [*     | ] | [*    | ] | [* | ] | [*     | ] | [*      | ] | [*     | ] | [*    | ]
|01/01/2008 - 30/06/2008 |  | 5                  | [*    | ] | [*     | ] | [*    | ] | [* | ] | [*     | ] | [*      | ] | [*     | ] | [*    | ]

Sums are in millions 

The above sums include the value of new investments listed in Exhibit C1. Should the need for new investments arise in order to complete the plan that is the object of this agreement, and should such investments be performed by TNT (without prejudice to the required Fiat Auto consent), the parties undertake to review the values of the above table, including such values the impact of the new investments.



---

---





Exhibit C1

|Mln                                | 2004 | 2005 | 2006 | 2007 | 2008 | TOTALE | Project reference
|----------------------------------- | ---- | ---- | ---- | ---- | ---- | ------ | -----------------
|                                    |      |      |      |      |      |        |                  
|INVESTMENTS                         |      |      |      |      |      |        |                  
|Shelves                             | [*   | ]    |      |      |      |        |                  
|Software                            | [*   | ]    |      |      |      |        |                  
|Other equipment                     | [*   | ]    |      |      |      |        |                  
|Moulds                              | [*   | ]    |      |      |      |        |                  
|Thermoretraction oven               | [*   | ]    |      |      |      |        |                  
|Containers                          | [*   | ]    |      |      |      |        |                  
|Packaging equipment                 | [*   | ]    |      |      |      |        |                  
|                                    |      |      |      |      |      |        |                  
|TOTAL INVESTMENTS                   | [*   | ]    |      |      |      |        |                  
|                                    |      |      |      |      |      |        |                  
|START UP COSTS                      |      |      |      |      |      |        |                  
|                                    |      |      |      |      |      |        |                  
|                                    |      |      |      |      |      |        |                  
|Redundancy                          | [*   | ]    |      |      |      |        |                  
|Dis-saturation of workforce         | [*   | ]    |      |      |      |        |                  
|                                    |      |      |      |      |      |        |                  
|TOTAL START UP                      | [*   | ]    |      |      |      |        |                  
|                                    |      |      |      |      |      |        |                  
|                                    |      |      |      |      |      |        |                  
|TOTAL INVESTMENTS AND COSTS         | [*   | ]    |      |      |      |        |                  
|                                    |      |      |      |      |      |        |                  
|                                    |      |      |      |      |      |        |                  
|                                    |      |      |      |      |      |        |                  
|amortization in 5 years             | [*   | ]    | [*   | ]    | [*   | ]      | [*               
|amortization in 4 years             |      |      |      |      |      |        |                  
|amortization in 3 years             |      |      |      |      |      |        |                  
|                                    |      |      |      |      |      |        |                  
|TOTAL AMORTIZATION                  | [*   | ]    | [*   | ]    | [*   | ]      | [*               
|                                    |      |      |      |      |      |        |                  
|START UP COSTS                      | [*   | ]    | [*   | ]    | [*   | ]      | [*               
|                                    |      |      |      |      |      |        |                  
|TOTAL AMORTIZATION COSTS + START UP | [*   | ]    | [*   | ]    | [*   | ]      | [*               



---

---



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: 17
    March 2004  /s/ M.P. BakkerChief
    Executive Officer




|174 | 2003
      annual report | 
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|
|



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:
        17 March 2004/s/
        J.G. HaarsChief
        Financial Officer




| | 2003
        annual report | 175
| | -------------------------- | ---

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Certifications

|
|



I,
  H.M. Koorstra, 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:
        17 March 2004/s/
        H.M. KoorstraGroup
        Managing Director Mail




|176 | 2003
      annual report | 
|--- | ------------------------ | 

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|



I,
  M.C. Lombard, 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: 17 March 2004   /s/ M.C.
    LombardGroup
    Managing Director Express




| | 2003
        annual report | 177
| | -------------------------- | ---

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Certifications

|
|



I,
  D.G. Kulik, 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: 17 March 2004  /s/ D.G.
    KulikGroup
    Managing Director Logistics




|178 | 2003
      annual report | 
|--- | ------------------------ | 

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CERTIFICATION
  PURSUANT TO18 U.S.C. SECTION 1350
  AS ADOPTED PURSUANT TO
  SECTION 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 2003 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.

17
  March 2004



/s/ M.P.
  Bakker

M.P. BakkerChief Executive Officer

| | 2003
        annual report | 179
| | -------------------------- | ---

---

CERTIFICATION
    PURSUANT TO 
    18 U.S.C. SECTION 1350 
    AS ADOPTED PURSUANT TO 
    SECTION 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 2003 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. 17
    March 2004  /s/ J.G.
    Haars J.G. HaarsChief Financial
    Officer 180
      2003
        annual report   
 
 CERTIFICATION
    PURSUANT TO18 U.S.C. SECTION 1350
    AS ADOPTED PURSUANT TO
    SECTION 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 2003 as filed with the Securities and Exchange
    Commission on the date hereof (the "Report"), I, H.M. Koostra, Group
    Managing Director Mail 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. 17
    March 2004  /s/ H.M.
    Koorstra H.M. KoorstraGroup Managing Director
    Mail 2003
          annual report
      181  CERTIFICATION
      PURSUANT TO18 U.S.C. SECTION 1350
      AS ADOPTED PURSUANT TO
      SECTION 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 2003 as filed with the Securities and Exchange
      Commission on the date hereof (the "Report"), I, M.-C. Lombard, Group
      Managing Director Express 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. 17
      March 2004  /s/
      M.C. Lombard M.-C. LombardGroup Managing
      Director Express 182
        2003
          annual report  
 
 CERTIFICATION
      PURSUANT TO18 U.S.C. SECTION 1350
      AS ADOPTED PURSUANT TO
      SECTION 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 2003 as filed with the Securities and Exchange
      Commission on the date hereof (the "Report"), I, D.G. Kulik, Group
      Managing Director Logistics 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. 17
      March 2004  /s/
      D.G. Kulik D.G. KulikGroup Managing
      Director Logistics 2003
            annual report
        183


















TPG N.V.P.O.
          Box 13000
          1100 KG Amsterdam
          The Netherlands
          Telephone +31 20 500 6000
          Fax +31 20 500 7000
          www.tpg.comRoyal TPG PostP.O.
          Box 30250
          2500 GG The Hague
          The Netherlands
          Telephone +31 70 334 3434
          www.tpgpost.nlTNTP.O.
          Box 13000
          1100 KG Amsterdam
          The Netherlands
          Telephone +31 20 500 6500
          www.tnt.com