TNT

In 2005, our Express division earned revenues of €6,109 million. The Express division accounted for 60.6% of our group operating revenues and 41.8% of our group operating income.

In 2005, despite mixed worldwide economic conditions, including particularly weak economies in our key domestic European markets, our express business produced a strong performance driven by our international businesses, offering the right products, disciplined pricing management and an efficient sales process.

The primary factors behind our express business profit improvements in 2005 were strong international volumes supported by a more balanced customer portfolio, growth in our global accounts, continued positive revenue quality yield, improved network optimisation and careful cost management. Revenue quality yield is one of our key measures and it is calculated as (1) the average of the percentage change in revenue per consignment compared to the previous year and (2) the percentage change in revenue per kilogramme compared to the previous year. Our employees furthered our mission through strict adherence to our commercial policy, a focus on serving business-to-business customers and consistent expresswide deployment of our uniform best practice processes.

In January 2006, we completed the acquisition of TG+, which is the third largest industrial parcel operator in Spain, and which has revenues of around €100 million. In total this network employs approximately 2,600 people (about 960 directly employed by TG+) and operates 57 depots (22 directly owned by TG+) throughout the country, which add up to approximately 135,000 square meters, with more than 900 pick-up and deliveries drivers, and a fleet of 140 linehaul trucksconnecting the depot network. We believe that TG+ will expand and strengthen our domestic express business and fuel our international express business in Spain, a strategic and fifth largest market in Europe with high growth potential. At the same time, we believe TG+ will further drive growth of our leading position in the premium express delivery market in Europe by providing better coverage in Spain.

We are actively looking into further business opportunities and potential acquisitions to expand our express operations in Europe and Asia. As announced on 6 December 2005, we are in advanced negotiations for the acquisition of Hoau, China’s leading domestic freight and parcel operator.

Express Europe
We have a more extensive express delivery road network in Europe than any of our competitors. We continue to enhance our European air and road networks to be able to offer the most reliable service to our customers. With respect to our European network, we added Palermo and Cagliari as new airport connections in September and October 2005, respectively, but closed Naples and Turin in April and July 2005, respectively. We further expanded our already dense network coverage by introducing new co-load airport connections in Skopje, Belgrade and Sarajevo during 2005.

Following our announcement in 2004 of our plan to introduce a further five Boeing 737-300 aircraft to our European air network, we introduced two aircraft in each of 2004 and 2005 and a further one will be added in 2006. The five aircraft, leased for five years from GE Capital Aviation Services, will replace chartered aircraft currently operating in our express air network. We also entered into another agreement in June 2005 with GE Capital Aviation Services for two additional leased Boeing 737s. These aircraft are due for delivery in 2006.

Express Rest of the World
The Express Rest of the World business provides door-todoor express delivery of documents, parcels and freight worldwide in all areas outside Europe and from these areas to Europe. We also are building our position in Asia and have further improved service levels between Europe and Asia. Our worldwide coverage extends to more than 200 countries.

In China, we have built an extensive network consisting of 25 company-owned locations and 50 agency franchises which together serve over 600 cities. We intend to differentiate from other major integrators by developing and capitalising an extensive road network in China. The network is planned to be significantly enhanced in 2006 as we are in advanced negotiations for the acquisition of Hoau, China’s largest privately owned transportation network offering comprehensive road coverage among 1,100 locations in China.

We have announced plans to increase our uplift capacity between China and Europe through the addition of two Boeing 747 aircraft that are due to be delivered in December 2006 and June 2007 respectively. Each new aircraft to be delivered by Boeing will provide 100 tonnes of capacity and will facilitate our strong growth in the region.

Freight Management
In August 2004, our global freight management capabilities were established through our acquisition of Wilson, a freight management business comprising primarily air and sea freight transportation. Freight management is an attractive standalone business which has economic resilience. In general, freight management operators do not own assets to provide transportation services because they acquire cargo space from airline and shipping firms. The asset-light profile of freight management provides flexibility to adjust to changes in volumes. We expect that the addition of freight management capabilities and expertise will enable us to offer our knowledge, skills and value added activities to a larger potential customer base while at the same time providing existing customers with a broader service offering.

The acquisition of Wilson was a major step in becoming a global freight management company. Wilson was rebranded into TNT Freight Management as of 1 July 2005. The global network operates from 130 offices in 28 countries with a significant presence in the Nordic region. We plan to continue to grow our freight management capabilities organically and increase the density of our operations in the Americas and Asia. The retention rate following the acquisition of Wilson is very high and the turnover rate in operational management was negligible.