At the end of 2005, 6,315 people (2004: 6,735) were employed by joint ventures, of whom 4,562 (2004: 4,964) were on the payroll of Dutch companies, primarily Postkantoren B.V. and 1,753 (2004: 1,771) were on the payroll of companies outside the Netherlands.

In 2005 the average number of average full-time employee equivalents in the mail division was 42,482. This was a decrease of 4.5% compared to last year and was mainly caused by restructuring plans and natural attrition in the Netherlands.

The 5% increase of average full-time employee equivalents in express was mainly caused by organic growth.

The number of external agency staff increased by 8,157 (2004: 3,469), mainly due to the flexible work force programme in the mail segment.

No options or shares were granted to members of the Supervisory Board and none of the members of the Supervisory Board accrued any pension rights with our company.

Remuneration of members of the Board of Management

During 2005, the Board of Management consisted of five members. The Board of Management remained unchanged during 2005.

TOTAL REMUNERATION

In 2005, the remuneration, including pension and social security contributions, of the current and the former members of the Board of Management amounted to €9,784,714 (2004: 7,956,604).

BASE SALARY

Details of the base salary and the other periodic paid compensation elements of the current members of the Board of Management are set out below.

For 2005 the Board of Management has not received a general increase in base salary. In 2006 the Board of Management again will not receive a general increase in base salary. The base salary of Marie-Christine Lombard was aligned to the salary of the other group managing directors in the Board of Management at €600,000. The country of residence component in the base salary for Dave Kulik and Marie- Christine Lombard consisted of €500,000 for Dave Kulik and €300,000 for Marie-Christine Lombard.

SHARE MATCHING SCHEME

In 2005, the amount of €2,288,333 in relation to company results was paid to the members of the Board of Management. Of this amount, 75% (€1,762,250) was paid in cash and 25% (€572,083) was paid in shares. These bonus shares are held in a trust by our share administrator.

LONG TERM INCENTIVES

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

LONG TERM INCENTIVE/SHARE OPTION SCHEME

The table below summarises the status of the number of outstanding options of our ordinary shares granted to the members of the Board of Management:

No member of the Board of Management has exercised options.

LONG TERM INCENTIVE/PERFORMANCE SHARE SCHEME

The table below summarises the status of the rights awarded under the performance share scheme to the members of the Board of Management:

Our relative total shareholder return over the period from 1 January 2002 through 31 December 2005 governs the share option grant and performance share grant for 2002. Our relative total shareholder return over the period from 1 January 2003 through 31 December 2005 governs the share option grant and performance share grant for 2003.

The table above shows the actual vesting of the 2002 and 2003 share options as well as the 2003 performance shares on 31 December 2005.

VARIABLE COMPENSATION

In the table below the total variable compensation granted in 2005 to the members of the Board of Management is expressed as a percentage of base salary. For this purpose the value of the rights on matching shares, share options and rights on performance shares were calculated using the Monte Carlo method and a weighted probability analysis provided by Hewitt Associates.

PENSIONS

Peter Bakker, Jan Haars and Harry Koorstra are participants in a defined benefit scheme, which provides an annual benefit of 70% of pensionable salary, assuming 35 years of service. Dave Kulik participates in a defined benefit scheme with a normal retirement benefit accrual of 1.75% per year and a 401(k) scheme (defined contribution). Marie-Christine Lombard participates in a defined contribution pension scheme. The pensionable age of Peter Bakker and Harry Koorstra is 65; the pensionable age of Jan Haars is 60 years of age. The foreseen pensionable age of Dave Kulik is 60. The accrued benefits and the transfer values (for participants in a defined benefit scheme) of the members of the Board of Management are as follows:

Transfer values of the accrued benefits of our Dutch members of the Board of Management has been calculated on the basis of actuarial advice in accordance with the regulations from the Dutch Ministry of Social Affairs and Employment.

The pension contribution for Dave Kulik is to a non-funded pension scheme, meaning that the liability for a future pension exists, but the money is not actually transferred to a fund.

In addition, we contributed €14,521 for Dave Kulik and €180,000 for Marie-Christine Lombard under a defined contribution scheme.

Performance share scheme

The performance share scheme is an equity-settled plan with annual grants. Participants will be granted a conditional right over a number of TNT shares. The number of shares comprised in the share award reflects the position that the participant holds and management’s assessment of their future contribution to the company.

In the outstanding number of rights on performance shares in the table above, an estimated total of 329,000 is related to our discontinued logistics business.

Management option plan

No options were granted in 2005. In 2005 the option plan was replaced by the performance share scheme.

The number of options granted in each of the three years that will ultimately be eligible for exercise is dependent on our total shareholder return relative to a peer group of direct competitors and a peer group of AEX companies.

Option rights were 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.

Statements of changes of outstanding options

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 and are equity settled.

In the outstanding total number of options in the table above an estimated total of 1.9 million options with a weighted average exercise price of €17.85 is related to our discontinued logistics business.

The significant 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 (2005: €20.55/share),
• the rights on matching shares are granted for zero and the number of shares is equal to the number of bonus shares,
• the matching shares are delivered three years after the delivery of the bonus shares. One matching share is delivered for each bonus share that has been retained for three years,
• for each bonus share that is sold within three years, the associated right to one matching share lapses. If more than 50% of the bonus shares are sold within three years, the entire right to matching shares lapses with immediate effect,
• where a participant leaves the company for certain reasons (retirement, certain reorganisations, disability or death) the right to matching shares will vest immediately and he/she can exercise his/her right pro rata, and
• 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,

In the outstanding number of matching rights on shares in the table above, an estimated total of 43,000 is related to our discontinued logistics business.

Fair value assumptions and hedging

Our share based payments have been measured using the Monte Carlo fair value measurement method. Significant assumptions used in our calculations are as follows:

As of 5 May 2005, the 2005 grant date, the fair value of our matching shares awarded was €18.62 and the fair value of our performance shares awarded was €14.11. As of 27 April 2004, the 2004 grant date, the fair value of our options awarded was €4.73, of our matching shares was €16.29 and of our performance shares awarded was €10.74.

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 2005, 2004 and 2003 we purchased no shares for hedging purposes.

Included within other operating expenses are costs incurred for services provided by our group statutory auditors, PricewaterhouseCoopers Accountants N.V.

Included in the table is approximately €3 million in 2005 and €3 million in 2004 related to fees for services provided relating to our discontinued logistics business.

The fees for their services can be divided into the following categories:

Fees for audit services include the audit of TNT’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 independent auditor can reasonably provide. Fees for audit related services include employee benefit plan audits, due diligence related to mergers and acquisitions, internal control reviews, transition to IFRS and consultation concerning financial accounting and reporting matters not classified as audit. Audited related fees in 2005 also include consultation and review of our controls framework related to the Sarbanes- Oxley Act requirements amounting to approximately €2 million. Fees for tax services include tax compliance, tax advice, including all services performed by the independent 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, general training support for accounting and audit of corporate sustainability reports.

O 22 NET FINANCIAL INCOME AND EXPENSES

Interest and similar income: 115 million (2004: 99) Interest and similar income in 2005 of €115 million mainly relates to interest income on funding our discontinued logistics business of €72 million, interest of €21 million relating to an income tax refund, interest income on loans and deposits of €12 million and other interest income relating to outstanding hedges.

Interest and similar income in 2004 of €99 million mainly relates to interest income on funding our discontinued business of €66 million, interest income on loans and deposits of €12 million, a one-off gain of €11 million on the unwind of a US dollar 435 million swap and other interest income relating to outstanding hedges.

Income taxes differ from the amount calculated by multiplying the Dutch statutory corporate income tax rate with the income before income taxes. In 2005, the effective income tax rate was 32.9% (2004: 34.2%), which is higher than the statutory corporate income tax rate of 31.5% in the Netherlands (2004: 34.5%). The decline of the effective tax rate compared to 2004 is predominantly the result of a decrease in the Dutch statutory income tax rate.

Income tax expense consists of the following:

In 2005, the current tax expense amounted to €338 million (2004: 345). The difference between the total income taxes in the statements of income and the current tax expense is due to timing differences. These differences are recognised as deferred tax assets or deferred tax liabilities.

The following table shows the movements in deferred tax assets in 2005:

Deferred tax assets as at 31 December 2005 include €36 million related to our discontinued logistics business and is included in assets held for sale. €46 million included in the table on deferred tax assets as transferred to assets held for sale represents the balance as at 1 January 2005 and does not reflect the movements during 2005.

The following table shows the movements in deferred tax liabilities in 2005:

Deferred tax liabilities as at 31 December 2005 include €30 million related to our discontinued logistics business and are included in liabilities related to assets classified as held for sale.€20 million included in the table on deferred tax liabilities as transferred to liabilities related to assets classified as held for sale represents the balance as at 1 January 2005 and does not reflect the movements during 2005.

Deferred tax liabilities arise because of the following differences:

Multinational groups the size of TNT are exposed to varying degrees of uncertainty related to tax planning and regulatory reviews and audits. We account for our income taxes on the basis of our own internal analyses, supported by external advice. We continually monitor our global tax position, and whenever uncertainties arise, we assess the potential consequences and either accrue the liability or disclose a contingent liability in our financial statements, depending on the strength of our position and the resulting risk of loss.