2005 annual report and Form 20-FAnnual report
ORANGE ON THE INSIDE
The employees depicted in this annual report have, through their individual actions and team efforts, made an extraordinary contribution to TNT’s success as a company. They have exhibited all the best aspects of our company’s personality in the course of making their contribution. We call this “orange on the inside”. To TNT, orange is more than a colour. It is an idea, a feeling, an attitude and a way of doing things. The employees in this annual report and their colleagues around the world are “orange on the inside”.
PRESENTATION OF INFORMATION AND EXCHANGE RATES
Unless otherwise specified or the context requires otherwise, “us”, “we”, “our”, “TNT” and the “company” refer to TNT
N.V. and all its group companies as defined in article 24b, part 1, book 2 of the Dutch Civil Code.
References to “dollars”, “US dollars” and “$” are to United States dollars. References to “euro” and “€” are to the currency introduced at the start of the second stage of the Economic and Monetary Union pursuant to the Treaty establishing the European Economic Community as amended by the Treaty on the European Union. Our financial statements are reported in euro.
In 2004 we prepared our consolidated financial statements in accordance with accounting principles generally accepted in the Netherlands (Dutch GAAP). As of 2005, all European listed companies are required to prepare their consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. As a result our 2005 consolidated financial statements have been prepared in accordance with IFRS, and the comparative 2004 data has been adjusted to IFRS. For TNT, there are no differences between the IFRS as adopted by the EU and the IFRS as issued by the International Accounting Standards Board. A detailed explanation of the transition to IFRS and the impact on our financial numbers is given in chapter 12. For a description of the differences between IFRS and US GAAP that affect the reconciliation of our IFRS net income and shareholders’ equity to those under US GAAP, see note 34 to our consolidated financial statements.
US dollar amounts presented are unaudited and have been translated solely for your convenience from euro into US dollars at an exchange rate of $1.1842 per €1.00, the noon buying rate in the City of New York on 30 December 2005 for cable transfers as certified by the Federal Reserve Bank of New York. We do not represent that the US dollar amounts presented in the US dollar convenience translations or any amounts translated from euro into any other currency could have been converted from euro at the rates indicated. Historical exchange rate information can be found in chapter 15, page 212.
SELECTED FINANCIAL DATA
Since we are a non-US company that is a first-time adopter of IFRS, the United States Securities and Exchange Commission (SEC) has permitted us to present one year of comparative data instead of the normally required two years of comparative data.
The selected consolidated financial income statements data for the year ended 31 December 2005 and 2004 and the selected consolidated financial balance sheets data as at 31 December 2005 and 2004 have been derived from our audited consolidated financial statements and the related notes included in chapter 12 of this report. The selected consolidated financial data in accordance with US GAAP for 2005 has been derived from our audited consolidated financial statements. Prior year’s US GAAP selected consolidated financial data have not been adjusted to reflect the impact of our discontinued logistic business, other than the disposal of our French logistics business.
We have acquired a number of companies and businesses during the years, that are included in the following financial data, which limits the comparability of our year-on-year figures.
| As at and for the year ended at 31 December | |||
| Selected financial data | 2005 | 2004 1 | |
|---|---|---|---|
| US$ | € | € | |
| INCOME STATEMENT | |||
| Total revenues | 11,967 | 10,105 | 9,106 |
| Other income | 45 | 38 | 8 |
| Salaries and social security contributions | (4,042) | (3,413) | (3,248) |
| Depreciation, amortisation and impairments | (379) | (320) | (303) |
| Other expenses | (6,219) | (5,251) | (4,447) |
| Total operating expenses | (10,640) | (8,984) | (7,998) |
| Total operating income | 1,372 | 1,159 | 1,116 |
| Profit before income taxes | 1,363 | 1,151 | 1,096 |
| Profit for the period from continuing operations | 913 | 772 | 721 |
| Profit/(loss) from discontinued operations | (131) | (111) | 31 |
| Profit attributable to the shareholders | 780 | 659 | 752 |
| RATIOS | |||
| Operating margin (%) 1 | 11.5 | 11.5 | 12.3 |
| Average number of outstanding shares (in millions) | 454.4 | 454.4 | 473.4 |
| Earnings per ordinary share (in cents) 2 | 171.7 | 145.0 | 158.9 |
| Earnings from continuing operations per ordinary share (in cents) 2 | 200.9 | 169.5 | 152.3 |
| Earnings from discontinued operations per ordinary share (in cents) 2 | (28.8) | (24.5) | 6.6 |
| Average number of outstanding shares on diluted basis (in millions) | 456.4 | 456.4 | 74.0 |
| Earnings per diluted share (in cents) 2 | 171.7 | 144.4 | 158.7 |
| Earnings from continuing operations per diluted share (in cents) 2 | 200.1 | 168.7 | 152.1 |
| Earnings from discontinued operations per diluted share (in cents) 2 | (28.7) | (24.3) | 6.6 |
| Dividend per share (in cents) 3 | 74.6 | 63.0 | 57.0 |
| Dividend pay-out ratio (%) 4 | 43.4 | 43.4 | 35.9 |
| BALANCE SHEET | |||
| Non-current assets | 4,338 | 3,663 | 5,070 |
| Current assets | 2,789 | 2,355 | 3,159 |
| Assets held for sale | 2,816 | 2,378 | |
| Total assets | 9,943 | 8,396 | 8,229 |
| Equity | 3,883 | 3,279 | 3,344 |
| as % of total liabilities and equity | 39.1 | 39.1 | 40.6 |
| Non-current liabilities | 1,904 | 1,608 | 2,221 |
| Current liabilities | 2,699 | 2,279 | 2,664 |
| Liabilities related to assets classified as held for sale | 1,457 | 1,230 | |
| Total liabilities and equity | 9,943 | 8,396 | 8,229 |
| CASH FLOW STATEMENT CONTINUED OPERATIONS | |||
| Net cash from operating activities | 1,165 | 984 | 708 |
| Net cash used in investing activities | (314) | (265) | (268) |
| Net cash used in financing activities | (922) | (779) | (284) |
| Changes in cash and cash equivalents | (71) | (60) | 156 |
| CASH FLOW STATEMENT DISCONTINUED OPERATIONS | |||
| Net cash from operating activities | 33 | 28 | 250 |
| Net cash used in investing activities | (22) | (19) | (22) |
| Net cash used in financing activities | 22 | 19 | (216) |
| Changes in cash and cash equivalents | 33 | 28 | 12 |
(in millions, unless otherwise stated)
|
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| Selected financial data US GAAP | 2005 | 2004 1 | 2003 1 | 2002 1 | 2001 1 | |
|---|---|---|---|---|---|---|
| US$ | € | € | € | € | € | |
| Total revenues | 15,798 | 13,341 | 12,328 | 11,492 | 11,364 | 10,790 |
| Total operating income | 1,503 | 1,269 | 1,215 | 866 | 1,165 | 926 |
| Profit before income taxes | 1,414 | 1,194 | 1,135 | 861 | 1,059 | 835 |
| Profit for the period from continuing operations | 931 | 786 | 739 | 464 | 729 | 476 |
| Profit/(loss) from discontinued operations | (180) | (152) | (25) | (132) | (12) | 8 |
| Profit attributable to the shareholders | 749 | 632 | 714 | 332 | 717 | 484 |
| Profit attributable to minority interest | 2 | 2 | ||||
| Earnings per outstanding ordinary share (in cents) | 164.8 | 139.1 | 151.92 | 69.9 | 150.9 | 101.9 |
| Earnings per outstanding diluted ordinary share (in cents) | 164.1 | 138.5 | 151.72 | 69.8 | 150.9 | 101.9 |
| Non-current assets | 5,997 | 5,064 | 5,006 | 5,261 | 5,797 | 5,521 |
| Current assets | 3,948 | 3,334 | 3,160 | 2,858 | 2,693 | 2,867 |
| Assets held for sale | 14 | 12 | ||||
| Total assets | 9,959 | 8,410 | 8,166 | 8,119 | 8,490 | 8,388 |
| Equity | 3,285 | 2,774 | 2,641 | 3,163 | 3,128 | 2,653 |
| as % of total liabilities and equity | 33.0 | 33.0 | 32.3 | 39.0 | 36.8 | 31.6 |
| Non-current liabilities | 2,837 | 2,396 | 2,602 | 2,482 | 2,772 | 2,855 |
| Current liabilities | 3,837 | 3,240 | 2,923 | 2,474 | 2,590 | 2,880 |
| Liabilities related to assets classified as held for sale | ||||||
| Total liabilities and equity | 9,959 | 8,410 | 8,166 | 8,119 | 8,490 | 8,388 |
(in millions, unless otherwise stated)
|
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Hard work and a flair for organisation helped her to increase customer satisfaction with local unaddressed mail deliveries.
Marilyn Conrich Agent Controller TNT Post | United Kingdom
TO GUIDE YOUR READING OF THIS DOCUMENT, PLEASE FIND BELOW A SUMMARY OF EACH CHAPTER’S CONTENTS.
CHAPTER 1 contains the CEO letter to our shareholders and all other readers reviewing 2005 and looking forward to 2006.
CHAPTER 2 discusses high-level information on our company, giving the reader a quick inside look into our strategy and the group operating and financial review and prospects.
CHAPTERS 3 AND 4 discuss in more detail our mail and express 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 short summary of the regulatory environment in which our mail business operates. More comprehensive information on this regulatory environment can be found in chapter 13.
CHAPTER 5 discusses our discontinued logistics business.
CHAPTER 6 contains the report of our Supervisory Board.
CHAPTER 7 discusses corporate governance. This chapter gives an overview of our procedures and the checks and balances that govern the way we manage our company.
CHAPTER 8 deals with our Business Principles, as well as our social responsibility policy and humanitarian efforts.
CHAPTER 9 contains our remuneration report. It comprises our remuneration policy and the detailed compensation plan for our Board of Management and Supervisory Board.
CHAPTER 10 cautions against undue reliance on forward-looking statements and presents an overview of risk factors concerning our company and its business.
CHAPTER 11 discusses certain financial information for the company, in particular with regard to cash flow, liquidity, capital resources and critical accounting policies.
CHAPTER 12 contains our financial statements in accordance with IFRS and requirements as prescribed by the SEC, information as required by article 392, part 9, book 2 of the Dutch Civil Code and other financial information.
CHAPTER 13 discusses in detail the regulatory environment in which our mail business operates.
CHAPTER 14 contains additional information, including a description of our relationship with the State of the Netherlands and the rights attached to our shares.
CHAPTER 15 discusses other information of interest to our shareholders, including with respect to the performance of our shares.
CHAPTER 16 contains a cross reference table specifying where the various items required by Form 20-F can be found in this document.