EXPRESS

Business description

Our Express division provides on-demand door-to-door express delivery services for customers sending documents, parcels and freight. We offer regional, national and worldwide express delivery services, mainly for business-to-business customers. The express services we provide and the prices we charge to customers are primarily classified by transit times, distances to be covered and sizes and weights of consignments. We offer a comprehensive range of products to our customers that we divide into small and medium enterprises, major account and global customers with each of these being managed by dedicated teams and processes. We build strong relationships with our customers through regular personal calls and visits, as well as a wide range of communications media.

In 2006, our Express division earned revenues of €6,011 million.

The following tables set out the financial performance of our express division for the past three years:

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Year ended at 31 December
Express financial overview	2006	2006	variance %	2005 ¹	variance %	2004 ¹
	US$	€		€		€
Total operating revenues	7,933	6,011	12.1	5,363	8.1	4,963
as % of total operating revenues TNT		59.8		57.5		56.2
Other income	8	6
Total operating expenses	(7,176)	(5,437)	(11.3)	(4,887)	(6.6)	(4,585)
Total operating income	765	580	21.8	476	25.9	378
as % of express operating revenues		9.6		8.9		7.6
(in millions, except percentages) 1 Figures have been adjusted to reflect the transfer of Cendris UK from Mail to Express in 2006.

During 2006, our Express division realised higher operating revenues and improved earnings as a percentage of operating revenues due to a strong performance in our international business attributable to our attractive product offering, disciplined pricing and an efficient sales process.

We continued to grow our profit margin, which was achieved through the implementation of standard commercial policies, cost control, including increased network utilisation, while maintaining service levels and the ongoing review of our revenue quality yield against cost inflation.

STRATEGY

Our ambition is to be the leader in day certain and time certain door-to-door transport for our business-to-business clients with the widest geographical coverage.

We are a global express player. Our strategic intent is to:

• be number one in Europe in national, intra-European and Asia-Europe express flows,
• build volumes from China to fuel our European network and establish an intra-China network,
• be number one in selected emerging markets like India, Brazil and China, and
• be number one in special services: a range of flexible and value added solutions that are complimentary to the network services. These services are tailored to the customers’ requirements and range from time critical and freight transportation through tospecial handling and distribution services.

BUSINESS performance

In 2006 our Express business produced a strong performance driven by our international businesses, supported by a more balanced customer portfolio, growth in our global accounts, improved network optimisation and careful cost management. Our employees furthered our mission through strict adherence to our commercial policy, a focus on serving business-to-business customers and consistent company-wide deployment of our uniform best practices. These strong results are a continuation of previous years’ results, which have seen solid high single digit revenue growth and continuous improvement in operating margin.

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. 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. With respect to our European network, we added our own airport connections to Brno (the Czech Republic) and Vigo (Spain) in March and September 2006, respectively, and added St. Petersburg, Ljubljana and Zagreb as new co-load airport connections. We further expanded our already dense network coverage by introducing a road connection to Morocco between Madrid and Casablanca. TNT is the first major express company to create an owned time definite road linehaul connection between Africa and Europe, and this complements the focus on further strengthening our networks by expanding into the emerging markets within and around Europe.

Express Rest of the World

The Express Rest of the World business 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. We are also building our position in Asia and have further improved service levels between Asia and Europe.

We have a more extensive express delivery road network in Europe than any of our competitors