Shareholders are developing a critical view with regard to the social responsibility of companies in which they invest. This development will continue as an increasing number of successful companies demand social responsibility guarantees from their suppliers and partners. Major clients are now producing their own social responsibility reports and will expect other companies to do the same: not merely to produce reports, but to act according to their own social responsibility standards. Social responsibility and long-term reliability go hand-in-hand and are at the very heart of continuity.
We publish our social responsibility report at the same time as our annual report. Furthermore, we obtain external assurance on all data, apart from our major acquisitions, in our social responsibility report prior to publication. This supports our claim for credibility, delivers accountability and benefits shareholders as concurrent publication allows them to ask questions at the annual general meeting of shareholders.
Social responsibility’s economic dimension concerns our impact on our stakeholders’ economic circumstances and on local, national and global economic systems. For a detailed overview of our financial indicators, please refer to our 2007 annual report. These financial indicators focus primarily on informing our shareholders on profitability. In contrast, certain economic indicators in this report focus more on the manner in which we affect the stakeholders with whom TNT has a direct and indirect economic interaction. This includes suppliers, external staff, providers of capital and the manner in which we reinvest our earnings in our company.
Economic value generated and distributed
Looking at our 2007 performance, we can conclude that 2007 was a good year, with favourable developments in most of our activities and overall a realisation of our result expectations. Profit from continuing operations came in at €783 million after taking a €110 million provision for part of the restructuring in Mail Netherlands this coming years corrected for the impact of these costs the underlying profit from continuing operations grew by a healthy 4.5%. Profit attributable to the shareholders came in at a record level, aided by a book gain on the sale of our Freight Management business.
| Economic value retained1 | GRI indicator: EC 1 | ||
| (in € million) | 2005 | 2006 | 2007 |
| Direct economic value generated | |||
| Revenues | 9,329 | 10,060 | 11,017 |
| Economic value distributed | |||
| Operating costs | 8,219 | 8,849 | 9,900 |
| Salary costs | 3,318 | 3,384 | 3,608 |
| In/(de)crease in retained earnings2 | 186 | (1,087) | 309 |
| Interest on borrowings2 | 117 | 246 | 191 |
| Dividends on all classes of shares | 268 | 282 | 298 |
| Income taxes paid2 | 125 | 282 | 492 |
| Community investments3 | 9 | 8 | 10 |
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In 2007 the costs for subcontractors and other work contracted-out excluding rent and lease expenses and external temporary staff was €4,173 million in comparison to €3,589 million in 2006 and €3,049 million in 2005.
Shareholder value
TNT aims to be the company that creates the most value in its industry. Our main measure in this regard is total shareholder return.
TNT’s 2007 share price performance followed the trend of our peers and sector. The impact of the credit crisis and resulting fear of a recession caused our share price to lose 14% during 2007. Since the start of our Focus on Networks strategy in December 2005, our total shareholder return was 18.5%, compared with an average of 13.5% for our peers.
Since December 2005, we have been repurchasing shares, contributing to increased earnings per share. In 2006, we repurchased more than 58 million of our own shares and in 2007 almost 23 million. Our policy is to cancel all repurchased shares.
We have announced our intention to increase the dividend pay-out from around 35% of normalised net income to around 40% by 2010. This move fits with the strength of our cash flow and continues the pattern of our dividend payments over the past years. In 2007, our dividend per share increased by 16.4%.
The extended section of the 2007 bar relates to discontinued operations.
