Information on our share capital and shares

Share capital and shares
TNT’s authorised share capital is divided into 1,600,000,000 shares of €0.48 each and consists of 800,000,000 ordinary shares and 800,000,000 preference shares B. On 31 December 2007, 379,224,255 ordinary shares were issued and outstanding and no preference shares B were issued and outstanding.

Repurchase of shares/share buy-back programmes

The reduction of the issued share capital to its current amount was effected on respectively 5 July 2007 following completion in February 2007 of the €1,000 million share buy-back programme announced on 6 November 2006 and on 29 November 2007 following the completion in September 2007 of the €400 million share buy-back programme announced on 26 February 2007.

On 30 July 2007, a new share buy-back programme of up to €500 million was announced. A first tranche of €200 million was commenced 9 November 2007 and was completed on 4 January 2008. A further tranche of €100 million was started on 7 January 2008 and is expected to be completed by February 2008. The remaining €200 million is expected to be completed by mid 2008. A proposal to cancel the shares repurchased under this new share buy-back programme will be part of the agenda of the annual general meeting of shareholders in April 2008.

Equity: 1,951 million (2006: 2,008)

Equity consists of equity attributable to the equity holders of the parent of €1,931 million (2006: 1,983) and minority interest of €20 million (2006: 25). Equity attributable to the holders of the parent consists of the following items:

Issued Share Capital

Issued share capital amounted to €182 million at 31 December 2007 (2006: 203). The number of authorised, issued and outstanding shares by class of share is as follows:

Authorised share capital

By deed of 27 April 2007 the articles of association were amended. As of that date the company’s authorised share capital amounts to €768 million, divided into 800,000,000 ordinary shares and 800,000,000 preference shares B of €0.48 nominal value each. Prior to the amendment, the authorised share capital amounted to €864 million and was divided into 900,000,000 ordinary shares, 1 special share and 899,999,999 preference shares B of €0.48 nominal value each.

Form of shares

The ordinary shares are in bearer or in registered form. Ordinary shares in bearer form are represented by a global note held by the Dutch clearing system Euroclear Netherlands (formerly known as NECIGEF) and are transferable through Euroclear Netherlands’ book entry system. ADRs represent ordinary shares in bearer form represented by the note held by Euroclear Netherlands. Ordinary shares in registered form are transferred by means of a deed of transfer and TNT’s written acknowledgement of the transfer. TNT does not have share certi?cates for ordinary shares represented by the global note. The preference shares B are in registered form.

Repurchase of shares to cover share plans

In 2007, the company purchased no ordinary shares (2006: 2.700.000) to cover its obligations under the existing management option plans and share grants. At 31 December 2007 the total number of shares held for this purpose was 1,716,060 (2006: 2,884,441). TNT shares held by the company are not entitled to receive dividends nor have voting rights.

Repurchase of shares / reduction of the issued share capital by cancellation of shares

Under the €1,000 million share buy-back programme announced on 6 November 2006, TNT purchased 27,640,543 ordinary shares in 2006 and 3,307,164 ordinary shares in January 2007. On 20 April 2007 the annual general meeting of shareholders resolved to cancel the total number of 30,947,707 ordinary shares purchased under this programme. The cancellation of these shares became effective as of 5 July 2007.

The company announced a further buy-back programme of €400 million on 26 February 2007. In total 12,595,639 ordinary shares were repurchased under this programme during 2007. The annual general meeting of shareholders held on 20 April 2007 had also resolved to cancel the shares purchased under this programme, and the cancellation of these shares became effective on 29 November 2007.

In 2007, the total number of issued and outstanding ordinary shares decreased by 43,543,346. At a nominal value of €0.48 per share, the cancellation equals an amount of €20.9 million.
On 30 July 2007 TNT announced a new share repurchase programme of up to €500 million. A first tranche of €200 million was commenced on 9 November 2007. As a result of these repurchases, the company held 6,977,275 ordinary shares for cancellation at 31 December 2007 (2006: 27,640,543).

Special share

On 17 November 2006, the State of the Netherlands transferred its special share in the company for free to TNT. On 20 April 2007 the annual general meeting of shareholders resolved to convert the special share into an ordinary share as part of an amendment to the articles of association of TNT. As a result the special share ceased to exist on 27 April 2007, the date on which the amendment to the articles became effective.

Preference shares

Stichting Bescherming TNT (Foundation Protection TNT or the Foundation) was formed to care for TNT’s interests, the enterprises connected with TNT and all interested parties, such as shareholders and employees, by, among other things, preventing as much as possible in?uences which would threaten TNT’s continuity, independence and identity contrary to such interests. The Foundation is an independent legal entity and is not owned or controlled by any other legal person.

TNT’s articles of association provide for protective preference shares B that can be issued to the Foundation to serve these interests. There are currently no preference shares B issued, although the Foundation has a call option to acquire a number of preference shares B not exceeding the total issued amount of shares minus one and minus any shares already issued to the Foundation.

TNT and the Foundation have entered into the call option agreement to prevent, delay or complicate unsolicited influence of shareholders, including an unsolicited take-over or concentration of power. The issue of preference shares B enables TNT to consider its position in the then-existing circumstances. The preference shares B will be outstanding no longer than strictly necessary. Once the reason for the placing of the preference shares B no longer exists, TNT shall propose to the general meeting of shareholders to cancel the preference shares B entirely as a class.

At the annual general meeting of shareholders held on 20 April 2007, the shareholders rejected the proposal to extend the then-current authority of the Board of Management to issue preference shares B for another period of eighteen months. This authority enabled the Board of Management to initiate a placement of preference shares B with the Foundation following the put option agreement. As from 20 October 2007 the Board of Management was no longer entitled to initiate such placement. After careful consideration, it was agreed by TNT and the Foundation to terminate the put option agreement as of 15 February 2008.

TNT has granted to the Foundation the right to file an application for an inquiry into the policy and conduct of business of TNT with the Enterprise Chamber of the Amsterdam Court of Appeal (Ondernemingskamer). TNT believes that this may be a useful option in the period before the issuance of preference shares B, without causing a dilution of the rights of other shareholders at that stage.

Additional paid in capital

Additional paid in capital of €982 million (2006: 1,245) is exempt for Dutch tax purposes.

Translation reserve

In 2007 the cumulative translation reserve decreased from -€5 million in 2006 to -€82 million in 2007. An amount of -€81 million (2006: -1) is the movement in exchange differences on converting foreign subsidiaries of TNT N.V. into euros. These differences are charged or credited to the translation reserve, net of taxation. In 2007, an amount of €4 million was released from equity and charged to income related to the divestment of the freight management business. In 2006 the portion of TNT’s translation reserve that related to the divested logistics business was released from equity and charged to income.

The translation reserve is a legal reserve, which cannot be distributed to the equity holders of the company.

Hedge reserves

Movements on cash ?ow hedges amounted to -€1 million (2006:-9) resulting from the fair value movement on the €1,000 million forward starting swaps and the US$441 million of forward starting interest swaps, net of taxes. The net cash payments relating to the unwinding of these swaps will be recycled from equity to the income statement based on the duration of the underlying hedged items. During 2007, €600 million and $154 million of forward starting swaps were unwound with a relating recycling of the recorded fair value adjustment to the income statement. In 2007, €1 million of fair value adjustment has been recycled to the income statement due to ineffective hedging. For further information on the interest rate swaps, see note 31.

The hedge reserve is a legal reserve, which cannot be distributed to the equity holders of the company.

Other Reserves

The other reserves are nil (2006: 0).

The appropriation of net income from 2006 which is added to the other reserves in 2007 amounts to €378 million (2006: 386).

In 2007, TNT increased its other reserves representing the fair value of share based transactions to an amount of €14 million (2006: 13).

The “other” movement of €31 million (2006: 54) includes the proceeds obtained from the share grants of 2007 and 2006 and exercise rights of option plans of prior years.

Retained earnings

The pro?t for 2007 has been calculated as the 2007 net income of TNT N.V. and all its subsidiaries. The 2007 unappropriated component is €871 million (2006: 561), containing the net pro?t of €986 million (2006: 670) and the paid interim dividend 2007 of €115 million (2006: 109). The Board of Management has determined to add €670 million (2006: 378) to other reserves and to put €201 million (2006: 183) as ?nal dividend at the disposal of the general meeting of shareholders.

Ability of the company to acquire its own shares

In order to execute share buy-back programmes as described in chapter 9, TNT must be allowed to acquire its own shares. Under Dutch law and its articles of association, TNT may acquire its own shares, provided that they are fully paid-up. If such shares are acquired for consideration, the following conditions apply:

• TNT’s shareholders’ equity less the purchase price may not fall below the sum of the paid-up capital and any reserves required to be maintained by Dutch law or pursuant to the articles of association, and
• following the share acquisition, TNT may not hold shares with an aggregate nominal value exceeding one-tenth of its issued share capital.

The acquisition of shares in its capital may be effected by a resolution of the Board of Management, which resolution is subject to the approval of the Supervisory Board.
In addition to the above, the Board of Management requires prior authorisation by the general meeting of shareholders to acquire shares in the company for consideration. This authorisation may be valid for a period of no more than 18 months from the date of the meeting and must specify:

• the number of shares that may be acquired,
• the manner in which shares may be acquired, and
• the price limits within which shares may be acquired.

On 20 April 2007, the annual general meeting of shareholders extended the then-current authority of the Board of Management for another period of eighteen months to end on 20 October 2008.
Authorisation by the general meeting of shareholders is not required if TNT’s own shares are acquired for the purpose of transferring those shares to TNT employees pursuant to any arrangements applicable to such employees.

Reduction of issued share capital in general

Cancellation of shares following a repurchase is one of the ways to reduce the issued share capital. TNT’s issued share capital may also be reduced by way of a reduction of the nominal value of its shares by amendment of TNT’s articles of association. The general meeting of shareholders is the body competent to resolve to reduce TNT’s issued share capital. Pursuant to TNT’s articles of association, such resolution may be taken only upon a proposal of the Board of Management that has been approved by the Supervisory Board. The latter requirement is more stringent than is required by Dutch law.

Increase of issued share capital by issuance of shares/pre-emptive rights

TNT’s Board of Management has been designated as the body competent to resolve to issue shares in TNT and to grant rights to subscribe for ordinary shares, including options and warrants. Pursuant to TNT’s current articles of association, such resolution is subject to the approval of the Supervisory Board. The scope and duration of this authority of the Board of Management is determined by the general meeting of shareholders. Under TNT’s articles of association the scope relates at most to all shares in its authorised share capital that have not been issued. The duration of the authority shall be for a period of five years at most.

On 20 April 2007, the annual general meeting of shareholders extended the then-current authority of the Board of Management to issue ordinary shares for another period of eighteen months to end on 20 October 2008. Ordinary shares up to a maximum of 10% of the issued share capital may be issued by resolution of the Board of Management. An additional 10% of the issued share capital may be issued that way when a share issue takes place in relation to a merger or acquisition. The authority of the Board of Management to issue preference shares B was not extended and has meanwhile lapsed. See also below under “Foundation Protection TNT and preference shares B”.

Extension of the term of designation of the Board of Management as the body competent to issue shares may also be effected by amending TNT’s articles of association to that effect. If no extension is given, the issue of shares or granting of rights to subscribe for ordinary shares requires a resolution of the general meeting of shareholders. Such resolution may only be taken upon a proposal of the Board of Management, which proposal requires approval of the Supervisory Board.

In principle, each holder of ordinary shares has a pre-emptive right to any issue of ordinary shares or the granting of rights to subscribe for these shares. Holders of American Depositary Receipts do not qualify as holders of ordinary shares in this respect. Pursuant to TNT’s articles of association shareholders’ pre-emptive rights may be restricted or excluded by a resolution of the Board of Management, provided and as long as the Board of Management has been designated as the body competent to resolve to issue shares. Such resolution is subject to the approval of the Supervisory Board. Pursuant to TNT’s articles of association the provisions with respect to the scope and duration of the authority to issue shares and grant rights to subscribe for ordinary shares are also applicable to the scope and duration of the authority to exclude or restrict pre-emptive rights.