In 2004 the Supervisory Board met eight times with the Board of Management. Five of these meetings were preceded by meetings of the Supervisory Board with the CEO. There was no frequent absence of any member of the Supervisory Board.

Considerable time was devoted to our strategic plan, the divisional strategies, the TPG-1 programme and plans with regard to moving our business in China forward. The Supervisory Board discussed with the Board of Management our objectives, strategy, associated risks and mechanisms for controlling financial risks. Our plans for corporate sustainability were discussed, as was our partnership with the United Nations World Food Programme.

Early in 2004, the Supervisory Board completed a thorough review of our corporate governance, which took place in view of the developments and changed laws and regulations in the United States, the Netherlands and Europe. New bylaws and terms of reference for the Supervisory Board, the Board of Management and various committees were approved as was a whistleblower procedure. The Supervisory Board approved a proposal for the remuneration policy for the Board of Management, which was adopted by our annual general meeting of shareholders held on 7 April 2004.

In February 2004, our audit committee, on behalf of the Supervisory Board, conducted an independent investigation regarding representations made to the UK Inland Revenue and to our external auditors, PricewaterhouseCoopers Accountants N.V., with respect to certain UK tax matters originally arising in the late 1990s relating to one of our UK subsidiaries. In addition to this investigation, our audit committee, with the assistance of independent tax advisors, conducted a review of other UK tax matters that arose from the same period. The investigations conducted by our audit committee, with the assistance of independent legal counsel, concluded that not all relevant details in connection with these tax matters were adequately disclosed to the UK Inland Revenue and PricewaterhouseCoopers. The Supervisory Board discussed the outcome of the investigations and approved proposed remedial actions such as a review of the tax, finance and legal functions. Since April 2004 the Supervisory Board has regularly been updated about the status of the implementation of the remedial actions and our ongoing discussions with the UK Inland Revenue.

In March 2004, the Supervisory Board met to adopt our 2003 annual results and approved the dividend for 2003. This meeting was attended by our auditors, PricewaterhouseCoopers. In April 2004 the Supervisory Board approved the 2004 first quarter results. In August 2004 the Supervisory Board approved the 2004 half-year results and interim dividend and in October 2004 the third quarter results. In its December meeting the Supervisory Board approved the budget for 2005.

During 2004, the Supervisory Board discussed with the Board of Management growth initiatives. The Supervisory Board approved the acquisition of the freight management company Wilson and a proposal to purchase of a 25% stake in Post Denmark. The Supervisory Board approved a request by the express division for capital expenditure to expand the express hub in Liège. The Supervisory Board was updated by the Board of Management on a regular basis about the progress of the turnaround in our logistic division.

The public affairs committee met once by telephone conference and discussed regulatory issues.

At the time of our annual general meeting of shareholders on 7 April 2005 Mr Tabaksblat and Mr Hommen will reach the end of their tenure. Mr Hommen is available for re-appointment; Mr Tabaksblat has indicated that he is not available for re-appointment, for personal reasons.

As previously mentioned, during 2004 the nominations committee on behalf of the Supervisory Board searched for a successor of Mr Bernabè. Two suitable candidates were found. The Central Works Council decided to nominate Mrs Giovanna Monnas as its candidate for appointment to the Supervisory Board. The Central Works Council also indicated that it considers Messrs Halberstadt and Kok as members of the Supervisory Board proposed by it. In view of its increased responsibilities and workload, the Supervisory Board decided to also nominate Mr Shemaya Levy for appointment to the Supervisory Board. The Supervisory Board therefore nominates the following persons for appointment by the annual general meeting of shareholders to the Supervisory Board under the condition that the annual general meeting of shareholders does not propose other candidates:

Mr J.H.M. Hommen, for a term of 4 years; Mr S. Levy, for a term of 4 years; and Mrs G. Monnas, for a term of 4 years.

All these candidates have the support of the Central Works Council.

Data as mentioned in article 2:142 (3) of the Dutch Civil Code can be found in the enclosed agenda for the annual general meeting of shareholders. In addition, each Supervisory Board member’s year of birth, current and former positions, number of shares held and other supervisory board memberships are presented below. Also listed are the date and term of first appointment, current term of office and memberships of Supervisory Board committees.

Independence of members of the Supervisory Board

• has been a employee or member of the Board of Management of our company;
• receives personal financial compensation from our company or an associated company other than the compensation received as Supervisory Board member;
• has had an important business relationship with our company or a company associated with it, in the year prior to the appointment;
• is a member of the management board of a company in which a member of the Board of Management is a Supervisory Board member;
• holds at least 10% of the shares in our company;