The estimated amortisation expenses for the subsequent five years are 2005: €200 million, 2006: €182 million, 2007: €186 million, 2008: €155 million, 2009: €159 million and after 2009: €1,621 million.

GOODWILL

Additions in 2004 include €265 million (2003: 58) of goodwill arising from the acquisition of interests in newly acquired group companies and from extending our interests in group companies acquired in prior years. Our acquisitions in 2004 have generally centred around addressing our long-term strategic plans by, amongst others, the global freight forwarding operations and obtaining full control of some of our successful joint ventures. The acquisition of Wilson contributes to this strategy to offer 100% integrated supply chain management services.

The acquisition of Wilson Logistics Holding A.B., goodwill €236 million, amount paid €190 million

In August 2004, we completed the acquisition of the Swedish-based global freight management company Wilson from Nordic Capital following approval from the relevant competition authorities. The purchase price for Wilson includes €7 million of additional acquisition costs. We have financed the acquisition from cash reserves. The recognised goodwill of the acquisition of Wilson is €236 million.

The opening balance sheet of Wilson is summarised in the table below:

Openings balance sheet summary of newly acquired entity

Openings balance sheet summary of newly acquired entity

Company name	Wilson
Total fixed assets	19
Total current assets	114
Total assets	133
Shareholders' equity	(46)
Provisions	5
Longterm liabilities	56
Current liabilities	118
Total liabilities and equity	133
(in € millions)

In addition, the other acquisitions of €27 million, paid in cash, consist of amounts paid in respect of the additional shareholdings in previous acquisitions from prior years amounting to €17 million, and a number of smaller acquisitions with a combined purchase price of €10 million. Goodwill recognised on these transactions amounted to €29 million.

This calculation also includes the impact of amortisation and an imputed interest cost.

SOFTWARE Internally generated software included in the total software balance had a book value of €82 million at 31 December 2004 (2003: 68).

All software has a definite economic useful life and is amortised over its economic life.

PREPAYMENTS AND OTHER INTANGIBLE ASSETS Prepayments mainly relate to assets under construction (mainly

Historical cost refers to, amongst others, the then current value of the property, plant and equipment contributed by the former parent Royal PTT Nederland N.V. to our company upon incorporation on 1 January 1989. The calculation of the depreciation expense on these assets takes into account the useful life that had already elapsed at that date. The book value at 31 December 2004 of these assets contributed to our company on 1 January 1989 is €103 million (2003: 113), net of accumulated depreciation of €287 million (2003: 298).

Aircraft including spare parts are classified as other property, plant and equipment. Aircraft and (spare) engines are depreciated on a straight-line basis over their useful lives to estimated residual values of 20%. Depending on the type of aircraft, the useful life varies from 10 to 20 years. Spare parts are depreciated to their estimated residual value on a straight line basis over the remaining estimated useful life of the associated aircraft or engine type.

There are no existing contracts for leasehold and ground rents longer then 20 years or contracts with indefinite terms. Lease hold rights and ground rent for land and buildings are mainly in Belgium for €29 million, in France for €9 million, in Spain for €2 million and in the Netherlands for €8 million. In 2004 the annual amount paid for the lease hold rights and ground rent contracts was €2 million (2003: 3).

The property, plant and equipment of €48 million which are pledged as security to third parties are located in France for €14

There are no material capitalised borrowing costs in the capital expenditure of property, plant and equipment in 2004.

The book value of temporarily idle property, plant and equipment is €4 million on 31 December 2004. This relates mainly to land and buildings.
The gross carrying amount of fully depreciated property, plant and equipment that is still in use is €261 million of which €232 million is related to plant and equipment and €29 million is related to land and buildings. The carrying amount of property, plant and equipment retired from active use and held for disposal is €9 million.

The future minimum lease receivable sub-lease payments on noncancellable operating leases to third parties are:

Payment schedules sublet property, plant and quipment

shorter than 1 year	3
between 1 and 5 years	4
over 5 years	1
Total mimimum receivable sublet payments	8
(in € millions)

The impairment costs in 2004 are €11 million (2003: 10; 2002: 1). These costs are related to buildings of the express division in Australia and Germany (€7 million). Further, the mail division has incurred impairment costs of €4 million related to buildings (€2 million) and plant and equipment (€2 million).

0 3 FINANCIAL FIXED ASSETS : 656 MILLION (2003: 627)

The carrying values of our loans receivable from affiliated companies, other loans receivable, and prepayments and accrued income approximate their fair values.

note 9). The short term deferred tax assets of €40 million (2003: 37) are included in accounts receivables.

Included in the repayments of other loans receivable is the unwinding of a USD 435 million cross currency interest rate swap on which we received a repayment of €172 million, which had a carrying amount in December 2004 of €160 million before the transaction was unwound. The related interest income of €12 million is included in interest and similar income (see note 20).

We do not have any finance lease agreements where we are the lessor party, that transfers the right to use assets and transfers

The total inventory of €46 million (2003: 49) is valued at historical cost for an amount of €45 million (2003: 47) and valued at net realisable value for an amount of €1 million (2003: 2). Inventory is stated net of provisions for obsolete items amounting to €5 million (2003: 2).

Trade accounts receivable for services rendered and delivered goods have been included after deduction of a provision for doubtful receivables amounting to €90 million at 31 December 2004 (2003: 83).

The balance of the accounts receivable that is expected to be recovered after 12 months is €8 million.

0 7 CASH AND CASH EQUIVALENTS: 633 MILLION (2003: 470)

Cash and cash equivalents comprise cash at hand of €8 million (2003: 10), cash at bank and on deposit of €623 million (2003: 453), outstanding cheques of €1 million (2003: 6) and marketable securities of approximate €1 million (2003: 1). Included in cash and cash equivalents is €171 million (2003: 167) of restricted cash held and partially controlled by consolidated joint ventures.

0 8 GROUP EQUITY: 2,784 MILLION (2003: 2,986)

Group equity consists of shareholders’ equity of €2,765 million (2003: 2,969) and minority interest of €19 million (2003: 17). See notes (31) to (37) for the explanation of shareholders’ equity.

0 9 PROVISION FOR PENSION LIABILITIES: 870 MILLION (2003: 521)

We operate a number of pension plans around the world. Most of our non-Dutch pension plans are defined contribution plans. For our non-Dutch employees we also operate a limited number of defined benefit plans. The liabilities for these employees are separately covered by private insurers and foreign pension funds.

Two retirement plans are applicable to most Dutch employees. These two plans are the most significant pension plans of TPG:A pension plan and a conditional early retirement arrangement.

Our main Dutch company pension plan, which is externally funded in “Stichting Pensioenfonds TPG”, covers the employees who are subject to our collective labour agreement. The majority of all our Dutch employees are subject to the collective labour agreement. This pension plan and the corresponding early retirement plan have merged into a renewed pension plan from 1 January 2001. The plan covers some 90,000 participants including approximately 11,000 pensioners and some 26,000 former employees. By Dutch law the plan is carried out by a separate legal entity and is managed by an independent board that falls under the supervision of the Nederlandsche Bank (DNB).

The plan is a defined benefit average pay plan and our employees are eligible for a retirement pension at the age of 62.

Old age pension benefits are accrued on an annual basis of 2.25% of the pensionable base (pensionable salary minus a deductible). At age 62 part of the old age pension can be transferred into spouses’ pensions. Furthermore, a temporary old age pension of 2% of the deductible is accrued to cover the three years before the state pension commences. A transitional plan exists for employees in service at 31 December 2000 and who were 35 years or older at that date. For these employees we guarantee a benefit of at least 70% of the last qualifying salary from age 62 to 65. Employees who are 42 years or older at 31 December 2000 are also entitled to an additional transitional plan. These employees will retire at age 65 and are entitled to an early

	Actual asset mixat 31 December	Actual asset mixat 31 December
	2004	2003
Equities	44.9%	43.6%
Fixed interest	46.5%	46.9%
Real estate	8.6%	9.4%
Cash		0.1%
Total	100.0%	100.0%

 

Historical returns

	2004	10-year average	12-year average
Equities	10.6%	10.5%	10.8%
Fixed interest	7.7%	8.0%	7.8%
Real estate	6.8%	9.8%	10.0%

The assets of our major plan cover approximately 93% of our total pension assets and the liabilities described in the section above cover approximately 95% of our total pension liabilities.

PENSIONS COST

Inherent in the valuation of our pensions and the determination of our pension cost are key assumptions which include: employee turnover, mortality and retirement ages, discount rates, expected long-term returns on plan assets and future wage increases which are usually updated on an annual basis at the beginning of each fiscal year. Actual circumstances may vary from these assumptions giving rise to a different pension liability, which would be reflected as an additional profit or expense in our statement of income.

Changes in the related net periodic pension cost may occur in the future due to changes in the assumptions.In 2004, our net periodic pension cost was €128 million (2003: 43). This included termination benefit costs of €57 million and a pro rata part of the unrecognised settlement losses of €30 million.

The total cash contributions in 2004 were €437 (2003: 264) of which €200 million (2003:185) were regular premiums paid to various pension funds, payments of €95 million (2003: 79) were made for pensions which fall under our Dutch transitional plan and a cash payment of €142 million relating to the Personal Seniors Arrangement in the Netherlands. Total cash contributions in 2005 are expected to amount to approximately €296 million.

As stated in the table above, we have reached a situation in which The table below shows the sensitivity of the net periodic pension the accumulated benefit obligation exceeds the fair value of the cost to deviations in assumptions. plan assets as per 31 December 2004. SFAS 87 than requires to account for an additional minimum liability amounting to €654 Change in assumptions million (2003: 0). The reason for the increase in the accumulated benefit obligation compared to plan assets is mainly caused by the fact that the interest rate decreased from 5.5% in 2003 to 4.75% in 2004 (impact approximately €560 million) and the adjustment in turnover probabilities within the mail division (impact approximately €260 million). This increase could not be offset by the increase in our plan assets in 2004.

Full application of SFAS 87 requires us to recognise an additional minimum liability representing a net loss that under SFAS 87 is not yet to be recognised as net periodic pension cost, but is reported as a separate component (that is a reduction) of equity. We have deducted an amount of €454 million from our equity (net of tax). The accrued pension costs have increased with the minimum liability of €654 million and we accounted for a deferred tax asset amounting to €200 million. No intangible assets have been recognised (2003: 0).

0 10OTHER PROVISIONS : 149 MILLION (2003: 153)

Provisions relate to obligations and risks associated with our operations and liabilities related to termination of employment contracts.

We expect to make cash expenditures of approximately €17 million (2003: 27) from the restructuring provision, €8 million (2003:13) from the retirement schemes provision and €24 million (2003: 9) from other provisions in the coming year.

Provisions for restructuring deal primarily with restructuring projects for mail activities in the Netherlands, integration and restructuring projects within express and logistics. During the year approximately 2,462 (2003: 1,532) employees were made redundant through such reorganisations, as result of a combination of efficiency improvements and the impact of restructuring of the operations of our customers. Of the employees made redundant during the year, paid via the restructuring provisions 300 (2003: 358) related to mail, 704 (2003: 271) related to employees in express, and 1,458 (2003: 903) related to employees in logistics. Of the 2,462 positions

0 11 LONG-TERM DEBT: 1,440 MILLION (2003: 1,474)

The table below sets forth the amounts of the interest-bearing long-term liabilities maturing during each of the next five years and thereafter.

Long-term debt includes a €1 billion Eurobond, a drawing of €186 million on a Canadian dollar-denominated syndicate facility, a €129 million bilateral loan agreement bearing fixed interest of 2.54%, €86 million of finance lease obligations and €39 million of other long-term liabilities at fixed and variable rates.

On 5 December 2001, TPG N.V. issued a €1 billion Eurobond with an original maturity of seven years. The bond has a coupon of 5.125% and began paying interest annually in arrears on 5 December 2002. The bond is listed on the Euronext Amsterdam Exchange and is rated “A”, (stable outlook) by Standard & Poor’s Ratings Services and “A1”, (stable outlook) by Moody’s Investor Services Limited.

Other long-term loans include a €186 million (2003: 187) Canadian dollar denominated, syndicated facility that was signed in May 2001, at a rate of interest of 3 month Canadian LIBOR plus a margin of 0.325%.This facility has an original maturity of five years plus one day. At 31 December 2004, the rate of interest on this facility was 2.975%.

A bilateral loan agreement amounting to €129 million (2003: 129) has changed from an amortising loan maturing in year 2020 with fixed interest rate of 5.85% to a bullet loan maturing in 2006 with a fixed interest rate of 2.54%. Accordingly, the current

0 12 OTHER CURRENT LIABILITIES : 637 MILLION (2003: 540)

	At 31 December
	2004	2003
Short term bank debt	36	45
Income tax payable	130	18
Taxes and social security contributions	273	280
Current portion of long-term debts	15	24
Expenses to be paid	44	57
Other current liabilities	139	116
Total	637	540
(in € millions)

The balance that is expected to be settled after 12 months is €58 million.

0 14 COMMITMENTS AND CONTINGENCIES

(No corresponding financial statement number)

	At 31 December
	2004	2003
Commitments relating to:
operating guarantees	110	9
financial guarantees	240	254
rent and operating lease	1,675	1,679
capital expenditure	33	58
rerpurchase shares	259
purchases	84	100
(in € millions)

Of the total commitments indicated above, €593 million are of a short-term nature (2003: 631).

FINANCIAL AND OPERATING GUARANTEES

Total financial and operating guarantees provided by our company amounted to €350 million (2003: 263), of which €127 million (2003: 90) related to guarantees issued by our company to banks and other institutions and €164 million (2003: 94) related to corporate guarantees. These guarantees were issued in connection with the group’s obligations under lease contracts, custom duty deferment and local credit lines. The increase of corporate guarantees was mainly related to the mail division in the UK.

The €59 million (2003:17) of remaining guarantees in 2004 relates to bank guarantees issued locally by group companies.

RENT AND OPERATING LEASE CONTRACTS

In 2004 operational lease expenses (including rental) in the consolidated statements of income amounted to €606 million

These operating lease commitments relate to real estate for €1,459 million (2003: 1,436), transport equipment for €165 million (2003: 199) and computer equipment and other equipment for €51 million (2003: 44).

CAPITAL EXPENDITURE

Commitments in connection with capital expenditure are €33 million (2003: 58), of which € 25 million is related to property, plant and equipment and €8 million related to intangible assets. These commitments primarily related to projects within the operations of the mail division. These projects include sequence sorting (€15 million) and tray cart unloading (€9 million).

REPURCHASE OF SHARES

On 29 September 2004 we announced that the Dutch State sold a total of 77.7 million ordinary shares in our outstanding share capital, representing approximately 16% in our company. By the sale and transfer the State has reduced its ownership in our capital from 34.8% to 18.6%. We repurchased 20.7 million of the total amount of shares sold by the State. Transfer of the repurchased ordinary shares has taken place in two tranches. The first tranche of 7.6 million shares was transferred to us on 4 October 2004. The transfer of the remaining 13.1 million shares was completed on 5 January 2005 and repurchased for €259 million.

PURCHASE COMMITMENTS

At 31 December 2004 we had unconditional purchase commitments of €84 million (2003: 100) which were primarily related to various service and maintenance contracts. These contracts for service and maintenance relate primarily to information technology, security, salary registration, cleaning and aircrafts. A contract is made with our Post Offices joint venture business for specific postal services to customers until the end of 2005.

LEGAL PROCEEDINGS

(No corresponding financial statement number)

GENERAL Ordinary course litigation

We are involved in several legal proceedings relating to the normal conduct of our business. We do not expect any liability arising from any of these legal proceedings to have a material effect on our results of operations, liquidity, capital resources or financial position. We believe we have provided for all probable liabilities deriving from the normal course of business.

MAIL

OPTA PROCEEDINGS

Provision of information

Pursuant to the Dutch Postal Law, OPTA under certain conditions is authorised to make inquiries of TPG. In April 2003 OPTA asked us to provide certain documents in order to investigate whether we complied with the legal obligations applicable to TPG’s tariffs for letters in bulk used in separate contracts with major customers. We argued that the request for information was unclear and OPTA was not authorised to request such information. In a provisional court proceeding on 25 July 2003, the court did not decide whether or not OPTA was entitled to summon us to provide the information and referred the case to the judgement of the court in an action on the substance. On 1 December 2003 we lodged a formal court appeal against the subsequent administrative decision OPTA rendered on 15 October 2003, which appeal has been substantiated on 23 December 2003. On 23 February 2004 OPTA submitted its written defence.

OTHER PROCEEDINGS

Decision on tariff freeze

On 18 November 2002, the Ministry of Economic Affairs decided that tariffs controlled by the current price cap system should be frozen until the end of 2006. The Ministry of Economic Affairs indicated that in the event postal services became subject to value added tax between 1 January 2003 and 1 January 2007, a change of the frozen tariffs corresponding with the resulting tax burden would be allowed. On 19 June 2003, when the tariff freeze was discussed in parliament, the duration of the freeze was limited to 1 January 2005, awaiting the vision of the Minister on the future regulation of the postal sector. The Minister proposed in his PostalVision sent to Parliament on 1 April 2004 that the temporary tariff freeze would be extended until year-end 2006.

On 17 November 2003 we lodged an appeal against the administrative decision to freeze the tariffs. Following the grant of the formal appeal, the temporary tariff freeze decision was declared void in June 2004 and TPG Post remained allowed to amend the individual rates for mandatory postal services, subject to the provisions of the tariff control system. However, in view of the wider importance of the adoption of an integral and balanced vision for the postal market as submitted to Parliament, we announced our intention not to increase the

CREDIT FACILITIES

(No corresponding financial statement number) At 31 December 2004, our committed facilities with domestic and international banks amounted to €786 million (2003:787), of which €600 million remained undrawn. The undrawn committed facilities consisted of a five-year €600 million revolving, syndicated facility signed in October 2003, which supported our Euro Commercial Paper programme. In addition, at 31 December 2004, we had €474 million of uncommitted facilities, of which €438 million remained undrawn.

CONTRACTUAL CALL AND PUT OPTIONS

(No corresponding financial statement number) The main call and put options were the following:

Essent N.V. Put/Call options

On 15 July 2004 Royal TPG Post, a subsidiary of TPG, and Essent established a company named Cendris BSC Customer Contact in which the ordinary share capital, carrying equal voting rights, is split 51% and 49% respectively. Cendris BSC Customer Contact provides call centre ac