0 22 NET CASH PROVIDED BY OPERATING ACTIVITIES : 1,000 MILLION (2003: 937; 2002 : 1,032)

Net cash provided by operating activities was €1,000 million, which is 7% above last year (€937 million). Net income contributed €667 million or €1,200 million if corrected for the non-cash impact of depreciation, amortisation and impairments an increase of €189 million or 19% to last year (€1,011 million).

The change in deferred taxes of €82 million is a non-cash item that is primarily attributable to tax deductible pension payments in 2004 and utilisation of tax losses carried forward, partly offset by an adjustment to the net deferred tax position, due to the decrease of the Dutch statutory tax rate from 34.5% in 2004 to 31.5%, 30.5% and 30.0% in respectively 2005, 2006 and 2007 and further. This resulted into a reduction of our current income tax payable position included in working capital.

Our cash payments for pensions, which fall under the transitional plan of our Dutch collective labour agreement and are directly paid by TPG (see note 9 to our financial statements), amounted to €95 million (2003: 79). The remaining cash contribution of €142 million related to the Personal Seniors Arrangement.

Working capital decreased by €30 million in 2004 versus an increase of €26 million in 2003. Most of the decrease in 2004 relates to the trade receivable position that moved favourably by €77 million (2003:4). The net income tax receivable position of €32 million (2003, tax payable: 18) reflects total income tax payments in 2004 of €396 million compared to €288 million in 2003. Net Interest paid in 2004 amounted to €64 million compared to €84 million in 2003. Trade payables decreased the cash flow by €66 million and compared unfavourable with a decrease of €19 million in 2003. In 2004 both debtor days and creditors days decreased. The decrease in debtor days contributed to the decrease in working capital, whereas the decrease in creditor days slightly increased working capital. Other current assets moved unfavourably by €11 million (2003: 10) caused by an increase of prepayments and accrued income.

0 23 NET CASH USED IN INVESTING ACTIVITIES: (338) MILLION (2003: (373); 2002: (518))

In 2004 the total payments for acquisitions of group and affiliated companies amounted to €228 million (2003: 75), which was primarily attributable to the acquisition of Wilson (€190 million) in the logistics division. The payments of €190 million included the total acquisition price of €183 million and transaction costs of €7 million. We also made several smaller acquisitions, our mail division for an amount of €14 million (2003: 34), including the remaining shares of Höfinger and the establishment of the joint venture Cendris BSC Customer Contact and our express division for an amount of €2 million (2003: 4). In our logistics division, other acquisitions included Ventana and the remaining 60% shares of Overtrans in Italy and the remaining 50% of the shares of TNT Lojistik ve Dagitim Hizmetleri in Turkey for a total amount of €11 million (2003: 21). The funds we used for acquisitions of affiliated companies amounted to €11 million (2003: 16), primarily related to additional capital contributions to our affiliate Logispring of €10 million.

During 2004, we also disposed of some interests in group and affiliated companies with a rounded net book value of zero (2003: 8), the largest of which was TNT-DFDS Transport Logistics.

In 2004, capital expenditures on property, plant and equipment amounted to €290 million (2003: 287). Of this amount €75 million (2003: 82) related to mail, €140 million (2003: 124) to express, €69 million (2003: 77) to logistics and €6 million (2003: 4) to corporate. The capital expenditures on intangible assets of €67 million (2003: 67) mainly related to software (€62 million) and the remainder related to prepayments on intangible assets (€4 million), mostly relating to software, and licenses and concessions (€1 million).

In mail, the major capital expenditures related mostly to sorting equipment and information technology, needed among other reasons to support the introduction of sequence sorting. In express, capital expenditures included investments in depots, hubs and warehouses, and replacements and operational equipment including automated sorting systems. In logistics

head office for France in Lyon (€10 million), the replacement of trailers and tractor units in the UK (€7 million), depots in Stockholm (€6 million), Birmingham (€3 million) and Enfield (€3 million) and the first investments in the expansion of the Air hub in Liège (€4 million).

Capital expenditure on property, plant and equipment and other intangible assets by our logistics division totalled €82 million in 2004, which is comparable to the capital expenditures in 2003 (€83 million). The majority of the expenditures in property, plant and equipment relate to new business acquired and to other equipment dedicated to operate logistics contracts throughout the world.

The largest capital expenditures on property plant and equipment and other intangibles in the logistics division were concentrated in the United Kingdom (€18 million), followed by Central and Eastern Europe (€12 million), North America (€10 million), Italy (€13 million), Asia (€5 million) and South America (€4 million).

The €18 million invested in the United Kingdom was mainly spent on warehouses and equipment. In Central and Eastern Europe, €6 million was invested in warehouses and equipment to service the DaimlerChrysler contract in Germany. In the remainder of continental Europe, €33 million was invested in warehouses, new depots and automated warehouse racking, information technology and systems security engineering. In Italy, €13m was invested in warehouse equipment, information technology and systems security engineering. In Australia, €5 million was invested in warehouses and equipment for new and existing contracts, and in North America €10 million was spent on warehouses, information technology and equipment for renewals and new contracts. In Asia, €5 million was invested in warehouses and information technology. An amount of €4 million euro was spent on warehouses and equipment for new and existing contracts in South America.

During 2004, capital expenditures on other intangible assets totalled €13 million (2003: 6), primarily attributable to the acquisition and implementation of a JD Edwards system and warehouse management software in the United Kingdom and Italy Automotive and South America.

The net cash generated by other investing activities totalled to €200 million (2003: 2), which is an increase compared to 2003. This increase was for an amount of €160 million attributable to the settlement of a USD 435 million cross currency interest rate swap, which provided a hedge against USD denominated assets. The remaining €40 million, partly adjustments of non-cash movements in the net cash provided by operating activities, was the result of the combined effect of a decrease in long term prepayments and accrued income €25 million, changes relating to affiliated companies €8 million, changes in other securities for €1 million and the effect of minority interests for €6 million (2003: 4).