Press Release

TPG announces record results for first half of 2000

Publish Date : 4 September 2000 at 11:02 CET - TPG has announced a net income growth of 25.1% in the first half of 2000 compared with the same period last year. Excluding the profit on the sale of non-core business, the net income growth is 16.9%. The growth performance in the first half exceeds the previous outlook for the full year 2000 given by TPG (12.6%)

Operating revenues increased by 19.5% compared to the same period last year. EBIT increased by EUR 60 million (18.2%).

* The election period starts on 5 September 2000. The dividend is payable as of 2 October 2000.

Outlook 2000 On the basis of the excellent first half performance, the Board of Management has significantly upgraded its outlook for net income growth for the full year 2000. Excluding exchange rate movements, TPG expects to achieve underlying net income growth for the full year 2000 in line with the first half which, excluding the profit on the sale of non-core business, was 16.9%.

Longer term outlook The Board of Management has set internal targets to increase the net income growth for the next few years from the previous range of 10 - 15% to a range of 12 - 18% (excluding exchange rate movements and acquisitions).

Excellent first half year

"All businesses performed strongly in the first half of 2000" the Chairman and CEO of TPG, Ad Scheepbouwer, commented. "Mail continues to maintain its operating margins and has now restored a 95% weighted average next day delivery performance. Express has continued its strong improvement trend based on the principle of being the fastest and most reliable provider of Express delivery services with earnings from operations up 68% compared to last year. Logistics has grown significantly, fuelled by acquisition activity to support the aim of market leadership in its target sectors. A clear feature of the excellent half year performance is that we are delivering on the promises we have made to our shareholders."


TPG management has also today unveiled a new 5 year strategy. The cornerstone of the strategy is a value based management approach which is currently being implemented throughout the company. TPG's overall strategy consists of two main planks: strong business strategies in Mail, Express and Logistics and a comprehensive e-business strategy.

"Accelerating the creation of value in TPG is the objective of this bold new strategic approach", declared Ad Scheepbouwer. "The combination of aggressive business strategies and exciting e-business developments, driven by our managing for value culture, puts TPG on track to deliver significant enhancements in shareholder value. Through continued new business developments and value creating acquisitions, we are targetting to make TPG one of the leading business service companies in our peer group."

Key features of the strategy are:

Profitable expansion of European coverage in Mail Development of hybrid and electronic services in Mail Focus on service and margin improvements in Express Aim for global leadership in Logistics through targetted acquisitions Acceleration of e-business initiatives

Mail A revenue growth range of 6-8% is targetted through rapid international expansion in the wake of the anticipated liberalisation in European mail and through a focus on value added services.

The international expansion in Germany is on track. By the end of this year a coverage of around 45% of households will have been reached, related to unaddressed networks. The first tests with addressed mailshots will start at the end of September 2000. In Belgium our first addressed services nation-wide have been successfully launched. In Italy our position in addressed networks has been expanded via acquisitions in Padua and Florence.

Express Express will continue to deliver on its strategy to be the fastest and most reliable express company with a strong focus on customer satisfaction. The launch this week of a unique new Europe-wide round the clock on demand TNT Sameday service also consolidates our position as the fastest and most reliable European express delivery service provider. Operating margins are targetted to increase to 6% in 2001 with further improvements targetted in subsequent years.

Express is investigating the set up of a Domestic Express network in China with depots and hubs planned in over 95 cities. The aim of this ambitious move is to establish TNT as "The Express Company" in China.

Logistics Logistics aims to triple its 1999 revenues in the next three years primarily through acquisitions whilst maintaining its operating margins. The objective is to build critical mass in key territories and to focus on profitable market sectors. A key part of this is realised today with the announcement of TPG's acquisition of CTI Logistx, a US based company (see separate press release), which builds on the three acquisitions already made this year (Mendy Group, Schrader Group and Barlatier S.A.) and the joint venture with the Koç group in Turkey.

E-business TPG has announced the creation of a new Venture Group as the driving force behind its new e-business strategy.

A TPG Venture Group will be set up to provide the funding and support to enable the business divisions to develop e-revenue initiatives either from new opportunities or from traditional business. This will include availability of investment funds of up to EUR 100 million over the next few years.

This approach will enable TPG to build on the new e-revenue streams it has already launched, which include TNT Loop, WebCollect and I-Connections. TNT Loop has already entered into 8 pilot agreements with customers in the mobile telecommunications, automotive and consumer goods sectors and is on track for a full commercial launch in the fourth quarter.

In addition, the Mail business will start new E.D.P. (Electronic Document Presentment) and E.B.P.P. (Electronic Bill Presentment and Payment) services as a logical next step for extending its existing hybrid services.

Longer term outlook

The Board of Management has set internal targets to increase the net income growth for the next few years from the previous range of 10 - 15% to a range of 12 - 18% (excluding exchange rate movements and acquisitions and assuming a stable economic environment).

BUSINESS DEVELOPMENTS IN THE FIRST HALF OF 2000 MAIL Revenues in the Mail division increased by 3.4% in the first half of 2000. Two working days more compared to the first half of 1999 have had an estimated positive effect of 1%.

The total revenue for the Mail division is summarised as follows:

The growth of 3.4% is a result of underlying organic business growth of 2.6%, a net impact from acquisitions and disposals of 0.2% and a positive impact from foreign currency effects of 0.6%.

For further details please refer to the separate business lines below

Domestic Mail Domestic Mail includes collection, sorting, transport and distribution services for domestic mail, both in the Netherlands and within country borders abroad.

Underlying organic business growth in Domestic Mail was affected by a slight decline in volume compared to the same period last year, mainly as a result of a reduction in the frequency of bank statement mailings. Acquisitions (Padua and Florence in Italy) contributed 0.7% growth.

From 1 June 2000 the new Postal Act in the Netherlands reduced the scope of both the mandatory and the reserved postal services.

Direct Mail Direct Mail comprises all activities involving distribution of addressed mail and magazines, newspapers and periodicals and unaddressed advertising mail and newspapers within country borders. It also includes direct marketing initiatives and a number of database management and value-added direct marketing services.

Underlying organic business growth in Direct Mail was 4.4% mainly due to the good volume growth of printed matters and unaddressed mail in the Netherlands. The acquisition of GFW Austria in 1999 contributed 0.8% to growth in the business.

International Mail TPG operates its International Mail business around the world, providing services for collection, sorting and distribution of international mail, parcels and valuables across national borders.

International Mail operating revenues increased by 3.5%, despite business pressures in North America, mainly due to a positive impact from foreign exchange movements.

The new cross border global mail joint venture signed between TPG, Royal Mail and Singapore Post will contribute positively to the full year results.

Post Offices and Others

Revenues from the joint ventures Post Offices and Geldnet increased by 2.2%. The remaining growth arose from other items including profit on sale of fixed assets. The sale of Corporate Fashion Services decreased revenues by 9.3 %.

Mail: Earnings from Operations

The Mail division's earnings from operations increased by 4.3% or EUR 16 million to EUR 389 million. The overall operating margin remained stable at 21%. Next day delivery weighted average quality of on time delivery performance in June 2000 reached 95% and is on line to reach the target for December 2000 of 95.5%.

EXPRESS Express revenues increased by 26.6% in the first half of 2000.

Total revenues in Express are summarised as follows:

Underlying organic business growth was 11.9%. Acquisitions contributed a further 10.0%. There was an overall positive impact from foreign exchange movements of 4.7% mainly due to the weaker euro during the period.

For further details please refer to the separate business lines below.

Express Europe

Express Europe's underlying organic business growth was 12.9%. The 1999 first half year acquisitions, (Jet Services and NVS) accounted for 8.2% growth. Foreign exchange effects provided a positive 3.0% growth. Significant revenue growth was achieved in Scandinavia, Eastern Europe and Turkey. Underlying business growth of more than 12% was achieved in the UK, France, Germany and Italy.

Express International

Outside Europe, underlying organic business growth was 7.1 %. The acquisition of Ansett Air Freight in the second half of 1999 contributed a growth of 17.9% and foreign exchange effects added a further 12.2%.

Express: Earnings from Operations

Express earnings from operations increased by 68% or EUR 34 million to EUR 84 million continuing the strong performance improvement trend experienced in the second half of 1999. The operating margin in the first half of 2000 was 4.2% compared to 3.2% of sales in the first half of 1999.

LOGISTICS Revenues in the Logistics division increased by 39.6 % in the first half of 2000.

Total revenue in Logistics is summarised as follows:

A significant contribution to the increase in revenue is from the full period impact of the 1999 acquisition of Tecnologistica and the acquisitions of Mendy and Convoi in the first half of 2000. Organic growth was 9.1%. There was a positive impact from foreign exchange movements of 5.9%.

Logistics: Earnings from Operations

The earnings from operations of the Logistics division increased by 12.5 % or EUR 5 million to EUR 45 million.

The operating margin of 5.0 % (compared to 6.2% in the first half of 1999) was impacted by the fact that Tecnologistica (acquired in June 1999) is still diluting the overall profitability of the division as a result of price pressure in some sectors, particularly the automotive industry. Nevertheless the underlying margin improvements of Tecnologistica are on track to realise the improvements set out at the time of acquisition.

ADDITIONAL INFORMATION Employees In the first half of 2000 the average number of full time employees increased from 89,641 to 91,155. The increase in full time employees is mainly attributable to acquisitions of businesses made in 1999 and 2000.

Dividend Policy TPG intends to pay a stable dividend of NLG 0.80 per ordinary share. In line with the investment and expansion strategy of the business, the intended stable dividend of NLG 0.80 per ordinary share is expected to result in a pay-out ratio of 30 to 35%. This dividend policy will be pursued subject to the financial results of TPG and is subject to annual review.

Board of Management Mr Harry Koorstra was appointed to the Board of Management on 1st July 2000 as Group Managing Director of Mail following the retirement of Mr Bert van Doorn.

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995

Certain information contained in this press release is forward looking. By their nature, forward- looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. In addition, to the assumptions specifically mentioned in the above paragraphs, there are a number of other factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, the actual effects of recent and future levels of spending in major economies, level of marketing and promotional expenditure, actions of competitors and joint venture partners, employee costs, future exchange and interest rates, changes in tax rates, uncertainties associated with future business combinations or dispositions. Continuing investments in infrastructure (airplanes, depots and trucks) is important to maintain and increase market share. Infrastructure investment requires substantial lead time and involves significant fixed costs. Any mismatch between investments in infrastructure and actual market growth (or increase in TPG's market share) could result in costly excess capacity (if investment is too great) or losses of market share (if investment is insufficient).

Page publication date: 4 September 2000 at 11:02 CET