TNT says it finds evidence of illegal acts in tax

TNT NV, Europe's second-biggest express-package delivery company, said it has found evidence past tax transactions were handled illegally, sending the shares down as much as 8.1 percent, the most in four years.

The company, based in the Dutch city of Hoofddorp, is probing tax matters in the U.K. as well as the tax position of some non- U.K. subsidiaries, TNT said a statement on its Web site. TNT spokeswoman Daphne Andriesse declined to give further details.

TNT, which employs 161,000 people and delivers packages around the world, in March last year took a charge of 59 million euros ($72 million) for underestimating U.K. tax liabilities. TNT may face tax claims of as much as 400 million euros, including interest and possible fines, Dutch daily De Telegraaf reported, without saying where it got the information.

“We are surprised by the scope of any additional tax claims and the mentioning of illegal acts,'' said Ralf Jacobs and Richard Brakenhoff, analysts at Rabobank Groep in Amsterdam, who cut their rating on TNT today to “neutral'' from “outperform.''

The shares fell as much as 1.79 euros to 19.55 euros and were down 7.9 percent at 10:15 a.m. in Amsterdam, trimming the company's market value to 9.03 billion euros.

The company plans a report on the current investigation by yearend, said Andriesse.

“We hope to get back to the market before the end of the year,'' Andriesse said in a telephone interview. “It's too early to determine what the impact will be.''

Tax Probe

TNT named Karel Kooijman to lead the investigation into the tax matters. Kooijman was head of the tax department at Royal Dutch Shell Group Plc until he retired in 2000.

The resignation of Chief Financial Officer Jan Haars on Sept. 19 is unrelated to the tax investigation, Andriesse said..

The company, which operates the Dutch postal service and changed its name from TPG in April, is expanding its fright management unit to compensate for slowing growth in its domestic mail business. TNT had a profit of 210 million euros in the second quarter.

TNT Press Release: Independent tax investigations initiated
22 September 2005

As previously disclosed, we are preparing an addendum to our report, submitted in August 2004, to the UK Inland Revenue, that will cover other UK tax matters not addressed in the original report and are separately investigating the tax position of certain non-UK subsidiaries. As also disclosed previously, the outcome of these investigations may have a material impact on TNT's results and financial position. The investigations have revealed the likelihood of illegal acts relating to certain past tax matters. On behalf of TNT's Supervisory Board, its Audit Committee has taken responsibility for overseeing these investigations and will retain an independent law firm to assist it in conducting a full, independent investigation.

TNT has appointed Mr. Karel Kooijman to coordinate these investigations and to report directly to its Audit Committee. Mr. Kooijman retired in 2000 as the head of the tax department of the Royal Dutch Shell Group. Subsequently, until 2003, Mr. Kooijman acted as part-time special counsel to the Director-General for Tax Policy and Legislation of the Ministry of Finance of the Netherlands.

For further information, please contact:

Mike Richardson
Director Investor Relations
Phone: + 31 20 500 6241
Fax: +31 20 500 7515
Email: [email protected]

Daphne Andriesse
Senior Press Officer TNT Group Media Relations
Tel: + 31 20 500 6224
Mobile: +31 6 109 187 90
E-mail: [email protected]