NEOPOST - 2018 Registration document

R E G I S T R AT I ON DO C UM E N T 2 0 1 8

INCLUDING THE ANNUAL FINANCIAL REPORT

Index 1

5 Non-financial performance statement 79 Social, societal and environmental information 80 Independent verifier’s report on the

Neopost group activity 5 Key figures 6 Activities 8 Strategy 10 Organizational structure 13 History 15

Statement on non-financial performance information presented in the management report

105

2 Corporate governance report

6

17

Financial statements 109 Consolidated financial statements 110 Statutory auditors’ report on the consolidated financial statements 171 Analysis of Neopost S.A.’s annual results 176 Neopost S.A. statements of financial position 179 Statutory auditors’ report on the financial statements 206

Board of directors

18 30

Committees

Management team 35 Remuneration of managers and directors 35 Regulated agreements 47 Summary table of the Extraordinary General Meeting delegations to the Board of directors 49 Information that could have an impact in the event of a takeover bid or exchange offer 50

7 Information on Neopost and its share capital

211

Practical information for attending the General Meeting

50

Neopost share capital

212 214

Special report of the Statutory Auditors on regulated agreements and commitments 52

Neopost shares

8

3

Additional information 217 General information 218 Recent events 219 Officer responsible for the registration document and Auditors 219 Statements by officer 220 Fees paid to the statutory auditors and members of their networks 221 Information policy 221 Publication of information 222 Concordance tables 226

Management report

55

Review of the Neopost group’s financial position and results in 2018

56 61

Ownership structure

Indications related to “Back to Growth” strategy and implications for 2019

63

4 Risk factors and internal control

65

Risk factors

66

Internal control and internal audit procedures

74

Registration document 2018

This registration document was presented to the Autorité des Marchés Financiers on 29 April 2019, inaccordance with article 212-13 of the AMF’s general regulations. It may be used to support financial transactions if accompanied by an information statement certified by the AMF. This document was made out by the Company and commits its signatories.

The following information is included for reference in this document in accordance with article 28 of European Commission regulation EC 809/2004:

The corresponding consolidated financial statements, annual accounts and Auditors’ report may be found on pages 85 to 180 of the registration document for year ending 31 January 2018 registered with the AMF on 27 April 2018, number D.18-0444. The corresponding consolidated financial statements, annual accounts and Auditors’ report may be found on pages 85 to 180 of the registration document for year ending 31 January 2017 registered with the AMF on 27 April 2017, number D.17-0451.

The management reports for 31 January 2018 and 31 January 2017 may be found on pages 47 to 66 and 47 to 58 of registration documents D.18-0444 and D.17-0451.

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NEOPOST GROUP ACTIVITY

Key figures

6

Organizational structure

13

Head office 13 Research and development centers 13 Production centers 13 Distribution 13 Investments 14

Activities

8 8 8 9

Enterprise Digital Solutions

Neopost Shipping

SME Solutions

History

15

Strategy

10 10 10 11 12 12 12 12

Refocus on Major Operations Specific ambitions for each major solutions Optimize Additional Operations

Streamline operations

Capital allocation

Shareholder return policy

Mid-term guidance

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Neopost group activity

Key figures

Key figures

Sales

Current operating margin (1)

Net margin

18.2%

8.4%

+ 0.2%

organically compared to 2017

of sales

of sales

Sales in 2018 came to 1,092 million euros, down (1.8)% compared with 2017, and up 0.1% at constant exchange rates. Organic growth was 0.2%. 2018 current operating margin before acquisition-related expense was 18.2% of sales, stable versus 2017 in particular thanks to the icon Systemhaus’ earn-out reversal, amounting to €7.5 million. Excluding the earn-out reversal, the current operating margin stood at 17.6% of sales. (1)

As part of its new strategy “Back to Growth”, presented in January 2019, the Group decided to set its annual pay-out ratio at a minimum of 20% of the Group attributable net income with the minimum annual dividend set at an absolute floor of 0.50 euro per share. 2018 dividend for an amount of 0.53 euro per share, will be paid in cash and in one instalment, on 6 August 2019, subject to approval by the Ordinary General Meeting of shareholders to be held on 28 June 2019.

12% Enterprise Digital Solutions 5% Neopost Shipping

Sales by division

The Enterprise Digital Solutions division posted a +10.1% increase in sales at constant exchange rates. Restated for scope effects of the divestment of DMTI Spatial in July 2017, sales increase 11.6% organically. Sales of the Neopost Shipping division increased organically by +16.6%. Sales of the SME division were down organically by (2.1)%.

2018

83% SME Solutions

Sales by region

In North America, sales stood at 498 million euros, up 1.2% organically. In Europe, sales decreased organically by (0.3)%, to reach 529 million euros. Sales in Asia-Pacific went down by (2.5)% organically and came at 86 million euros.

8% Rest of the world

48% Europe

44% North America

2018

Current operating margin before acquisition-related expenses = current operating income before acquisition-related expense/sales. (1)

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Neopost group activity

Key figures

Current operating income (1) (In million euros)

The current operating income (1) came out at 199 million euros in 2018 from 202 million euros in 2017. Current operating margin (1) was 18.2% of sales stable versus 2017. Excluding icon Systemhaus' earn-out reversal, the current operating margin stood at 17.6% of sales. The EDS division posted an increase in its current operating margin while Neopost Shipping margin was down and SME Solutions' was almost stable. The net cost of debt amounted to (31) million euros from (32) million euros in 2017. The average tax rate came to 29.0% in 2018, compared to 0.6% one year earlier. In 2017, the Group benefitted from non-recurring items (booking of the repayment of taxes on dividends in France and the effect of a decrease in tax in the United States). Conversely, in 2018, the Group notably recorded a provision settling a long-standing tax dispute dating back from 2006 to 2008. The Group’s net attributable income ended at 92 million euros, which represents a net margin of 8.4% of sales, compared to 12.0% in 2017.

202 199

2017 2018

Net attributable

134

income (In million euros)

92

2017 2018

Leverage ratio The net debt/EBITDA (2) ratio improved at 2.3, compared with 2.4 a year earlier. At 31 January 2019, shareholders’ equity was 1,247 million euros. The strong cash flow generation led to a significant decrease in net debt, which at 31 January 2019 stood at 617 million euros versus 675 million euros one year before. Neopost points out that its net debt is fully backed by future cash flows from its rental and leasing activities.

2.4 2.3

2017 2018

Dividend

Net income

€2.40

€0.53

per share

per share

Before acquisition-related expense. (1) EBITDA = current operating income (182 million euros) + depreciation and amortization of tanglible (46 million euros) and (2) intangible (44 millions euros) fixed assets.

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Neopost group activity

Activities

Activities

Neopost is a global leader in digital communications, shipping and mail solutions. Its mission is to help companies improve the way they manage interactions with their clients and partners. Neopost provides the most advanced solutions for physical mail processing (mailing systems and folders-inserters), digital communications management (Customer Communications management and Data Quality applications), and supply chain and e-commerce process optimization (from point of sale to delivery, including associated tracking services).

In 2018, Neopost is organized around three divisions:

• • •

Enterprise Digital Solutions;

Neopost Shipping;

SME Solutions.

Enterprise Digital Solutions

In its Enterprise Digital Solutions (EDS) division, Neopost offers digital communications solutions and Data Quality software. Market Customer communications management and Data Quality are growing niche markets. Both are estimated between 1 and 1.5 billion United States dollars (1) in sales. Competition is fragmented but Neopost has been recognised as a leader in customer communications management technology for several years in a row by the research firm Gartner. Customers Customers of the EDS division are primarily large accounts in vertical markets such as banks or insurance companies and print service providers. The Group also started to develop into new vertical markets, notably in utilities, telcos and governments. Customer communications management The EDS division offers solutions that allow a company to coordinate and harmonise all of their customer communication across different departments (sales, marketing, accounting, etc.), while adapting to each department’s specific needs. Neopost Shipping markets a complete range of products and solutions which facilitates the entire supply-chain and e-commerce operation: automated parcel creation, preparation of shipments, data capture to allow track & trace and ultimately management of parcel delivery and returns, especially in the “last-mile” management, with the development of parcel lockers. Market The market for shipping solutions is estimated between 2 and 3 billion United States dollars in sales (1) . Neopost Shipping

The Inspire software facilitates the creation and management of their transactional or marketing communication documents regardless of the medium and the channel used (physical mail, e-mail, fax, text messages, websites, social networks, etc.). Data Quality In Data Quality, EDS markets software which enables companies to collect, manage and update accurate address databases in real time. EDS also offers master data management solutions capable of creating a single database where all essential data used by the different departments of the Company are stored. On 28 January 2019, Neopost proceeded with the divestment of Satori Software to Thompson Street Capital Partners (TSCP), the owner of BCC Software, a provider of postal management software in the Americas based in Rochester, New York. On 8 February 2019, Neopost proceeded with the divestment of Human Inference to EDM Media Group, a leading Data-driven marketing strategy provider based in Nieuwegein, in the Netherlands. Following these divestments, Neopost has stepped out of Data Quality. Customers Neopost Shipping customers are primarily retailers, e-retailers, shippers, logistics operators, postal authorities and carriers. Software solutions Neopost Shipping’s multi-carrier shipping platforms streamline fulfillment, generate labels, and create transport documents. Available in stand-alone solutions, interfacing with existing information systems or integrated with e-commerce platforms, these solutions adjust to the needs and volumes handled by retailers and online retailers.

Neopost estimates. (1)

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Neopost group activity

Activities

The Group is developping parcel lockers in France, Japan, Australia and the United States.

Neopost Shipping offers also online and mobile solutions based on EDI (Electronic Data Interchange), RFID (Radio Frequency IDentification) or bar code data capture technologies to track and locate mail pieces and register proof of delivery. Parcel Lockers Parcel lockers are an automated locker system that securely stores packages for easy consumer retrieval and returns if need be. Automated parcel lockers eliminates the need for multiple deliveries and re-delivery attempts and reduces the risk of lost packages, hence respecting delivery deadlines and lowering CO2 emissions. The SME Solutions division encompasses the legacy business of the Group related to mail solutions and graphics activities as well as the new activities in digital communications and shipping solutions. Market The size of the mail solutions’ market is estimated to be around 3 billion United States dollars (1) of sales per year. Neopost is ranked number 2 worldwide with a revenue of 905 million euros in 2018 in its SME Solutions division. Its two main competitors are Pitney Bowes and Francotyp Postalia with respective revenue of 1,6 billion United States dollars for Pitney Bowes’ SMB division and 127 million euros for Francotyp Postalia’s Franking and Inserting division. Neopost is no longer in a position to precisely give market shares in terms of installed base due to the lack of availability of the data from French and American postal authorities. Customers SME Solutions’ customers are mainly small and medium sized enterprises across all industry sectors. Postal authorities’ role Postal authorities govern production, distribution and maintenance of franking machines. Mail Solutions Neopost supplies equipment, software and services to cover all steps in the incoming and outgoing mail handling chain. It provides important advice and training in organising mailroom, according to each customer’s particular needs. Neopost offers a competitive range of folders/inserters for the office, mailroom and mail center segments. These systems, SME Solutions

CVP-500 The automated packing solution CVP-500 addresses the specific needs of e-commerce. The system builds fit-to-size packages that reduce package volume up to 50%, saving on cardboard consumption and eliminating the need for void fill as well as providing significant savings in transportation costs.

supplemented with software to interface with databases, make it possible to publish, prepare for insertion, combine and route documents (pay slips, invoices, marketing mail shots). The Group also offers maintenance on these systems. Since these systems are connected to the Internet, the maintenance can be performed remotely. Neopost believes it is the world’s leading manufacturer of folders/inserters for office and mailroom. Furthermore, Neopost offers mailing systems which combine franking machines, franking management software solutions, accessories like postal scales, ink cartridges and other supplies to operate them. Neopost offers maintenance of its equipment (which may be remote) and the update of postal tarifs. Finally, Neopost markets customized financing solutions for all equipment and services which it sells as well as long-term rentals in countries where regulation makes it mandatory, i.e. France for the entire franking machine, the United States and Canada for the meter. The Group also has a financial service called postage financing. Graphic activities Neopost distributes also a wide range of equipment for print finishing: guillotines, binding machines, laminating machines, paper folding machines for any type of format. These graphics solutions are available primarily in the Nordic countries and in Australia. Digital & Shipping Solutions Software developed by the two divisions EDS and Neopost Shipping are adapted to the requirements of small and medium sized enterprises and are marketed in a client server mode or a SaaS mode (Software as a Service) using the Cloud. Neopost also call upon partners in order to create specific solutions like hybrid mail solutions.

Neopost estimates. (1)

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Neopost group activity

Strategy

Strategy

Over the past few years Neopost has been extending its business portfolio into a wide range of activities to gradually reduce its exposure to its structurally declining Mail Solutions business. Between 2012 and 2018, this strategy, has consisted in expanding its offering to digital communications and shipping solutions in order to make the Group’s activity less dependent on changes in mail volume and to create conditions for sustainable growth. It has helped to reduce the Mail Solutions exposure from 92% in 2011 to 70% in 2017. Whereas Mail Solutions remained the dominant segment, the partial rebalancing of Neopost revenues came at the expense of a significantly fragmented model outside Mail Solutions. On 23 January 2019, Geoffrey Godet, Neopost Chief Executive Officer since 1 February 2018, unveiled its new strategy for the 2019-2022 period during Neopost Capital Markets Day. Named “Back to Growth”, this strategy aims at expanding and growing the Group while accelerating its transformation to reach by 2022 a more balanced business profile designed to deliver sustainable and profitable organic growth going forward. Neopost is operating in 2018 in more than 80 different products across multiple end markets, each with a very different business mix and, to a large extent, different customers. As part of its new strategy, Neopost will focus on four major solutions which are meeting the criteria the Group has set for itself, namely businesses where Neopost has already built strong legitimacy and that have the potential to reach a significant size and/or provide significant growth potential. These four major solutions currently stand at very different stage of their development. Mail Related Solutions In a highly concentrated market, Neopost enjoys a solid reputation as well as the position of being a clear challenger to the incumbent market leader. Neopost therefore firmly believes that reinvesting in its product offering (both mailing and document systems as well as mailroom software) and keeping a high level of client servicing will allow the Group to gain market share and maximize the value of this business over time, which in turn will provide strong financial resources to contribute funding a more aggressive rebalancing of its portfolio. Refocus on Major Operations

To achieve this strategy, the Group intends to:

reinvest in Neopost highly cash generative legacy Mail • Related Solutions offering; focus on four major solutions, including Mail Related • Solutions as well as Business Process Automation, Customer Experience Management and Parcel Locker Solutions, in two main geographies, namely North America and main European countries; seize bolt-on acquisition opportunities which, together with • organic growth in selected business segments, will contribute to scale up the Group’s major offers; streamline the Group’s organization to run the Major • Operations in a more efficient and integrated way; either grow, improve or divest the Group’s Additional • Operations by no later than 2022; adapt the Group’s shareholder return policy and allow for • potential releveraging to gain flexibility in capital allocation.

From a geographical standpoint, 12 out of 29 countries where Neopost operates directly account in total for more than 85% of the Group’s total sales. As part of its refocusing strategy, Neopost will concentrate its efforts on these countries gathered on two main geographies: North America (Canada and the United States) and the main European countries including Austria, Benelux, Germany, France, Ireland, Italy, Switzerland and the United Kingdom.

Specific ambitions for each major solutions

Business Process Automation On the strength of its expertise in hybrid and dematerialized mail solutions, Business Process Automation has been identified as a major offer. On the one hand, digitalization of business processes is at the heart of corporates’ cost optimization programs. On the other hand, regulation is increasingly favouring the switch to digital processes. Neopost is therefore considering the deployment of its suite of Business Process Automation solutions, particularly in the field of invoicing flows (accounts receivable/accounts payable), as a new strategic priority. Neopost will continue to primarily target the SME segment, with a view to expand its offering by adding other functionalities in the wider field of order management and purchasing for instance.

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Neopost group activity

Strategy

Customer experience management Neopost aims at further leveraging its Customer Communications Management (CCM) franchise – a field in which it holds a firm leading market position both in size and reputation – to bring customer experience to the next level. Neopost current solutions enable corporates to design, manage and deliver high volume and on-demand omni-channel personalized communications. The roadmap Neopost has set for itself is threefold: expand into new vertical markets: from its legacy print • service providers client base, Neopost has already successfully gained customers in the financial services, insurance and healthcare industries. Targeted new verticals include telcos, utilities and governments; continue to add cloud-based services to complement its • historical on premises software offer; extend its CCM offering to Customer Experience • Management, building on its expertise in document-based customer centric communications and interactions.

Parcel Locker Solutions Whereas parcel volumes are booming as result of the continuous growth of e-commerce, Parcel Lockers are rapidly emerging as the most efficient solution to solve the last mile delivery issue. They bring significant benefits to carriers, retailers, property and facility managers as well as to consumers. Operating parcel lockers is yet a nascent multi-local business. On the back of its successful experience in building an installed base of parcel lockers, notably in Japan, Neopost aims at taking significant positions in key geographies, primarily in the United States. In the meantime, Neopost, who has been deploying its French and Japan footprint through contracts with both carriers and retailers, sees in the residential segment a strong market opportunity. The Group is also working on developing less voluminous lockers fitting the needs of smaller shops, such as convenience stores, as well as small residential properties. Thanks to the acquisition, on 22 January 2019, of Parcel Pending, a leader in the American market, Neopost made a significant entry into the high-growth potential US parcel locker market. Activities included in Additional Operations’ scope are: the four major solutions in other geographies: Nordics, • Asia-Pacific and rest of the world; and other activities, in particular, graphics activites, Proship, • Temando, other shipping software, CVP-500. Satori Software and Human Inference, initially included in Additional Operations were respectively sold in January and February 2019. Neopost is going to continue carefully assessing the situation of each one of these operations.

Optimize Additional Operations

The portfolio of Additional Operations includes all businesses that are not part of the four major solutions, as well as all operations outside the main geographies, i.e. 17 countries where Neopost has a direct presence and the 60+ countries where Neopost products and solutions are sold through dealers. Altogether, Additional Operations accounted for 18.5% of the Group's total sales in 2018..

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Neopost group activity

Strategy

Streamline operations

The refocus of the Group on its Major Operations goes hand in hand with the implementation of a new management organization aimed at conducting these businesses in a more integrated manner than previously. Indeed, the Group has been operating over the past few years in a highly decentralized way, with three independent global business divisions (SME Solutions, Enterprise Digital Solutions and Neopost Shipping). From now on, in addition to each one of the four major solutions being overseen by a dedicated Chief Solutions Officer, the new organization will be primarily structured under geographical responsibilities with North America on the one hand and the main European countries on the other hand, the latter being divided into three regions: France & Benelux; United Kingdom & Ireland; Germany, Austria, Switzerland and Italy. Additional Operations will be put under the direct responsibility of one manager. Neopost growth ambitions will partly rely on its ability to close some bolt-on acquisitions that will be designed to accelerate the Group’s transformation and expand its franchise within its major offers. Strict discipline and stringent financial criteria will be applied to the selection of M&A opportunities. Neopost will be typically considering targets growing at double-digit rates, with a firm view to achieving a Return on Capital Employed (1) covering its cost of capital by the end of the third year, post year of closing. Respect for the capital allocation discipline in connection with portfolio rotation will be ensured by a team dedicated to Capital allocation

The main objective is to truly operate as one company in order to unlock more commercial synergies in each main geography, as well as to streamline the local operations and be more efficient. To that extent, support functions will also play a key role, including that of overseeing the Group’s transformation, support the new strategy, coordinate cross-functional projects and initiatives, conduct acquisitions and potential divestments, forge a common marketing vision, centralize the development and management of the product portfolio, ensure greater consistency in the offering from one region to another, as well as strengthen synergies both in R&D and in the supply chain. This proposed organization aims to create a strong and unique company culture.

acquisition and disposal operations that will support operational teams throughout the investment or divestment process. Neopost is setting an envelope dedicated to bolt-on acquisitions amounting to 100 million euros, net of divestments, on average per year over the 2019-2022 period. In addition, Neopost aims to spend on average 100 million euros per year in capital expenditure which would be mostly allocated to Major Operations.

Shareholder return policy

To achieve these goals, Neopost needs to gain flexibility in its capital allocation. This implies adapting its shareholder policy. The Group has therefore decided to set its annual pay-out ratio at a minimum of 20% of the Group attributable net income with the minimum annual dividend set at an absolute floor of 0.50 euro per share. The dividend will be paid in cash and in one instalment.

In addition, Neopost commits to returning to shareholders at the end of the 2019-2022 plan the potentially unused share of its net 400 million euros M&A targeted envelope.

Mid-term guidance

be in a position to achieve low single digit organic sales • growth in a sustainable way, by no later than the end of the plan. During the period 2019-2022, Neopost will keep an annual free cash-flow conversion (3) of over 50%.

Over the 2019-2022 “Back to Growth” strategic plan, Neopost aims to achieve: a mid-single digit sales CAGR at constant exchange rates; • a high-single digit current EBIT (2) CAGR at constant • exchange rates; a rebalancing of its business portfolio leading Mail Related • Solutions to represent less than 50% of sales by 2022;

ROCE calculated as current EBIT post tax/Enterprise value acquired. (1) Current EBIT = Current operating income before acquisition-related expenses. (2) Cash flow conversion = cash flow / current EBIT (3)

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Neopost group activity

Organizational structure

Organizational structure

Head office

Neopost’s head office is in Bagneux in the Paris region. All the Group’s strategic assets such as the research and development, production and distribution activities described

below are held by wholly owned subsidiaries of Neopost S.A.,

the parent company of the Group.

Research and development centers

Neopost has several specialized research and development centers. The main R&D centers are located in Bagneux (France) for mailing systems, in Drachten (the Netherlands), Loughton (United Kingdom) for folders/inserters, Hradec Kràlové (Czech Republic) for customer communications management software and Cavaillon (France) and Brisbane

(Australia) for shipping software and services. More than 800 engineers and technicians work in the R&D field at

Neopost.

In order to increase its productivity, Neopost subcontracts part of its R&D efforts in Vietnam.

Production centers

Neopost has three assembly centers: Le Lude (France) for high-end mailing systems, Drachten (the Netherlands) for mid-range folders/inserters and Loughton (United Kingdom) for high-end folders/inserters and the automated packing system CVP-500. A team based in Hong Kong manages Neopost subcontractors in Asia. Neopost subcontractors assemble entry-level to mid-range mailing systems and entry-level folders/inserters. This team also provides solutions for parcel lockers (Packcity).

The Memphis (United States) center is in charge of logistics and customization of products for North America.

All these centers account for around 650 people.

The Group believes that its production capacity is adapted to its activities.

Distribution

Neopost’s international sales network is a key feature of its business. The Group has wholly owned subsidiaries and branches in 29 countries: Australia, Austria, Belgium, Brazil, Canada, China, Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Ireland, Italy, Japan, Luxembourg, Mexico, the Netherlands, Norway, New Zealand, Poland, Singapore, Spain,

Sweden, Switzerland, Taiwan, the United Kingdom and the United States. Neopost also has a network of local distributors in about 60 countries in addition to the countries covered by its subsidiaries. These distributors are independent, essentially dedicated to Neopost products and have signed long-term distribution contracts with Neopost.

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Neopost group activity

Organizational structure

Investments

Excluding acquisitions, Neopost invested 87,9 million euros in 2018 compared with 98.8 million euros in 2017 and 82.2 million euros in 2016.

Details of investments are shown in the table below:

(In millions of euros)

31 January 2019

31 January 2018

31 January 2017

Acquisition of software

2.6

3.8

4.4

Capitalisation of development expenses

29.2

27.9

24.9

Acquisition of machinery and equipment

4.3

3.6

1.8

Rented equipment

37.0

52.4

33.4

IT implementation costs

0.0

1.4

5.2

Other investments

14.8

9.7

12.5

TOTAL

87.9

98.8

82.2

The breakdown of investments by geographical area is the following:

(In millions of euros)

31 January 2019

31 January 2018

31 January 2017

Europe

48.1

48.4

54.0

North America

26.5

23.6

24.7

Asia-Pacific & rest of the world

13.3

26.8

3.5

TOTAL

87.9

98.8

82.2

Regarding acquisitions, the Group invested, net of divestments, 26.3 million euros in 2018, mainly linked to the investment in Parcel Pending and the divestment of Satori Software compared with 23.4 million euros in 2017 and 24.0 million euros in 2016. These investments and acquisitions were financed either with Group cash or with existing credit lines.

Neopost is setting an envelope dedicated to bolt-on acquisitions amounting to 100 million euros, net of divestments, on average per year over the 2019-2022 period. In addition, Neopost aims at spending on average 100 million euros per year in capital expenditure which would be mostly allocated to Major Operations.

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Neopost group activity

History

History

Acquisition of ProShip , one of the largest providers of multi- carrier parcel shipping solutions in the United States.

Acquisition of Satori Software , one of the world market leaders in postal address quality management tools.

Acquisition of icon Systemhaus , the German leader in customer communications management.

Creation of Neopost by a group of investors led by Fonds Partenaires.

Introduction onto the main Paris Euronext market.

2014

2009

2016

1992

1999

2002

1997

2012

2015

2019

Acquisition of Parcel Pending , leader on the parcel locker market in the US. Divestments of Satori Software and Human Inference.

Acquisitions of GMC Software , a leader in the field of customer communications management, and Human Inference , one of the leading European data quality solution providers.

Majority stake taken in Temando , an Australian technology company providing shipping solutions for the e-commerce industry.

Takeover by another group of investors advised by BC Partners in association with the management.

Acquisition of Ascom Hasler , the mailing systems division of the Swiss company Ascom.

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Neopost group activity

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CORPORATE GOVERNANCE REPORT

Board of directors Governance structure 19 Missions of the Board of directors 19 Chairman of the Board 21 Chief Executive Officer 21 Members of the Board 21 Lead director 22 Directors 22 Departing directors 25 Independent directors 25 Work of the Board of directors 27 By-laws for the Board and committees 28 18

Remuneration of managers and directors

35 35 37

Management team

Non-executive directors The Chairman & the Chief Executive Officer – 2018 Remuneration

38

The Chairman – 2019 Remuneration

43

The Chief Executive Officer – Remuneration 2019

44

Regulated agreements Denis Thiery, Chairman Geoffrey Godet, Chief Executive Officer Summary table of the Extraordinary General Meeting delegations to the Board of directors

47 47

47

Committees

30 30 31

Remuneration committee Appointments committee

Remuneration and appointments committee

32 32

49

Audit committee

Strategy and corporate responsibility committee

34

Information that could have an impact in the event of a takeover bid or exchange offer

Management team

35

50

Practical information for attending the General Meeting

50

Special report of the Statutory Auditors on regulated agreements and commitments

52

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Corporate governance report

Board of directors

Board of directors

The mission of the Board of directors is to determine the strategic directions to be followed by the Company and to oversee their implementations.

10

directors

of independant directors within the Committtees

100%

independant directors

8

years old: director’s average age

55.5

1

lead director

years: mandate’s duration

3

of women within the Board

40%

directors with a foreign nationality

4

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Corporate governance report

Board of directors

Governance structure

Neopost S.A., the holding company belonging to the Neopost group, is a limited company with a Board of directors. On 12 January 2018, the Board opted for a separation of the the functions of Chairman of the Board and Chief Executive Officer of the Group. This separation of functions complies with the undertaking of the General Meeting of 1 July 2016 and takes effect as from 1 February 2018. In order to maintain a balance in discussions and within its governance structures, the Board of directors is comprised mainly of independent directors. The committees are made up The Board, a corporate body and forum for strategic discussion and decision-making, optimizes value creation while upholding the short-, medium- and long-term interests of the shareholders and all stakeholders. Over and above the local legal requirements, Neopost places particular importance on the Board being able to perform the following roles: approve all decisions concerning the Company’s major • strategic, economic, social and financial orientations and ensure that these are implemented; to be informed of a change in the markets, the competitive • environment and the key challenges, including in the domain of the Company’s corporate social responsibility; ensure there is an effective system in place within the • Company that offers reasonable assurance that operations are conducted in accordance with current rules and regulations; set up and run specialized committees with a view to • enriching the decision-making process; approve the investment projects and all transactions, • specifically acquisitions and divestments, likely to have a major impact on Neopost’s results, balance sheet structure and risk profile; Missions of the Board of directors

exclusively of independent directors. The Group’s policy for managing conflicts of interest was reconsidered under the review of the by-laws applying to the Board and committees and a lead director was appointed in 2016. Apart from the limitations imposed by law, regulations and the Board’s own by-laws, no additional limitations have been placed by the Board on the powers granted to the Chief Executive Officer.

approve the annual budget, review and approve the • financial statements at regular intervals; review the Company’s financial communications policy; • appoint the corporate officers in charge of running the • Company; set the remuneration policy for general management on the • recommendation of the remuneration committee; each year, prior to publication of the annual report, review • on a case-by-case the position of each of the directors and then notify the shareholders of the results of its review with a view to identifying the independent directors; approve the Corporate governance report on the conditions • for preparing and organizing the Board of directors’ work, together with the Company’s internal control procedures. Details on how the Board of directors operates and on the rights, obligations and recruitment practices of its members within the limits of their authorized mandates are defined in the Company’s by-laws. The by-laws also detail the Board’s principal missions as well as the operations for which its approval is required.

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Board of directors

Compositionof the Boardof directorstable for the2018 financial year:

Age

Start/renewal

End of

Nationality

Key competence

Independence

Years

End of term

Individual rate

Directorship

of attendance

of directorship

on the Board

July 2007 renewed July 2016

Denis Thiery

Finance & Management Management, e-commerce, Technologies Finance, Management, e-commerce Finance Management, e-commerce

63

F

no

11 years

2019

100%

Geoffrey Godet

41 F & US

no 7 months

June 2018

2021

100%

Martha Bejar*

January 2019

56

US

yes

1 month

2019

100%

June 2017 renewed June 2018 July 2012 renewed June 2017

Hélène Boulet-Supau 52

F

yes

1 year

2021

100%

Éric Courteille

51

F

Finance

yes

6 years

2020

100%

e-business, Digital Technology

Virginie Fauvel

44

F

yes

2 years

July 2016

2019

100%

July 2013, renewed June 2017 July 2009 renewed June 2018

William Hoover Jr.

Strategic Consulting

69

US

yes

5 years

2020

78%

Vincent Mercier**

Strategic Consulting

69

F

yes

9 years

2021

100%

July 2010 renewed July 2016 September 2018

Catherine Pourre

62

F

Finance

yes

8 years

-

100%

Consulting, New Technology

July 2016 renewed June 2018

Richard Troksa

56

US

yes

2 years

2021

100%

Management, New Technology

Nathalie Wright

54 78% * The appointment of Martha Bejar will be ratified at the General Meeting called to vote on the financial statements for the financial year ended 31 January 2019. ** Vincent Mercier is the Board’s lead director. F yes 1 year September 2017 2019

Changes that occured in 2018 within the Boardof directorsare:

Nominations

Ratification

Leaving

General Meeting as at 29 June 2018

Geoffrey Godet

Nathalie Wright

Board of directors as at 24 September 2018

Catherine Pourre

Board of directors as at 11 January 2019 Martha Bejar* * Martha Bejar was co-opted as director at the Board of directors on 11 January 2019. Her appointment will be ratified at the General Meeting called to vote on the financial statements for the financial year ended 31 January 2019.

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Chairman of the Board

Denis Thiery

Denis Thiery is 63 years old and a French citizen. He has been Chairman of the Board since 1 February 2018. Having graduated from HEC, he began his career as an Auditor with Coopers & Lybrand in France and in the USA. From 1984 to 1991, he held a number of positions at Wang France, before becoming financial director in 1989. From 1991 to 1997, he

Denis Thiery was appointed as a director by the Annual General Meeting of 10 July 2007. His mandate was renewed at the Annual General Meeting of 1 July 2016 for a new three-year term, i.e. until the Annual General Meeting of 2019. The Board of Directors of Neopost, meeting on April 26, 2019, took note of the decision of Denis Thiery not to request the renewal of his mandate as director (1) .

Other mandates in the Group: none.

was financial director, and then Chief Executive of Moorings, the world leader in yacht chartering, based in the United States. Denis Thiery joined the Neopost group in 1998 as Group financial director and became Chief Executive Officer and then Chairman & Chief Executive Officer on 12 January 2010 until 31 January 2018. From 1 February 2018, the functions of Chairman and Chief Executive have been separated. Geoffrey Godet was appointed Chief Executive Officer following the Board decision of 12 January 2018. The functions of Denis Thiery as Chairman of the Board was then renewed.

Other mandates outside the Group: none.

Other mandates over the past five years (except those already listed above): director of Neopost Ltd, of Neopost Shipping S.A. and of Mailroom Holding Inc. within Neopost Group and until the end of his functions as a Chief Executive Officer. Denis Thiery and his affiliated parties hold 148,312 Neopost shares.

Chief Executive Officer

Geoffrey Godet

Appointed Chief Executive Officer of Neopost as of 1 February 2018, Geoffrey

digitization division and managing director of Jouve Aviation

Solutions. Geoffrey Godet was appointed director of Neopost Godet, 41, is a dual French and American S.A. at the General Meeting of 29 juin 2018 for a three-year citizen and a graduate of HEC. He has term, namely until the 2021 General Meeting.

spent his entire career with the Flatirons Jouve Group, a leader in digital solutions for banking, insurance, healthcare, manufacturing, aeronautics, publishing, media and education. The Flatirons Jouve

Other mandates in the Group: director of Mailroom Holding Inc.

Other mandates outside the Group: none.

Group is present in the United States, France, the United Kingdom, Germany, the Nordic countries, China and India. Since 2004, Geoffrey had been Chief Executive Officer of Flatirons Solutions, based in California, and most recently was Chairman and Chief Executive Officer of Jouve, based in Paris. Prior to that, he was successively marketing and communications director, Head of the cultural heritage

Other mandates over the past five years (except those already listed above): President & Chief Executive Officer of Jouve, Chief Executive Officer of Flatirons Solutions Inc.

Geoffrey Godet holds 20,000 Neopost shares.

Members of the Board

The members of the Board of directors are proposed by the Board, on the advice of the remuneration and appointments committee, and appointed by the Ordinary General Meeting. The General Meeting may revoke their appointments at any time. Regular renewal of Members (the Board has been getting younger, with the average age decreasing from 60.9 in 2016 to 55.5 in 2018), compliance with Law no. 2011-103 of 27 January 2011 on an equal representation of men and women, openness of the Board to diversity are the Board's governance guidelines. Accordingly, 40% of the directors are of foreign nationality. The remuneration and appointments

committee is in charge of establishing the terms of succession plans. In addition, in compliance with the undertakings of 2016, on 12 January 2018, the Board decided to implement a separation of the functions of Chairman of the Board and Chief Executive Officer of the Group. This separation of powers took effect on 1 February 2018. The number of directors aged over 70 must not exceed one third of all directors during the period. The age limit for the Chairman is 65. The director representing employees was appointed in the Neopost France subsidiary. The term of each director’s mandate is limited to three years.

Please see press release available at the following address: https://www.neopost-group.com/en. (1)

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Lead director

liaising between the Chairman and other members of the • Board; taking part in a periodic assessment of the Board’s work, • particularly through holding work meetings between independent directors; taking part in committee work where necessary; • providing guidance and recommendations to the Board in • the case of conflicts or potential conflicts of interest, with a director; making him/herself available, working with the Chairman of • the Board to discuss governance questions with the shareholders. In accordance with the recommendations of the Afep-Medef code, the Board updated its by-laws on 29 March 2016 with a precise definition of the lead director’s missions, resources and prerogatives. Following the Board meeting of 26 April 2019 and subject to the decision of the next General Meeting of Shareholders, the position of Lead Director would end on 31 January 2020 (1) .

According to AMF's (French Financial Markets regulator) recommendations, Neopost decided to appoint Vincent Mercier as lead director in 2016 from among the independent directors. His role is to ensure governance bodies are run correctly and efficiently, that there are no conflicts of interest and that the concerns of shareholders with respect to governance are taken into account. The lead director’s missions and responsibilities notably include the following: participating in the preparation of the Board’s meetings • where necessary; • circumstances with a specific agenda and on his or her own initiative, suggesting linking up work sessions between independent directors; chairing all Board meetings where the Chairman of the • Board is absent, including work sessions between independent directors; ensuring the Board’s by-laws are applied at Board • meetings; requesting Board meetings under exceptional

Vincent Mercier

Vincent Mercier is 69 years old and a French citizen. He is a civil engineering graduate from the École des Mi nes and has a Masters in economic science, as well as an MBA from Cornell University (United States). Until 2014, he was Chair of the Supervisory Board of Roland Berger Strategy Consultants, where he served as director for France and China

the General Meeting of 1 July 2018 for a three-year term, namely until the 2021 General Meeting.

Other mandates in the Group: none.

Other mandates outside of the Group: director of Sucden, FM Logistic, Altavia Europe and ADIE. Other mandates over the past five years (except those already listed above): Chair of the Supervisory Board of Roland Berger Strategy Consultants until July 2014.

until 2010.

Vincent Mercier was appointed director of Neopost S.A. at the General Meeting of 7 July 2009. His mandate was renewed at

Vincent Mercier holds 1,900 Neopost shares.

Directors

Martha Bejar

24 September 2018. Her mandate will extend through the remaining term of her predecessor, i.e. until the Annual General Meeting of 2019, and will then be submitted to renewal.

Martha Bejar is 57 years old and an American citizen, an expert in software technology with a her deep knowledge of the American market. She has held the position of Chief Executive Officer in several IT infrastructure management and network services companies.

Other mandates in the Group: none.

Other mandates outside of the Group: director and Chief Executive Officer of Red Bison Advisory Group. Other mandates over the past five years (except those already listed above): Chief Executive Officer of Flow Mobile.

Martha is the recipient of numerous industry awards including "2017 Inspiring Women" of Washington State and was ranked top fifty Hispanic women in the United States by Hispanic Inc. Business Magazine. The Board of directors coopted Martha Bejar on 11 January 2019, in replacement of Catherine Pourre who resigned on

Martha Bejar holds 200 Neopost shares.

Please see press release available at the following address: https://www.neopost-group.com/en. (1)

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