NEOPOST - 2018 Registration document

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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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REGISTRATION DOCUMENT 2018 / NEOPOST