NEOPOST - 2018 Registration document

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Financial statements

Consolidated financial statements

Standards, amendments and interpretations published by the IASB but not yet adopted by the European Union: Amendments to IAS 28: Long-term interests in associates • and joint-ventures; • IFRS 15 is applicable since 1 February 2018 for Neopost, using the modified-retrospective approach with cumulative effect at first application. It applies to new contracts signed on or after the 1 February and to contracts in progress on that date. An indepth analysis has been carried out between 2016 and 2018. It revealed that the standard does not have a significant impact on revenue recognition in the Neopost group. IFRS 9 application on the phases related to the classification of financial assets and to the assessment of expected credit losses on trade receivables and contract assets does not have a significant impact on the Group’s financial statements. The phase three of IFRS 9 related to hedging instruments is early applied as at 1 February 2018 and has a 0.2 million euros impact on the shareholders’ equity. IFRS 17: Insurance contracts. Neopost will apply IFRS 16 on lease contracts starting from 1February 2019, using the simplified retrospective approach. The cumulative impact of adopting IFRS 16 will be recognized as an adjustment to the opening balance of retained earnings at 1 February 2019, with no restatement of comparative information. Neopost will apply the exemptions allowed by IFRS 16, in particular to not recognize contracts that cover a period of less than twelve months and leases for which the underlying asset is of a low value. Nature and features of the contracts • For Neopost, the contracts within the scope of IFRS 16 are mainly real estate leases and car rentals. • In order to assess the residual duration for real estate leases, the Group has made an analysis of its sites, to consider renewals reasonably certain to be exercised. The Group called upon the services of an external company to determine the discount rates to be applied on leases, reflecting the geographical area and the remaining life of the lease. Neopost has assessed the potential impact of adopting IFRS 16 on its consolidated financial statements. As of 1 February 2019, the Group will recognize a right-of-use and the underlying lease liability for lease contracts. The lease liability to be recognized as of 1 February 2019 will be about between 80 and 100 million euros, mainly related to real estate leases. The nature of the expenses related to lease contracts will change Key assumptions adopted Estimated impact • Transition to IFRS 16 Method and exemptions adopted •

with the adoption of IFRS 16, as the straight-line operating lease expense will be replaced by a depreciation charge of the right-of-use asset and an interest expense on the lease liability. The final impacts of adopting IFRS 16 will be fine tuned and fully disclosed in the half year financial report as of 31 July 2019. The Group is also assessing the effects of the other standards that are mandatory after 1 February 2019, in particular IFRIC 23, as well as the new standards not yet adopted, but it does not expect these to have any significant impact on its financial position. 2-2: In order to prepare this financial information, Neopost has made estimates and used assumptions that may affect the amounts presented under assets and liabilities, as well as the amounts presented under income and expenses for the year. The main material estimates and assumptions made when preparing the financial statements relate in particular to retirement benefit obligations, deferred taxes, goodwill, some provisions and the useful life of fixed assets. These estimates and assessments are reviewed regularly on the basis of actual experience and various other factors considered reasonable, which form the basis of the measurement of book value for assets and liabilities. Actual outcomes might differ substantially from these estimates if different assumptions or conditions are applied. and receivables Transactions in foreign currencies are recorded at the exchange rate in force on the date of the transaction. All assets and liabilities denominated in foreign currencies are translated at the year-end exchange rate in force at closing. The resulting gains and losses are recognized in the income statement, with the exception of variances on loans or borrowings which form part of the net investment in a foreign entity. These are booked directly under shareholders’ equity until divestment. Use of estimates Foreign currency payables 2-3: Translation of financial statements denominated in foreign currencies The operating currency for each of the Group’s entities is the currency of the economic environment in which that entity operates. Financial statements of subsidiaries operating outside France, which are presented in local currencies, are translated into euros – the currency used in the Group’s financial statements – at the year-end exchange rate. Income statement and cash flow statement are translated at the average exchange rate over the period. The resulting translation variance is recognized in the translation adjustment reserve under shareholders’ equity. 2-4:

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REGISTRATION DOCUMENT 2018 / NEOPOST