NEOPOST - 2018 Registration document

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Financial statements

Consolidated financial statements

Financial instruments, financial debts and risk management Note 11

Financial assets at fair value: the Group classifies in this • category the equity instruments owned by the Group, which means investments in companies over which the Group has no control nor any significant influence. Those are booked at fair value through profit and loss or through equity, depending on the option chosen by the Group. None of the investments in non consolidated companies are held for trading purposes. Neopost’s financing strategy is coordinated by the Group finance department. All Group exposure to interest rate and exchange rate risks is centralized within the Group cash management department. Financial instruments mentioned in note 11, especially those presented in table 11-1, are level 2 financial instruments, whose fair value is based on observable data.

Financial assets are divided in three categories: financial assets at amortized cost, financial assets at fair value through equity and financial assets at fair value through profit and loss. This classification is based on the management objectives applied to the asset by the Group and on the contractual cash flow characteristics. The Group classifies its assets by the following categories: Financial assets at amortized costs: the Group classifies • here the lease receivables, the trade receivables and other receivables, the loans and deposits, the receivables attached to non-consolidated investments and cash and cash equivalents. These assets are booked following the effective interest rate method which means at their fair value (acquisition cost including transaction costs). Lease receivables are analyzed and valued following the expected credit losses method;

11-1:

Breakdown of the balance sheet by financial instrument

31 January 2019

Breakdown by instrument category

Fair value through P&L

Fair value through equity

Loans and receivables/ debts

Debts at amortized costs

Derivative instruments

Book value Fair value

Non-current financial assets

57.0

57.0

- - - - - - - -

8.6

41.6

- - - - - - - -

6.8

Lease receivables (a)

706.2

715.0

- - - -

706.2

- - - -

Other long term receivables

3.4

3.4

3.4

Receivables (b)

229.8

229.8

229.8

Other receivables (b) Derivative financial instruments (c)

6.6

6.6

6.6

1.9

1.9

- -

-

1.9

Cash and cash equivalents (d)

245.9

245.9

245.9

-

ASSETS

1,250.8 1,259.6

8.6

1,233.5

8.7

Financial debts and bank overdrafts (e) Other long-term debts

863.4

870.7

159.4

- - - -

-

704.0

- - - -

7.2

7.2

- - -

7.2

- - -

Accounts payable (b)

80.1

80.1

80.1

Other operating liabilities (b)

196.9

196.9

196.9

Derivative financial instruments (c)

0.2

0.2

-

- -

-

-

0.2

LIABILITIES 0.2 Due to the large number of deals handled by the leasing entities, the Group did not perform an individual valuation for each deal. The (a) assumptions used are the following: average maturity of three years for the portfolio, yield curve ending on 31 January 2019 and constant exchange rate. The valuation is performed excluding credit spread. The British and American postage financing portfolios are comprised of very short-term maturities (less than a month) and renewable credits, the fair value considered is the same as the one booked in the balance sheet. Historical cost valuation. (b) Valuation method described in note 11–4. (c) Valuation based on realizable value. (d) The fair value of the debt includes the portion of the 2.50% Neopost bond that was swapped for 125 million euros and the portion of the (e) Schuldschein debt that was swapped for 29.5 million euros. Swaps and debt are recognized at their fair value as mentioned in note 11–4. ning the debt accounted for at amortized cost, the main amounts are broken down as follows: Concer for all floating-rate debt described in note 11-2-6, the drawdown is performed on a one-month, three-month and six-month basis and with a ▪ variable rate (EURIBOR and USD LIBOR); there is no difference between the fair value and the value in the balance sheet which represents an amount of 380.8 million euros; concerning fixed rate debts, the fair value has been calculated from the yield curve as at 31 January 2019. The difference between the fair ▪ value and the value as appearing in the balance sheet is 7.3 million euros. in foreign currencies are valued at constant exchange rates. Debts 1,147.8 1,155.1 159.4 284.2 704.0

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REGISTRATION DOCUMENT 2018 / NEOPOST