NEOPOST - 2018 Registration document

6

Financial statements

Consolidated financial statements

Tax position Note 12

12-1:

Accounting principles

In accordance with IAS 12, Neopost uses a balance sheet approach to account for deferred taxes. This consists of calculating the deferred tax on temporary differences, which are the difference between the tax base of an asset or liability and its book value on the balance sheet. Neopost also applies the variable carry-forward method. Deferred taxes are valued at the tax rate, either in force or coming into force, which is expected to be applied for the year in which the asset is realized or the liability settled. Due and deferred tax assets and liabilities are offset for a given tax authority where there is a legally enforceable right to offset.

The book value of deferred tax assets is revised at each accounting date and reduced if it is unlikely that adequate taxable profits will be available to make use of the benefit of all or part of the deferred tax asset. Unrecognized deferred tax assets are valued at each accounting date and are recognized if it is probable that future profits will make them recoverable. The Group’s French companies use the tax consolidation system. The same applies to the Group’s subsidiaries in each of the countries in which they are registered.

Main tax rates 12-2: The rates used in the main countries to calculate current and deferred tax at 31 January 2019 are as follows:

Current tax

Deferred tax

France

34.3% 34.3% -25%

United Kingdom

19.0%

19.0%

Netherlands

25.0%

25.0%

United States

26.0%

26.1%

Germany

31.7%

31.7%

Tax proof 12-3: The reconciliation between the theoretical tax charge and the actual tax charge is as follows:

31 January 2018

31 January 2018

Net income of consolidated companies before income tax

128.5

133.5

Tax rate for the consolidating company

34.3%

34.3%

Theoretical expense

44.1

45.8

Permanent differences

(1.0)

7.2

Income tax rate differences

(20.6)

(14.5)

Tax on dividends (a)

(4.5)

(7.4)

ODIRNANE

(3.1)

(3.1)

Prior year tax adjustment

0.9

(0.8)

Rate decrease and other exceptional items (b)

21.0

(25.6)

TOTAL INCOME TAX

36.8

0.8

EFFECTIVE TAX RATE 0.6% As of 31 January 2019, the proceed of 4.5 million euros represents the payment of the default interests related to the abolition of the tax on (a) dividends. As of 31 January 2018, the net proceed of 7.4 million euros included the reimbursement of the tax on dividends for an amount of 8.3million euros. In 2018, the exceptional items are composed of (i) the re-evaluation of the French deferred tax, related to the change of the corporate tax (b) rate, (ii) the provision for tax exposure related to the on-going procedure with the Netherlands (MAP) and (iii) the impact of the non-taxable non-current operations. In 2017, this line was composed of (i) the application of a new tax rate in France as well as in the United States, which led to a revaluation of the deferred tax mainly generated by the leasing activities and (ii) an impairment of tax loss carry forwards recognized as deferred tax assets as it is deemed unlikely that the Group will be able to use it in the five next years. 28.7%

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REGISTRATION DOCUMENT 2018 / NEOPOST