NEOPOST - 2018 Registration document

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Financial statements

Neopost S.A. statements of financial position

Information on associated companies Note 12

Figures for associated companies break down as shown below:

Associated companies Majority stake Minority stake

31 January 2019

Financial assets

1,286.4

1,275.3

11.1

Receivables

401.8

401.8

-

Financial debts

0.6

0.6

-

Financial expenses

3.7

3.7

-

Financial income (interests)

23.4

23.4

-

Financial income (dividends)

116.6

115.7

0.9

Risk management and financial instruments Note 13

accounted for in compensation of unrealized gains or • losses on assets or liabilities hedged by these instruments; deferred if these instruments have been allocated to • operations related to the following year. The effects of interest rate hedges (swaps, forward rate agreements, caps, etc. ) are calculated using a prorata temporis over the contract’s length, and accounted for in interest expenses for the year. For each consolidated position that is managed, Neopost implements a hedging strategy at the same time as it sets the reference exchange rate to be defended. The hedging strategy involves a combination of definite or optional forward currency purchases or sales, along with open positions protected by stop losses. These stop losses are predetermined exchange rates that trigger transactions when they are hit. As a result, the hedging strategy enables Neopost to defend a reference exchange rate for the entire position in the event of adverse exchange rate movements. Neopost uses the services of an independent consultancy based in Paris. This company assists Neopost in the Group’s exchange rate risk hedging policy and values its portfolios, thus ensuring continuity of methodology and providing an opinion independent of any financial institution. Neopost S.A., as the centralizing company, grants foreign exchange contracts at guaranteed exchange rates to subsidiaries exposed to exchange rate risks, and reverses the resulting positions in the market. Year-end position The tables below show Neopost S.A.’s year-end hedging positions and commitments to its subsidiaries.

The ANC no. 2015-05 regulation of 2 July 2015 regarding forward financial derivative instruments and hedging operations is applicable since 1 January 2017. The foreign exchange forward contracts and options outstanding as at 31 January are reassessed at that date. Unrealized gains or losses resulting from this revaluation are:

Liquidity risk 13-1: The Group’s cash requirement and the debt servicing account form a significant proportion of its cash flow. The Group believes that its cash flow (defined in the consolidated cash flow statement) will enable it to service its debt, given the current level of business. However, this ability will depend on the Group’s future performance, which is partly related to the economic cycle, which the Group cannot control. No guarantee can therefore be given regarding the Group’s ability to cover its financial needs. With the exception of the bond issue - Neopost S.A. 2.50% and ODIRNANE which are not subject to any covenant, the various debts (bonds, private placements, Schuldschein and revolving credit facilities) are subject to financial covenants. Failure to comply with these covenants may lead to early repayment of the debt. Neopost complies with all covenants at 31 January 2019.

13-2: Risk management policy

Exchange rate risk hedging

Neopost has a policy of centralizing its exchange risk, enabling the Group to monitor its overall exchange rate risk exposure and to gain full control over the market instruments used in hedging operations.

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REGISTRATION DOCUMENT 2018 / NEOPOST