NEOPOST_REGISTRATION_DOCUMENT_2017

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Management Report

Risk factors

Risks

Risk management system

Tax With regard to their current activities, Neopost entities are regularly subject to tax audits. Tax adjustments or uncertain tax positions not yet subject to tax adjustments are covered with appropriate provisions. The amounts of these provisions are regularly revised. In 2012, Neopost received a notification of tax adjustments in the Netherlands related to financial years 2006, 2007, 2008. The Groups believes that it has serious arguments against the different points raised by the Dutch tax authorities. A mutual agreement procedure was initiated between France and the Netherlands regarding these tax adjustments. The procedure is still under way and at this stage of the process no provision has been booked. In July 2014, the American holding received a notification of tax adjsutments and a provision has been booked. Fraud The Group has rolled out an initiative with managers of subsidiaries to ensure this risk is fully understood, to gather information on best practices and to ensure standard practices are enforced throughout the Group.

A tax review is performed at least once a year in each entity with the help of an external tax adviser. Each tax investigation must be reported to Group. An agreeemnt has been signed with a global tax adviser to manage the Group's tax issue.

A policy to combat fraud was prepared and sent out in September 2014 to the Chief Financial Officers and managing directors of different subsidiaries. The policy includes theoretical and practical recommendations to prevent fraud. If there is evidence of attempted fraud using new methods, the head of internal control notifies the subsidiary COOs and CFOs where necessary. Neopost S.A. has taken out a specific insurance policy to enhance its protection against this type of risk. Within the framework of the Group ethics charter, the Group's internal control department introduced a procedure to manage conflicts of interest as early as October 2012. Regarding industrial risks, the Group updates a Disaster Recovery Plan every year. This plan allows the Group to assert that these risks would not have a material impact on its financial position, business or results.

Environmental regulation

Given the nature of the Group’s assembly and distribution businesses, the Group is not aware of any risk of an environmental nature or which are related to climate change that might have a material impact on its financial position, business or results. Please refer to the social and environmental information detailed in the section 4 of this registration document.

Exchange rate risk

Impact on net income before tax  on 2018 budget

Impact on equity  as at 31 January 2018

(in million euros)

Increase of 5% Decrease of 5% Increase of 5% Decrease of 5%

USD

5.6

(5.6)

(2.2)

2.2

GBP

1.6

(1.6)

(15.1)

15.1

Interest rate risk

31 January 2018

(in million euros)

Impact on net income before tax

Impact on equity

Impact of the rise of +0.5% in interest rates

(2.7)

1.5

Impact of the decrease of +0.5% in interest rates

2.9

(1.5)

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REGISTRATION DOCUMENT 2017 / NEOPOST