2 0 0 7 Full Year Results

1
2 0 0 7Full Year Results
April 2008
2
DISCLAIMER

• Safe Harbour Statement
• This presentation contains forward-looking
  statements (made pursuant to the safe harbour
  provisions of the Private Securities Litigation
  Reform Act of 1995). By their nature,
  forward-looking statements involve risk and
  uncertainty. Forward-looking statements represent
  the company's judgement regarding future events,
  and are based on currently available information.
  Consequently the company cannot guarantee their
  accuracy and their completeness and actual
  results may differ materially from those the
  company anticipated due to a number of
  uncertainties, many of which the company is not
  aware of. For additional information concerning
  these and other important factors that may cause
  the company's actual results to differ materially
  from expectations and underlying assumptions,
  please refer to the reports filed by the company
  with the Autorité des Marchés Financiers.

3
AGENDA

• Introduction
• Market trends
• Acquisitions
• Product launch
• Full year accounts
• Outlook

4
INTRODUCTION
5
INTRODUCTION

• 2007, a transition year between 2
  decertifications in the US
• After a great performance in 2006
• Market conditions more difficult than expected
  during H2 in the US
• Sales growth of 2.4 excluding exchange rate
  effects
• Slight improvement in current operating margin
  at 26.1 of total sales
• Pursued policy of return to shareholders
• More intense preparation for the future
• Acquisitions
• Major product launch
• Accelerated optimisation of the Groups
  organisation

6
MARKET TRENDS
7
MARKET TRENDS

• Postal sector evolution
• Mail volumes generally flat
• Deregulation in Europe 2008-2011
• Opening up to competition
• A situation being still different depending on
  the countries
• Economic and competitive pressure within postal
  organisations in North America and in Europe
  for
• Greater efficiency / productivity
• Better service / flexibility
• Mailing systems a critical CRM tool for postal
  organisations
• Enhancement of the mail preparation function
• Acceleration of equipment renewal
• Customer acquisition of new accessories

8
MARKET TRENDS
Decertification of the remaining electronic
machines in the USA 2008
Main steps
Decertification of all electronic machines in
Canada and partially in the USA2006
Shape-Based Pricing in the USA 2007
Decertification of the mechanical machines in
the USA 1996-1999
2006 Pricing in Proportion in the UK
2004-2005 Frankit in Germany
2001-2002 Decertification of the mechanical
machines in the UK
2000-2001 Switch to the Euro and intelligent
franking machines in France
9
ACQUISITIONS
10
SIGNIFICANT ACQUISITIONS

• Reinforcement of the product range through
  acquisitions, following the rounding the core
  concept
• PFE, higher volume folders/inserters
• ValiPost, industrial mail
• NBG, RFID technology
• Distribution optimisation through dealer
  acquisitions
• In Europe
• In the United States

Sustained rate of the number of acquisitions
11
PFE INTERNATIONAL LTD

• Our most significant acquisition since 2002
• Worldwide leader in the high-end
  folders/inserters market
• Sales of around 26 million in 2007, very low
  EBIT margin
• Consolidation over 11 months in 2008
• Significant commercial synergies product range
  and distribution
• Objective EBIT margin at 15 within 24 months

Reinforcement of Neoposts high-end
folders/inserters product range
12
VALIPOST

• Acquisition in February 2007
• Leader in France in software solutions for
  industrial mailers
• Sorting by destination before printing
• Identification labels and mail box tracker
• Production planning
• Top 6 French industrial mailers customers of
  ValiPost
• Sales above 3 million in 2007, up 80

First steps of Neopost in industrial mail
13
NBG ID

• Neopost had owned 24 of NBG ID since 2004
• Stake increased to 100 in February 2008
• NBG ID activity
• Integrator of RFID technologies for the logistics
  sector
• A promising portfolio in pallet and asset
  tracking
• Important contract signed with Metro/DHL
• Pilots in place notably at Mory and Kuehne
  Nagel
• Development of the RFID technology for
  applications in
• Parcels
• Mail (on a longer term)
• Sales around 2 million in 2007

Strategic choice to integrate RFID in the
technological laboratory of Neopost
14
IMPROVING DISTRIBUTION EUROPE

• Objective to reinforce direct distribution
• Dealer acquisitions in 2007
• Ruf AG in Switzerland (Zurich) in July 2007
• Ducourrier in Switzerland (Geneva) in October
  2007
• 2 in Italy
• 1 in Germany
• Remaining opportunities in
• Switzerland
• Scandinavia
• Spain

Continuing downstream consolidation of
distribution
15
IMPROVING DISTRIBUTION US

• Objectives to reinforce direct distribution and
  to unify the network
• 2007 deals
• Acquisition of dealers California, Colorado,
  Florida, Maryland and Wisconsin
• Sale of territories Alabama, Minnesota, Nevada
  and Pennsylvania

Strategy of rationalising market coverage
16
RATIONALISING OF NEOPOST US DISTRIBUTION

indirect
69
67
60
56
56
40
44
24
40
33
31
direct
0
Unified distribution (installed base covered by a
single network, in )
Direct/indirect distribution (installed base
covered, in )
Potential for rationalising still significant
17
MAJOR PRODUCT LAUNCH
18
MAJOR LAUNCH OF MAILING SYSTEMS

IS-480
IS-460
19
ENHANCED HARDWARE OPTIONS

20
TECHNOLOGICAL BREAKTHROUGH IN TERMS OF
CONNECTIVITY AND SOFTWARE

21
MAJOR LAUNCH OF MAILING SYSTEMS

• Product range encompassing 50 of the worldwide
  franking machine installed base
• Launch programme
• April 2008 gt in the US
• 2008 / 2009 gt UK, Germany, France
• Ergonomics
• Ease of use customer interface, smart start,
  simplified access
• 1st colour touch screen
• Eco-conception
• Decrease in the weight of both machine and
  packaging
• Increase of the component recyclability

Strong competitive edge and increased revenue
per customer
22
IS480

23
FULL YEAR ACCOUNTS
24
GROWTH EXCL. EXCHANGE RATE EFFECTS
Sales( m)
22.0
-33.4
918.5
907.1
2006
2007
Growth excl. currency impacts
Currency impacts
Growth of 2.4 at constant exchange rates
25
HIGH COMPARISON BASES ON THE 3 MAIN MARKETS
2007/2006 change
2007 sales 907.1m
North America
0.0
North America 38
Rest of the world 11
1.2
France
Germany 7
United Kingdom
- 2.9
United Kingdom 16
Germany
12.7
France28
Rest of the world
18.8
Geographic balance between North America and
Europe
At constant exchange rates
26
STRONG GROWTH IN DOCUMENT SYSTEMS
2007/2006 change
2007 sales 907.1m
Document and logistics systems
Mailing systems
- 0.3
27
Document and logistics systems
10.6
Mailing systems
73
Complementarities between the 2 activities
At constant exchange rates
27
STRONG GROWTH IN RECURRING REVENUES
2007/2006 change
2007 sales 907.1m
Rental financial services
Services and supplies
Recurring revenues
8.4
30
33
Equipment sales
- 6.6
Equipment sales
37
Complementarities between equipment sales and
recurring revenues
At constant exchange rates
28
SLIGHT IMPROVEMENT IN PROFITABILITY
Current operating margin (Current operating
income / sales, )
26.1
26.0
24.8
23.4
21.5
21.0
20.6
19.6
20.7
18.6
19.2
16.7
Excluding Neopost Online
29
SLIGHT IMPROVEMENT IN PROFITABILITY

• Recurring revenues
• Increase in revenues coming from supplies
• Revenues increased by 19.4 excl. exchange rate
  effects, i.e. 13.6 of total Group revenues in
  2007
• Financial services development (leasing and
  postage financing)
• Revenues increased by 21.2 excl. exchange rate
  effects, i.e. 8.0 of total Group revenues in
  2007
• Productivity improvement
• Currency impacts under control (EUR/USD and
  EUR/GBP)

Relevance and strength of Neoposts model
30
CURRENT OPERATING MARGIN OF 26.1
m
Change
2007
2006
-1.3
907
919
Sales
Relevance and strength of Neoposts model
/ 2007 1.38 and 2006 1.26 / 2007 0.69
and 2006 0.68
31
ACCELERATED OPTIMISATION OF THE GROUPS STRUCTURE

• Research Development
• Grouping together some RD centres
• to strengthen RD capacities within a budget of
  5 of sales
• Supply chain
• 2 logistics platforms (Europe and USA)
• Direct shipment
• Optimisation of refurbishing unitS
• to reduce supply chain cycles and inventories
• Distribution
• Within the context of the optimisation of the US
  distribution
• Standardization of the ERP and of the franking
  machine resetting systems
• to improve productivity and customer service

32
ACCELERATED OPTIMISATION OF THE GROUPS STRUCTURE

• Schedule
• RD and supply chain H1 2008
• US distribution 2008-2009
• Cost
• 20 million (net impact of 13 million)
• Provisions recognised in the accounts at
  31/01/2008
• 6 to 7 million savings per year by 2010
• Mainly cash

To improve current operating margin growth
33
NET INCOME BEFORE PROVISIONS FOR OPTIMISATION

Sales 919 907 907 -1.3 -1.3
Current operating income 239 237 237 -0.7 -0.7
Results of disposals and others 1 1 1
Operating income 240 238 238 -0.7 -0.7
Financial results (19) (29) (29)
Taxes (65) (62) (62)
Results of associated companies 1 1 1
Net income 157 148 148 -5.7 -5.7
As a of sales Diluted EPS 17.1 4.91 16.4 4.68 16.4 4.68 -4.7 -4.7
m
2006
2007
Change
/ 2007 1.38 and 2006 1.26 / 2007 0.69
and 2006 0.68
34
NET INCOME

Sales 919 907 907 -1.3 -1.3
Current operating income 239 237 237 -0.7 -0.7
Results of disposals and others Provisions for optimisation 1 1 (20) 1 (20)
Operating income 240 218 218 -9.3 -9.3
Financial results (19) (29) (29)
Taxes (65) (54) (54)
Results of associated companies 1 1 1
Net income 157 136 136 -13.7 -13.7
As a of sales Diluted EPS 17.1 4.91 15.0 4.28 15.0 4.28 -12.8 -12.8
m
2006
2007
Variation
/ 2007 1.38 and 2006 1.26 / 2007 0.69
and 2006 0.68
35
WORKING CAPITAL REQUIREMENT UNDER CONTROL
m
2007
2006
Change
50
Inventories
43
-13.6
9.8
143
157
Trade receivables
6.7
(157)
(167)
Prepaid income
-5.5
(289)
(273)
Other payables and receivables
-5.3
(253)
(240)
Total excluding leasing
WCR maintained at a very high negative level
Include only trade receivables in 2006 and 2007.
In last year presentation, income tax receivables
and other receivable were also included
36
STRONG CASH FLOW GENERATION
m
2007
2006
297
303
EBITDA
(96)
(90)
Capex (net of disposals)
62
(13)
Change in working capital requirements
(65)
(54)
Taxes
198
146
Cash from operations
Exceptional improvement of WCR in 2006
Before leasing, debt service, dividends and
share buybacks
37
PLANNED INCREASE OF GEARING
31/01 2007
31/01 2008
m
595
496
Financial debt
(149)
(158)
Cash and marketable securities
338
446
Net financial debt
537
493
Equity
63.0
90.5
Net debt/equity
Net Debt / EBITDA
1.5
1.1
15.8
10.5
EBITDA / Financial charges
Impact of acquisitions, financial services
development and return to shareholders
38
PURSUED POLICY OF RETURN TO SHAREHOLDERS

• For 2006
• 2.1 of total shares bought back between July
  2006 and July 2007
• 655 782 shares for 62.1 million
• 3.30 dividend paid in July 2007
• 102.6 million
• Total value returned to shareholders 164.7
  million
• For 2007
• Buy-back of at least 2 of total shares
• 3.65 dividend per share (113 million)

100 of the increase in shareholders equity
returned to shareholders
39
10 INCREASE FOR 2007 DIVIDEND
In
4.99
5
4.75
4.35
4.32
4
3.65
3.58
3.50
3.30
3.00

• EPS

3
2.75
2.30
2
1.25
1.26
1.00
1

• Except.
• dividend

Pay-out ratio
43
45
98
69
66
77
A dividend of 3.65 per share for 2007, i.e. a
yield above 5
Based on the closing price of the 31st of
January 2008 (67.83)
40
OUTLOOK
41
CONTINUING BENEFITS OF THE NEOPOST MODEL

• Development of higher margin activities
• High end
• Supplies
• Leasing
• Postage financing
• Online services
• Structure optimisation
• Research Development
• Supply Chain
• Distribution

Potential to improve operating profitability
42
OUTLOOK

• Impact of PFE consolidation over 11 months in
  2007
• Sales 942 million
• Current operating margin 25.2
• 2008
• Sales
• Growth of at least 3 excluding PFE consolidation
• PFE impact around 3 percentage points of growth
  (at constant exchange rates)
• Current operating margin gain of 50 bps (from a
  current operating margin of 25,2 in 2007
  including PFE)
• Beyond 2008
• Continued technological and regulatory evolutions
• Neopost model for profitable growth will continue
  to bear fruit
• Optimisation programmes and PFE synergies
• Current operating margin above 26

43
APPENDIX
44
CONSOLIDATED BALANCE SHEETS (1/2)
FY 2007
FY 2006
Assets m
Goodwill
575
529
47
53
Fixed intangible assets
135
144
Fixed tangible assets
14
15
Financial investments
5
4
Other long term assets
425
399
Leasing receivables
45
Deferred tax assets
44
50
43
Inventory
157
Trade receivables
143
72
49
Other short-term assets
Cash and marketable securities
150
158
TOTAL
1,668
1,588
45
CONSOLIDATED BALANCE SHEETS (2/2)
FY 2007
FY 2006
Liabilities m
493
537
Shareholders equity
Provisions
40
42
Long-term financial debt
312
285
Short-term financial debt
310
184
Deferred tax liabilities
26
23
Prepaid income
167
157
Other short term liabilities
335
345
TOTAL
1,668
1,588
46
RETURN TO SHAREHOLDERS POLICY
July 2005
July 2006
July 2007
July 2008
m
157
136
138
104
Net income (previous year)
11
10
12
4
Exercised stock options (previous year)
0
0
0
135
Oceanes conversion
168
146
150
243
Impact on equity
103
113
69
48
Ordinary dividend
25
0
0
64
Special dividend
62
50
63
71
Share buy-backs
165
163
157
183
Return to shareholders
31.4
31.0
31.5
30.9
Number of shares (in millions)
2 of total shares bought back in 2007/2008
Does not include treasury stock held for
cancellation