NEOPOST_REGISTRATION_DOCUMENT_2017

5

Financial statements

Consolidated financial statements

6-3:

Current operating income and EBITDA

6-3-1:

Accounting principles

Research and development expenses Research and development expenses comprise the cost of carrying out research work, including depreciation of equipment used in this activity. These costs are expensed in the year in which they are incurred, and are clearly identified in the income statement. Development expenses that meet the activation criteria are presented in the balance sheet under intangible fixed assets (see note 4–2-2) and are then amortized. Sales and marketing expenses Sales and marketing expenses include the costs of sales departments, including advertising and promotional costs, and the cost of selling supplies.

Gross margin is defined as the difference between sales and cost of sales. EBITDA (Earnings Before Interests, Taxes, Depreciation and Amortization) is determined by adding to the current operating profit the amount of depreciation and amortization of fixed assets. Cost of sales Cost of sales consists of production-related direct costs (purchases, labour) plus depreciation of equipment rented to customers and sales-related transport and logistics costs.

6-3-2:

Gross margin and EBITDA calculation

31 January 2018

31 January 2017

Gross value

%

Gross value

%

Sales

1,111.7

100.0%

1,158.7

100.0%

Cost of sales

(279.3)

(25.1)%

(293.3)

(25.3)%

Gross margin

832.4

74.9%

865.4

74.7%

Operating expenses

(641.4)

(57.7)%

(662.5)

(57.2)%

Current operating profit

191.0

17.2%

202.9

17.5%

Amortization of fixed assets

93.7

8.4%

92.0

7.9%

EBITDA

284.7

25.6%

294.9

25.4%

6-4:

Breakdown of expenses by categories

31 January 2018

31 January 2017

Cost of inventories recognized as expense

259.1

264.5

Wages, bonuses, commissions and payroll charges

443.4

453.5

Rents and associated costs

28.0

32.2

Fees

26.9

26.7

Transport and travel

43.1

45.3

Fixed assets – depreciation and amortization

93.7

92.0

Other

26.5

41.6

Total expenses by category

920.7

955.8

Cost of sales

279.3

293.3

Operating expenses

641.4

662.5

TOTAL

920.7

955.8

128

REGISTRATION DOCUMENT 2017 / NEOPOST