NEOPOST_REGISTRATION_DOCUMENT_2017

5

Financial statements

Consolidated financial statements

A hedging strategy is adopted on the basis of the position to be managed and the reference interest rate adopted. The strategy is aimed at protecting the reference interest rate and at taking advantage, at least to some extent, of favorable movements. Hedging strategies involve definite and optional derivative instruments, and open positions are maintained if possible. The valuation of the open position based on market

forward interest rates, along with the interest rates obtained through hedging operations, should always protect the reference interest rate. Hedging strategies cover the period three years ahead at all times. However, the level of coverage and the weightings of the various derivative instruments may vary from one year to the next, since the aim is to maintain

greater scope for optimizing positions in later years.

Year-end position The table below sets out Neopost’s year-end position by maturity for the major currencies:

Notional value

EUR

USD

1 to 5 years > 5 years

1 to 5 years > 5 years

< 1 year

Total < 1 year

Total

Debt

13.8 539.0

71.0 623.8

10.2 266.5

16.0 292.7

Of which fixed-rate debts

6.2

170.7

57.0

233.9

6.4

93.5

-

99.9

CORRESPONDING HEDGE MATURITIES

155.0

-

-

155.0

-

95.0

-

95.0

The corresponding interest flows (excluding margin impacts) were calculated based on constant debt interest rate conditions and exchange rate parity at year-end. The following schedule is obtained:

2018

2019

2020

2021

Interest on fixed rates

7.0

6.5

4.7

2.5

Interest on the variable rate position

6.2

7.7

8.7

11.2

Interest on hedging operations

(2.1)

(2.1)

(1.2)

(0.2)

TOTAL

11.1

12.1

12.2

13.5

Sensitivity of the financial results to interest rate changes is as follows:

2018

2019

2020

2021

Sensitivity to a +0.5% increase in interest rates

1.3

1.6

2.5

3.4

Sensitivity to a (0.5)% decrease in interest rates

(1.2)

(1.4)

(2.5)

(3.4)

plain vanilla options: buying and selling of caps and floors • (used either alone or in combination); knock-in or knock-out barrier options: buying and selling of • caps and floors (used either alone or in combination); buying and selling of swaptions (used either alone or in • combination). Management mandates, packaged bank hedging products and derivative instruments that introduce a reference other than the underlying asset ( quanto swaps for example) are strictly forbidden by internal procedures.

For 2017, Neopost’s policy was to fix its net interest expenses in advance. As a result, after hedging and on a fixed-debt basis, 75% of Neopost group debt was not exposed to long-term interest rates for the current year. Only 25% of the debt remained exposed to long-term rates as at 31 January 2018. Instrument details Neopost uses standard and liquid derivative instruments. The instruments used are as follows: firm derivatives: swaps and FRA (Forward Rate • Agreement);

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REGISTRATION DOCUMENT 2017 / NEOPOST