2013 Full-year results March 2014 1
LIMITATION OF LIABILITY Forward-looking statement (Safe Harbour) This presentation contains forward-looking statements (made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995), which, by their nature, involve a degree of 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. 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 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 (French financial markets authority - AMF). 2
AGENDA Introduction 2013 financial statements Enlargement of the offering: recent development in CSS activities Dividend & Outlook 3
INTRODUCTION 4 Full-year 2013 results
NEW STRATEGY INITIATED IN 2012 Mail Solutions Mailing Systems Document Systems Other mailroom equipment Related services Communication & Shipping Solutions Customer Communication Management Data and Address Quality Shipping solutions Print finishing and graphics Continue developing mailrelated activities Expand the range of solutions for customers of Neopost network Accelerate the development of new activities Neopost Integrated Operations CSS Dedicated Units 5
2013 HIGHLIGHTS Mail Solutions Launch of the IN range (franking machine) in the US Strong momentum in the US Sustained growth in the Asia-Pacific region Return to good sales productivity in France Very challenging market in the UK Lower revenues from postal rate changes Virtually stable performance for Mail Solutions Communication & Shipping Solutions Confirmed technological leadership of GMC (Gartner and Forrester) First synergies between GMC and Neopost network Intensified synergies between Satori and the Neopost network (US and UK) Acquisition of DMTI Spatial New developments in Shipping Solutions Investment in new SaaS platform for customers of Neopost network Double-digit growth in CSS 6
TRANSFORMATION ON COURSE CSS 8% CSS 13% CSS 17% Mail Solutions Mail Solutions Mail Solutions 92% 87% 83% Very Resilient Mail Solutions activities Strong momentum in Communication & Shipping Solutions 7
FIVE CONSECUTIVE QUARTERS OF ORGANIC GROWTH +2.7% in 2013 +2.6% +3.0% +3.1% +2.1% +2.6% Q4 2012 Q1 2013 Q2 2013 Q3 2013 Organic growth compared with the same period last year Q4 2013 8
2013: STRATEGY AT WORK 2013 organic sales growth Neopost Integrated Operations CSS Dedicated Units Total Mail Solutions -0.2% - -0.2% Communication & Shipping Solutions (CSS) +22.5% +15.3% +18.9% Total +1.7% +15.3% +2.7% Organic growth of the Neopost network (NIO) driven by CSS activities 9
CHANGE IN CURRENT OPERATING MARGIN Current operating margin * (Current operating income / sales, as a %) 30 Implementation of the new strategy 25 24% 20 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Transformation of Neopost, while maintaining a high current operating margin 10 * Before acquisition-related costs
2013 FINANCIAL STATEMENTS 11 Full-year 2013 results
2013 SALES Change in sales (in millions) 1,070 +26 +30-30 1,096 Growth: +2.4% Growth excluding currency effects: +5.2% Scope effect: +2.5% Organic growth: +2.7% FY 2012 Scope effect * Organic growth Change effect FY 2013 Significant currency impacts 2.7% organic growth 12 * Impact of acquisitions: 2012 sales for GMC for 5 months ( 15.8 million), HI for 6months ( 5 million), and DMTI Spatial for 3 months ( 2.1 million)
2013 SALES BY BUSINESS LINE 2013/2012* 2013 Sales: 1,096 million Mail Solutions Communication & Shipping Solutions -0.2% +41.7% Communication & Shipping Solutions 17% Total growth excl. currency effects +5.2% Mail Solutions 83% Mail Solutions proved strongly resilient Very strong growth across all CSS activities 13 * excluding currency effects
2013 SALES BY REGION 2013/2012* 2013 Sales: 1,096 million North America Europe +6.4% +2.1% Asia-Pacific 7% Europe 54% o/w, France Asia Pacific -0.6% +23.1% North America 39% Total growth excl. currency effects +5.2% Strong growth in North America and Asia-Pacific Challenging economic environment in Europe 14 * excluding currency effects
2013 SALES BY REVENUE TYPE 2013/2012* 2013 Sales: 1,096 million Recurring revenue Sales of equipment & licences +1.8% +12.7% Rental & leasing 26% Services & supplies 41% Total growth excl. currency effects +5.2% Sales of equipment & licences 33% Strong growth in equipment and licence sales 15 * excluding currency effects
CURRENT OPERATING INCOME In million 2012 2013 Sales 1,070 1,096 Gross margin 832 838 % of sales 77.8% 76.5% EBITDA 334 331 % of sales 31.2% 30.2% Current operating income (before acquisition-related costs) 267 263 % of sales 24.9% 24.0% Current operating margin (before acquisition-related costs) sustained at a high level 16 /$ 2013 = 1.33 and 2012 = 1.29; / 2013 = 0.85 and 2012 = 0.81
OPERATING MARGIN BY SEGMENT In million NIO CSS DU Total 2012 NIO CSS DU Eliminations Eliminations Total 2013 Mail Solutions 933 - - 933 910 - - 910 Communication & Shipping solutions 81 71-15 137 94 110-18 186 Total Sales 1,014 71-15 1,070 1,004 110-18 1,096 Current operating Margin (excluding acquisition-related costs) 25.4% 12.8% 24.9% 24.8% 12.2% 24.0% Including 7 months for GMC and 2 months for Human Inference Including 12 months for GMC and Human Inference, and 3 months for DMTI Spatial Resilient Neopost network (NIO) margin 17 /$ 2013 = 1.33 and 2012 = 1.29; / 2013 = 0.85 and 2012 = 0.81
OPERATING INCOME In million 2012 2013 Current operating income (before acquisition-related costs) 267 263 Acquisition-related costs -7-8 Current operating income 260 255 Acquisition-related income - 15 Optimisation expenses -4-13 Operating income 256 257 Stable operating income 18 /$ 2013 = 1.33 and 2012 = 1.29; / 2013 = 0.85 and 2012 = 0.81
NET INCOME In million 2012 2013 Operating income 256 257 Cost of debt -31-37 Currency gains and losses and other 1-1 Net financial income/(expense) -30-38 Taxes -65-55 Net attributable income to owners Net margin as a % of sales EPS Fully diluted EPS 161 15.0% 4.74 4.52 164 15.0% 4.78 4.54 Increase in net income and earnings per share 19 /$ 2013 = 1.33 and 2012 = 1.29; / 2013 = 0.85 and 2012 = 0.81
CASH FLOW GENERATION Change relative to 31 January, in million 2012 2013 EBITDA 334 331 Other items -5-8 Cash flow* 329 323 Change in WCR -19-34 Change in lease receivables -31-33 Interest and income tax paid -72-66 Cash flow from operations 207 190 Capital expenditure -92-95 Acquisitions -132-40 Cash flow after capital expenditure -17 55 Strong level of cash flow from operations 20 * before cost of net debt and tax /$ 2013 = 1.33 and 2012 = 1.29; / 2013 = 0.85 and 2012 = 0.81
FINANCIAL STRUCTURE In million 31/01 2013 31/01 2014 Financial debt 949 995 Cash and marketable securities -158-187 Net financial debt 791 808 Shareholders equity 747 770 Net debt / shareholders' equity 106% 105% Net debt / EBITDA ratio 2.4 2.4 Healthy financial structure 21 Covenants: minimum shareholders' equity 525 million and net debt/ebitda ratio below 3.25
NEOPOST'S SOLID BALANCE SHEET Shareholders' equity: 770 million at end-january 2014 Future leasing and rental flows in excess of 975 million Leasing portfolio at 31 January 2014: 675 million +5% relative to 31 January 2013* Rental Net present value of future rental cash flows greater than 300 million Net debt: 808 million at end-january 2014 Future leasing and rental cash flows comfortably in excess of net debt 22 * excluding currency effects
FINANCING STRUCTURE In million 1500 1000 500 0 BD* DD** BD* DD** January Janvier 12 12 January Janvier 13 13 January Janvier 14 436 million BD* DD** Disponibilité Amount available sur la on ligne the revolving facility nouvelle new facility ligne since depuis January janvier 2013 2013 Amount Disponibilité available sur le on placement the Natixis privé / BPCE private placement Natixis / BPCE cancelled annulé 2012 en 2012 Drawings Tirage sur on la the ligne revolving facility new nouvelle facility ligne since depuis January janvier 2013 2013 Schulschein Schuldschein 2012 $95m M$ and et 67 67m M Maturité Maturity 4 ans years France Placement 2012 privé private France placement 2012 150 150m M Maturité Maturity 5 ans 5 years France Emprunt 2012 Obligataire bond issue France 150m 2012 Maturity 150 M 7 Maturité years 7 ans OCEANE 2009 Maturity Maturité 5 5 years ans Crédit Placement Agricole Privé private Crédit placement Agricole repaid remboursé USPP 2014 $50m 50M$ Maturity Maturité 6 years 6 ans USPP 2012 $175m M$ Maturity Maturité from de 4 to à 10 ans years Diversified Diversified financing sources structure of financing with large amount available for draw-down 23 * BD = Bank Debt ** DD = Disintermediated Debt
DEBT MATURITY In million 350 300 250 200 150 100 50 0 2014 2015 2016 2017 2018 2019 et and + beyond Good control over refinancing schedule 24
ENLARGEMENT OF THE OFFERING: RECENT DEVELOPMENTS IN CSS 25 Full-year 2013 results
RECAP ON CSS ACTIVITIES Characteristics of CSS activities Niche markets (worth about 1 billion) offering growth potential in the double digits Markets in which Neopost is or can become a key player Synergies with the existing customer base and with the Neopost distribution network CSS strategy Organic growth Partnerships Targeted acquisitions, ROCE target of 15% in 3 to 4 years Adaptation of product offering to meet the needs of SMEs Buoyant growth markets Synergies with Neopost customers and network 26
COMMUNICATION & SHIPPING SOLUTIONS DEDICATED UNITS CUSTOMER TYPOLOGY DISTRIBUTION MODE OFFER Large corporations, PSP, postal organisations, carriers, logistics companies CSS DU Specific CSS DU sales teams GMC Software Technology Satori Software Human Inference Neopost ID DMTI Spatial Medium-sized businesses NIO NIO specialist sales teams acting as VAR* for the CSS DUs GMC Software Technology Satori Software Human Inference Neopost ID DMTI Spatial Partners SMEs/VSEs NIO NIO sales teams and direct channels SaaS / Cloud offering developed by CSS DU & partners 27 * VAR: Value Added Reseller
DATA QUALITY Double-digit organic growth* Success of Address Quality solution (Satori / SAP partnership) Success of Satori's new Data Quality solution Recognition of Human Inference's technology by Forrester Acquisition of DMTI Spatial in November 2013 Address Quality leader Enlargement of the offering in Data Quality 28 * 2013 organic growth (excluding currency effects)
DMTI SPATIAL Provider of location-based data quality solutions Prestigious customer portfolio: Apple, Google, TomTom, Bell Canada, Rogers communications, Canadian Federal Government, and more Potential for synergies with Satori Software and Human Inference, and also with GMC Software Technology Established positions in Canada, with pilot under way outside Canada 2013 Sales: 10 million Canadian dollars Market leader in Canada Potential for international expansion 29
CUSTOMER COMMUNICATION MANAGEMENT Double-digit organic growth* Consolidation of global Print Service Providers (PSP) leadership position with 60% market share Successful vertical winover strategy (banks, insurance, telcos, utilities, etc.) Sales up 48% versus 2012 32% of 2013 sales, compared with 24% in 2012 Visionary company, offering innovative products and solutions such as Dynamic Statement and CCM on glass GMC's technological leadership recognised by Forrester and Gartner (ranked 1st and 2nd, respectively) 30 * 2013 organic growth (excluding currency effects)
GMC SOFTWARE TECHNOLOGY: RECOGNISED AS TECHNOLOGICAL LEADER Magic Quadrant for CCM Software (Gartner, Nov. 2013) Document Output for CCM Wave (Forrester, Jan. 2014) GMC position in 2011 wave 2011-2014 evolution 31 Sources: Gartner and Forrester 31
SHIPPING SOLUTIONS Pack Ship Collect Accept, sort & route Deliver Receive/ Collect Return Create Collect Capture Process Store Transform Monitor Deliver Inform Track & trace data management Optimized packing system Collection & delivery tracking Proof-of-delivery management Shipping software Collection & delivery tracking Parcel lockers Neopost, parcel facilitator 32 * Hors effets de change
SHIPPING SOLUTIONS Organic growth in excess of 30%* Growth in existing Online Shipping Solutions, Data Capture, Track & Trace contracts Roll out of Parcel Lockers in Australia: 165 lockers installed in 2013 (47 in 2012) Successful RFID pilot developed for French Army Roll-out in 2015 New developments Packcity Optimised Packing System: CVP-500 33 * 2013 organic growth (excluding currency effects)
PACKCITY Pilots launched in November 2013 (Relais Colis, Monop, Klépierre, Immochan) Fill rate of up to 70% without any particular promotion 60% of pick-ups on the same day Agreement signed with GeoPost in January 2014 1,500 machines to be installed for the French market by the end of 2016 Potential installation of 3,000 machines over time 1 Packcity network GeoPost dedicated lockers Lockers opened for a number of operators in the logistics and distribution chain (delivery, returns, concierge service, click and collect) Financing requirement of about 50 million, broken down as 2/3 Neopost and 1/3 GeoPost Potential for international development 34
CVP-500: INNOVATION AT Continuous packing system delivering 3D optimisation of parcel size An innovation that embodies Neopost's expertise In conjunction with one of the largest e-fulfilment professionals in the Netherlands: A pilot tested from May to November 2013 Placed in production in November 2013: 200,000 parcels wrapped since then Click on CVP-500 image below to launch introduction movie Pack size = Product size Up to 500 parcels per hour 1 to 10 items per parcel Very broad range of sizes No need for packing fillers Carton reusable for returns or other No stock of predefined boxes, but pallets of corrugated cardboard Order details printed and packed at the same time Shipping label printed and applied on the box 35
CVP-500: INITIAL RESULTS Main advantages: Automation & optimisation * 20% savings on labour Up to 40% less shipping volume No filler material needed Up to 20% reduction in cardboard used Flexibility for peak times Operators concerned: * CVP-500-40% Manuel E-tailers E-fulfilment professionals Carriers Any company handling large volumes of parcels 3 million spent in 2013, broken down into 40% CAPEX and 60% OPEX Currently assessing the business model and market potential 36
NEOPOST INTEGRATED OPERATIONS VAR* CUSTOMER TYPOLOGY DISTRIBUTION MODE OFFER Large corporations, PSP, postal organisations, carriers, logistics companies CSS DU Specific CSS DU sales teams GMC Software Technology Satori Software Human Inference Neopost ID DMTI Spatial Medium-sized businesses NIO NIO specialist sales teams acting as VAR* for the CSS DUs GMC Software Technology Satori Software Human Inference Neopost ID DMTI Spatial Partners SMEs/VSEs NIO NIO sales teams and direct channels SaaS / Cloud offering developed by CSS DU & partners 37 * VAR: Value Added Reseller
NEOPOST INTEGRATED OPERATIONS VAR* Increase in the number of GMC approved NIO subsidiaries and training of specialist sales staff In 2013 In 2014 Use of the NIO customer base Success of CSS in the NIO network Customer Communication Management: 50%* organic growth Data Quality: 25%* organic growth Shipping solutions: 50%* organic growth 38 * VAR: Value Added Reseller ** Organic growth in 2013 excluding currency effects
NEOPOST INTEGRATED OPERATIONS CUSTOMER TYPOLOGY DISTRIBUTION MODE OFFER Large corporations, PSP, postal organisations, carriers, logistics companies CSS DU Specific CSS DU sales teams GMC Software Technology Satori Software Human Inference Neopost ID DMTI Spatial Medium-sized businesses NIO NIO specialist sales teams acting as VAR* for the CSS DUs GMC Software Technology Satori Software Human Inference Neopost ID Partners DMTI Spatial SMEs/VSEs NIO NIO sales teams and direct channels SaaS / Cloud offering developed by CSS DU & partners 39 * VAR: Value Added Reseller
NEOPOST INTEGRATED OPERATIONS First CSS pilot applications: Shipping neoship CCM Data Quality neoclean Acceleration of capital expenditure and preparation for launching the SaaS platform Salesforce.com and Zuora First products developed by GMC launched in the UK in H1 and in the US in H2 2014 OMS 500 client/server to replace Print Machine OMS 500 in SaaS mode neopreference SME solution supported by the new infrastructure 40
RETURN ON INVESTMENTS Data Quality: Satori Software case study Initial sales of $13 million in 2009 Sales have more than doubled in four years: $29 million in 2013 Total acquisition cost = $27 million EBIT of 10% at the time of the acquisition, rising to close to 20% in 2013 ROCE > 20% (excl. synergies from the NIO network) Customer Communication Management: GMC Software Technology ROCE already above 10 % in 18 months (excl. synergies from the NIO network) Relevant and well-integrated acquisitions that create value 41
RETURN ON INVESTMENTS Shipping solutions: a different business model Development of brand new solutions from scratch Investment and expenditure instead of acquisitions Choice of sales development models focusing on recurring revenues Gradual build-up of sales EBIT below 10% in 2013 Potential operating margin of 15 to 20% for each of the 3 CSS DUs 42
DIVIDEND & OUTLOOK 43 Full-year 2013 results
DIVIDEND (In ) 4.74 3.90 4.78 3.90 EPS Dividend (100% in cash) Final dividend 2.10 Interim dividend 1.80 Pay-out ratio: 2012 2013 82% 82% 3.90 dividend per share proposed in respect of 2013, giving a return of close to 7%* 44 * Based on closing price on 21 March 2014 (59.54 )
2014 OUTLOOK 2014 sales growth expected to be in the range of 1 to 3%, excluding currency effects: Sales for Mail Solutions maintained more or less stable (organic growth) Double-digit organic growth in Communication & Shipping Solutions (CSS)* Current operating margin, before acquisition-related costs, expected to be between 22.5 and 23.5%** based on identified and approved projects: Significant spending and capital expenditure for the SaaS platform and hosted solutions Significant spending and capital expenditure for Shipping Solutions (Packcity/CVP-500) Choice of development models focusing on recurring revenues, to be reflected in the gradual build-up in sales (SaaS and HaaS) 45 * Scope effects related to the DMTI acquisition (+ 5 million in 2013) ** Excluding acquisition
MEDIUM-TERM VISION 2013 2016-18 CSS CSS 17% 30-35% Mail Solutions 83% Mail Solutions 65-70% 46
APPENDICES 47 Full-year 2013 results
DEFINITIONS Mail Solutions Mailing systems, document systems (desktop, professional, production folder/inserters, other mailroom equipments) and related services Communication & Shipping Solutions (CSS) Data quality, Customer Communication Management, Shipping Solutions, print finishing and graphic solutions Neopost Integrated Operations Neopost operating companies engineering, producing and distributing Neopost products and services CSS Dedicated Units Neopost ID, Satori Software, Human Inference, GMC Software Technology and DMTI Spatial 48
PRODUCT DEFINITIONS Inspire: enterprise communication platform enabling companies to consistently deliver relevant and personalised messages, at the right time through the preferred channel. Satori Capture: point-of-entry, instant address verification tool, used to collect fast and accurate contact data at the point of input to the software system. Satori Architect: software suite offering a comprehensive range of tools for the development of a Data Quality solution for contacts, to meet customers' individual needs. Mes envois.fr: on-line price comparison site for sending parcels and preparing registered mail, designed especially for business customers. SendEasy: application for professional shipping solutions, focused on e-commerce and companies with a small to medium volume of parcels. 2Ship: SaaS solution allowing any authorised user in a company with on-line access to arrange shipments from a single secure platform. Neoship: a simple shipping solution to create labels for shipments, compliant with USPS criteria. Neotouch: hybrid mail solution where the sender creates the item electronically, which is then materialised in our plant. The item is printed, folded, inserted in the envelope and metered in our production centre, and then physically delivered to the recipient. DPM (Delivery Preference Manager): cloud-based solution that seamlessly integrates with production management software to provide companies with a simple and efficient method for managing multi-channel communications. 49
CONSOLIDATED BALANCE SHEET (1/2) Assets ( millions) 31/01 2013 31/01 2014 Goodwill 979 977 Intangible fixed assets 147 178 Tangible fixed assets 139 134 Non-current financial assets 46 46 Other non-current receivables 4 2 Leasing receivables 645 675 Deferred tax assets 9 10 Inventories 69 69 Trade receivables 203 219 Other current assets 87 82 Financial securities 158 187 Current financial instruments 0 0 TOTAL 2,486 2,579 50
CONSOLIDATED BALANCE SHEET (2/2) Liabilities ( millions) 31/01 2013 31/01 2014 Shareholders equity 747 770 Non-current provisions 18 20 Non-current financial debt 873 908 Current financial debt 76 87 Other non-current liabilities 37 12 Deferred tax liabilities 126 142 Non-current financial instruments 4 3 Prepaid income 220 211 Other current liabilities 384 426 Current financial instruments 1 0 TOTAL 2,486 2,579 51