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Neopost: 2012: A Year of Significant Expansion in Businesses Not Related to Mail



  Neopost: 2012: A Year of Significant Expansion in Businesses Not Related to
  Mail

  * 2012 sales: €1,070 million, up 2.5% excluding currency effects
  * 2012 current operating margin^1 before acquisition-related expenses
    maintained at almost 25% of sales
  * 2012 net margin^2: 15.0% of sales
  * Proposed dividend unchanged at €3.90 per share

2013 OUTLOOK

  * 2013 sales expected to grow by at least 5% excluding currency effects
  * Current operating margin before acquisition-related expenses expected to
    be over 25% for Neopost Integrated Operations^3 and over 12% for CSS
    Dedicated Units^3

Business Wire

PARIS -- March 26, 2013

Regulatory News:

Neopost (Paris:NEO), the European leader and number two world-wide supplier of
mailing solutions, today released its full-year results for 2012 (12-month
period ended 31 January 2013).

In 2012, the Group generated sales of €1,070.0 million, up 6.7% relative to
2011 or 2.5% excluding currency effects. In particular, Neopost's sales were
boosted by the acquisitions of the distributor GBC Australia (consolidated
since June 2011), GMC Software Technology, a company specialising in Customer
Communication Management (consolidated since July 2012) and Human Inference,
which specialises in data quality (consolidated since December 2012).

Current operating income amounted to €266.7 million in 2012 before
acquisition-related expenses, up from €256.5 million in 2011. 2012 current
operating margin ^1 before acquisition-related expenses was 24.9% versus 25.6%
in 2011.

After acquisition-related expenses of €6.8 million, a €4.0 million provision
for optimisation charges following the integration of GMC Software Technology
and an increase in tax expenses, net attributable income rose from €153.6
million in 2011 to €160.6 million in 2012, giving a net margin^2 of 15.0% as
opposed to 15.3% in 2011.

Denis Thiery, Chairman and Chief Executive Officer of Neopost, said: "Just one
year ago, we were formulating our new strategy. In line with this strategy, we
have made strategic acquisitions in Customer Communication Management and Data
Quality. The last 12 months have also shown the resilience of our mail-related
businesses, along with the strong momentum of our Communication & Shipping
Solutions activities. As a result, Neopost resumed firm organic growth at the
end of 2012. At the same time, we were able to keep operating margin at almost
25%, and to maintain a very strong financial position while also investing
heavily. This means that we are again able to provide a substantial return to
our shareholders through a dividend that equates to a yield of over 8%."

^1 Current operating margin before acquisition-related expenses = current
operating income before acquisition-related expenses/sales
^2 Net margin = net attributable income /sales
^3 See glossary page 6

(in € million)                                     2012      2011      Change
Sales                                              1,070.0   1,002.6   +6.7%^4
Current operating income before                    266.7     256.5     +4.0%
acquisition-related expenses
% of sales                                         24.9%     25.6%     -
Current operating income                           259.9     256.5     +1.3%
% of sales                                         24.3%     25.6%     -
Optimisation expenses and others                   (4.1)     (19.5)    -
Net income                                         161.3     154.6     +4.3%
% of sales                                         15.1%     15.4%      
Net attributable income                            160.6     153.6     +4.6%
% of sales                                         15.0%     15.3%      
Reported earnings per share                        4.74      4.71      +0.6%
Diluted earnings per share                         4.52      4.50      +0.4%
                                                                        

^4 +2.5% at constant exchange rates

Breakdown of 2012 sales

2012 sales rose by 6.7% to €1,070.0 million, an increase of 2.5% at constant
exchange rates.

Sales were boosted by the acquisitions of GBC Australia (consolidated since
June 2011), GMC Software Technology (consolidated since July 2012) and Human
Inference (consolidated since December 2012). On the other hand, compared with
last year, sales suffered from lower revenues from postal rate changes in
several countries.

In North America, sales decreased by 2.5% excluding currency effects and in
France by 7.4%. In North America, to address the temporary decline in the
number of leasing contracts coming to an end between two waves of
decertification echoes, the Group redeployed its sales force to focus on
folders/inserters, which mitigated the decrease in equipment sales. In France,
the new organisation implemented following the combination of distribution
subsidiaries caused some disruption to sales operations, but the situation
gradually improved throughout 2012.

In other markets, sales rose by 2.0% at constant exchange rates in the United
Kingdom, by 6.0% in Germany and by 29.6% at constant exchange rates in the
Rest of the World. This strong growth resulted from the consolidation of GMC
Software Technology and Human Inference, along with good performances in
Asia-Pacific.

Equipment sales were almost unchanged in 2012, rising by 0.4% at constant
exchange rates. The lower equipment sales in North America and in France were
mitigated by the consolidation of GMC Software Technology (licence sales), and
the good results recorded in Asia-Pacific.

Recurring revenue rose by 3.4% at constant exchange rates, due in particular
to growth in leasing and the consolidation of GMC Software Technology and
Human Inference (maintenance and service revenue).

Mailing systems sales fell by 2.1% at constant exchange rates in 2012, due to
lower revenue from postal rate changes and the end of the echo effect from the
2006 decertification programmes in North America. Mailing systems accounted
for 65% of the Group's total sales in 2012.

Sales of document and logistics systems continued to grow, rising by 12.1% at
constant exchange rates due to the Group's competitive products and services
and the positive impact of consolidating GMC Software Technology and Human
Inference.

Communication & Shipping Solutions (businesses not related to mail) saw strong
growth in 2012. They accounted for 13% of Group sales in 2012 versus 8% in
2011. This substantial increase is the result of organic growth momentum in
these businesses, along with the successful integration of two acquisitions -
GMC Software Technology and Human Inference - where sales growth was strong.

Current operating income

Current operating income before acquisition-related expenses was €266.7
million in 2012, versus €256.5 million in 2011. Current operating margin
before acquisition-related expenses remained at a high level. It reached 24.9%
compared to 25.6% in 2011.

The variation in operating margin was mainly due to lower revenue from postal
rate changes, the dilutive effect of growth in Asia-Pacific and at GMC
Software Technology, and investments in rolling out a specific distribution
channel to cover entry-level equipment. Higher social contributions related to
pension, employee profit-sharing and incentive plans in France also dragged
down operating income.

The Group's current operating margin before acquisition-related expenses
reflects:

  * a margin of over 25% in Neopost Integrated Operations^5;
  * a margin of over 12% in CSS Dedicated Units^5.

Current operating income was €259.9 million in 2012, versus €256.5 million in
2011. Acquisition-related expenses amounted to €6.8 million in 2012, whereas
they were non-existent in 2011.

^5 Glossary page 6

Optimisation plans

During 2011, the Group launched a plan to optimise its operations in the
United States and Europe, with the aim of continuing to streamline its
organisation and creating fresh impetus. Implementation of this plan is now
complete.

The Group has started to see the positive effects of this optimisation plan,
and confirms that it should generate annual savings of around €7-8 million
from 2013.

More recently, following the acquisition of GMC Software Technology, the Group
decided to combine its teams working on document composition software with
those of GMC Software Technology, and to close its operations in Ruti,
Switzerland. A provision of €4 million has been set aside in the 2012
financial statements. This new organisational optimisation should yield more
than €2 million of savings from 2014.

Higher net income

The net cost of debt rose slightly from €30.4 million in 2011 to €31.2 million
in 2012. Foreign exchange gains and other financial items resulted in income
of €0.8 million in 2012 as opposed to €2.8 million in 2011. Overall, net
financial income totalled €30.4 million in 2012 versus €27.6 million in 2011.

The average tax rate increased, due in particular to a rise in certain tax
charges in France. It was 28.6% in 2012, up from 26.5% a year previously.

Net income was €161.3 million, up 4.3% on 2011. Net attributable income came
in at €160.6 million, versus €153.6 million in 2011.

Refinancing efforts complete

As planned, the Group completed its refinancing programme in 2012. It
fulfilled its aim of arranging new sources of financing to replace the Crédit
Agricole private placement due to mature in December 2012 (€133 million) and
the multi-currency revolving syndicated credit facility expiring in June 2013
(€675 million).

Between June 2012 and January 2013, the Group raised €867 million and $270
million as follows:

  * a $175 million bond issue in the form of a private placement with various
    insurance companies in the United States, with maturities of between 4 and
    10 years;
  * a €150 million issue of bonds placed with several French insurance
    companies including AXA, with a 5-year maturity;
  * $95 million and €67 million of German-law Schuldschein bonds placed with
    European and Asian investors, with a 4-year maturity;
  * a €150 million issue of bonds to qualified investors in France, with a
    7-year maturity;
  * a new €500 million revolving euro/dollar credit facility with a 5-year
    term, replacing the aforementioned multi-currency revolving syndicated
    credit facility expiring in June 2013.

After refinancing, the average interest rate of funding was just under 4%. The
average maturity of its debt was also significantly extended, rising from less
than 2 years to more than 4 years.

Stronger financial position

Cash flow before net cost of debt and income tax is very high and strongly
recurring. It reached €328.7 million in 2012, up 1.4% relative to 2011.

Leasing receivables amounted to €645.4 million at 31 January 2013 versus
€616.9 million at 31 January 2012, an increase of 4.90% at constant exchange
rates.

The Group also acquired GMC Software Technology and Human Inference and paid
out €98.6 million of dividends to its shareholders.

At 31 January 2013, net debt was €791.5 million. The increase of €117.9
million relative to 31 January 2012 corresponded to the cost of the two
acquisitions.

The Group's net debt finances the equipment used by its customers, and is more
than covered by future cash flows from the leasing and rental businesses.

At 31 January 2013, shareholders' equity was €746.6 million, substantially
higher than the year-earlier figure of €696.8 million. This increase was due
to net income generated during the year and the creation of new shares
relating to the 2011 dividend, which was partly paid in shares.

As a result, gearing ended the period at 106% as opposed to 97% a year
earlier. The leverage ratio (Net debt/EBITDA) rose to 2.3 as opposed to 2.1 in
2011. The Group comfortably complied with its banking covenants.

At 31 January 2013, the Group had €452 million of undrawn credit facilities.

Unchanged dividend

Based on the Group's strong cash flow, the Board of Directors has decided to
ask the 2 July 2013 shareholders' meeting for its approval to pay a total
dividend of €3.90 per share in respect of the 2012 financial year. If the
total dividend is approved, the final dividend paid in July 2013 will be €2.10
per share, since the Group paid an interim dividend of €1.80 per share on 23
January 2013. The final dividend with respect to 2012 will be paid entirely in
cash, as was the case with the interim dividend.

The Group plans to maintain a high dividend in 2013 and to continue its
interim dividend policy.

2013 outlook

In mail-related businesses (Mail solutions), Neopost should see improved
performance in the United States and France in 2013, along with further
expansion in Asia-Pacific. As regards businesses not related to mail
(Communication & Shipping Solutions), the Group anticipates further organic
growth along with commercial synergies arising from the integration of
recently acquired companies, i.e. GMC Software Technology and Human
Inference^6. Overall, although economic conditions are likely to remain tough,
the Group expects sales to rise by at least 5% excluding currency effects in
2013.

On the earnings front, the Group expects current operating margin^1 before
acquisition-related expenses to be:

  * over 25% in Neopost Integrated Operations,
  * over 12% in CSS Dedicated Units.

Denis Thiery concluded: "We are very confident regarding 2013 and the next few
years. Neopost is continuing to develop its mail-related businesses, with a
focus on innovating, expanding geographically and developing services. Our
range of Communication & Shipping Solutions shows exciting growth potential.
In addition to the organic growth being achieved by dedicated units like GMC
Software Technology, Human Inference, Satori and Neopost ID - which mainly
work with large corporations - we are also able to adapt and roll out their
complex technologies across our traditional customer base. This enables us to
offer an enhanced range of solutions to our 800,000-strong customer base in
mail related activities along with tools and services dealing with
communication flows, data quality and parcel shipping and tracking."

^6 2012 sales will integrate €24 million related to 5 months of GMC Software
Technology and 10 months of Human Inference.

Glossary :

  * 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, Human Inference, GMC Software
    Technology

Calendar

First-quarter sales figures will be published on 3 June 2013 after the market
close.

ABOUT NEOPOST

NEOPOST IS THE EUROPEAN LEADER and the number two world-wide supplier of
mailing solutions. It has a direct presence in 29 countries, with 5,900
employees and annual sales of €1.070 billion in 2012. Its products and
services are sold in more than 90 countries. The Group is a key player in the
markets for mailroom equipment and logistics solutions.

Neopost supplies the most technologically advanced solutions for franking,
folding/inserting and addressing as well as logistics management and
traceability. Neopost also offers a full range of services, including
consultancy, maintenance and financing solutions.

Neopost is listed in the A compartment of Euronext Paris and belongs notably
to the SBF 120 index.

2012
Consolidated income statement

                                         2012                2011

€ million                                (year ended         (year ended

                                         31/01/2013)         31/01/2012)
Sales                                    1,070.0   100.0%    1,002.6   100.0%
Cost of sales                            (238.0)   (22.2)%   (222.3)   (22.2)%
Gross income                             832.0     77.8%     780.3     77.8%
R&D expenses                             (33.0)    (3.1)%    (30.0)    (3.0)%
Selling expenses                         (269.1)   (25.2)%   (246.1)   (24.6)%
Administrative expenses                  (165.2)   (15.4)%   (151.8)   (15.1)%
Maintenance and other expenses           (89.8)    (8.4)%    (86.4)    (8.6)%
Employee profit-sharing and              (8.2)     (0.8)%    (9.5)     (0.9)%
share-based payments
Current operating income before          266.7     24.9%     256.5     25.6%
acquisition-related expenses
Acquisition-related expenses             (6.8)     (0.6)%    -         -
Current operating income                 259.9     24.3%     256.5     25.6%
Gain/(losses) on disposals and others    (0.1)     -         -         -
Optimisation expenses                    (4.0)     (0.4)%    (19.5)    (1.9)%
Operating income                         255.8     23.9%     237.0     23.7%
Net financial income/(expense)           (30.4)    (2.8)%    (27.6)    (2.8)%
Income before taxes                      225.4     21.1%     209.4     20.9%
Income taxes                             (64.5)    (6.0)%    (55.4)    (5.6)%
Income from associates                   0.4       -         0.6       0.1%
Net income                               161.3     15.1%     154.6     15.4%
Non-controlling interests                0.7       0.1%      1.0       0.1%
Net attributable income                  160.6     15.0%     153.6     15.3%
                                                                        

2012
Condensed balance sheet

ASSETS (€ million)                   31 January 2013   31 January 2012
Goodwill                             978.6             803.8
Intangible assets                    146.8             91.7
Property, plant and equipment        138.8             139.6
Other non-current financial assets   45.6              37.3
Leasing receivables                  645.4             616.9
Other non-current receivables        3.5               11.5
Deferred tax assets                  9.3               12.6
Inventories                          68.9              67.5
Trade receivables                    203.3             195.0
Other current assets                 87.2              95.1
Financial instruments                0.4               0.1
Cash and cash equivalents            158.1             171.8
TOTAL ASSETS                         2,485.9           2,242.9
                                                      
                                                        
LIABILITIES (€ million)              31 January 2013   31 January 2012
Shareholders' equity                 746.6             696.8
Non-current provisions               17.9              12.9
Non-current financial debt           873.5             306.3
Other non-current liabilities        37.4              12.6
Current financial debt               76.1              539.1
Deferred tax liabilities             125.8             100.7
Non-current financial instruments    3.5               7.4
Prepaid income                       219.8             204.8
Current financial instruments        1.1               3.3
Other current liabilities            384.2             359.0
TOTAL EQUITY AND LIABILITIES         2,485.9           2,242.9
                                                        

2012
Simplified cash flow statement

€ million                                          2012      2011
EBITDA                                             336.9     319.1
Adjustments to reconcile EBITDA to cash flow       (8.2)     5.2
Cash flow before net cost of debt and income tax   328.7     324.3
Change in the working capital requirement          (18.8)    (4.9)
Net change in leasing receivables                  (30.7)    (32.7)
Cash flow from operating activities                279.2     286.7
Interest and tax paid                              (72.6)    (60.1)
Net cash flow from operating activities            206.6     226.6
Capital expenditure                                (91.9)    (71.4)
Purchases of securities and granting of loans      (132.2)   (52.9)
Disposals of assets and other                      13.6      9.0
Net cash flow from investing activities            (210.5)   (115.3)
Increases in capital                               0.5       1.7
Dividends                                          (98.6)    (76.7)
Change in debt and other                           116.3     3.8
Net cash flow from financing activities            18.2      (71.2)
Impact of exchange rates on cash                   (28.7)    (3.0)
Change in net cash position                        (14.4)    37.1
                                                              

Audits of the full-year financial statements have been performed by the
statutory auditors. The certification report shall be issued after
verification of the management report and final implementation of the required
procedures and diligences for the annual financial report publication.

Contact:

Gaële Le Men, 01 45 36 31 39
Investor Relations Officer
g.le-men@neopost.com
or
Fabrice Baron, 01 53 32 61 27
DDB Financial
fabrice.baron@ddbfinancial.fr
or
Visit our web site: www.neopost.com
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