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Interim Results
September/October 2007
1
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’.
2
FIRST HALF 2007
Highlights
First half accounts
Significant acquisitions
Confirmation of outlook
3
FIRST HALF 2007 HIGHLIGHTS
4
FIRST HALF 2007 HIGHLIGHTS
Strong growth
Further profitability gains
Return of value to shareholders
Significant acquisitions
5
STRONG SALES GROWTH
Quarterly sales (€ million)
+7.8%
in H1 07
260
+11.9% in 2006
+10.5%
+8.9% in 2005
240
+5.1%
+6.3% in 2004
220
200
180
7
0
7
20
2
Q
Q
1
20
0
6
0
6
20
Q
4
20
0
6
Q
3
20
0
6
2
Q
1
20
0
5
Q
Q
4
20
0
5
0
5
20
Q
3
20
0
5
2
Q
1
20
0
4
Q
Q
4
20
0
4
0
4
20
0
3
20
Q
2
Q
Q
1
20
0
4
160
Growth significantly above the market average
6
Growth figures are a year-on-year comparison on a like-for-like basis, and exclude the Stielow non-core businesses sold in September 2003 and
March 2004.
FURTHER PROFITABILITY GAINS
Current operating margin
(Current operating income / Sales, %)
26.3
26.0
25
24.8
20.6*
21.0*
23.4
21.5*
20.7
19.6
20
18.6
19.2*
16.7
15
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
*Excl. Neopost Online
H1
2007
7
RETURN TO SHAREHOLDERS FROM JULY
2006 TO JULY 2007
2006 dividend: €3.30 per share
 Yield of 3.5%*
 Total distribution to shareholders €103m
Share buy-back and cancellation
 675,782 shares, or 2.3% of capital, acquired between July 2006
and July 2007
 Total amount: €62m, i.e. an average price of €94.60 per share
=> Total value returned to shareholders: €165m
100% of the increase in shareholders' equity in 2006
returned to shareholders
*Based on the closing share price on 31 January 2007: €95.15
8
FIRST HALF 2007 ACCOUNTS
9
STRONG GROWTH IN H1 2007
Sales (€ million)
500
+35.1
470.4
450
-15.0
450.3
400
350
H1
2006
Growth*
Currency
impacts
H1
2007
Growth of 7.8% at constant exchange rates
*Excluding currency impacts
10
STRONG GROWTH IN H1 2007
Change H1 2007/H1 2006*
North
America
H1 Sales 2007: €470.4m
+ 13.8%
France
+ 6.0%
United
Kingdom
- 2.4%
Germany
+ 7.1%
Rest of the
world
Rest of the world
10%
Germany
6%
United
Kingdom
15%
+ 5.0%
Sales peaked in the USA in Q2
*At constant exchange rates
North
America
42%
France
27%
11
WELL-BALANCED GROWTH
Change H1 2007/H1 2006*
Mailing systems
+ 7.3%
H1 Sales 2007: €470.4m
Document and logistics
systems
26%
Document and
logistics systems
+ 9.5%
Mailing systems
74%
Success in cross selling
* At constant exchange rates
12
VERY STRONG GROWTH IN RECURRING
REVENUES
Change H1 2007/H1 2006*
Recurring
revenues
Equipment
sales
+ 13.2%
H1 Sales 2007: €470.4m
Rental &
leasing
Services and
supplies
29%
34%
-0.1%
Equipment sales
37%
Increase in recurring revenues driven by the growth
in the number of equipment installed in 2006
* At constant exchange rates
13
FURTHER PROFITABILITY GAINS
Sales growth
Product mix
Increased revenues from supplies:
 Sales growth of +19.5%*, accounting for 12.7% of sales
to end-July 2007
Expansion of financial services:
 Sales growth of +25.9%*, accounting for 7.5% of sales
to end-July 2007
 A 23.7% increase in the portfolio to €433m
Currency impacts on margins under control
Relevance of Neopost's model
* Excluding currency impacts
14
NEW IMPROVEMENT OF CURRENT
OPERATING MARGIN: 26.3%
31/07
31/07
Change
2006
2007
%
Sales
450
470
+4.5%
Gross margin
344
366
+6.2%
As % of sales
76.5%
77.7%
146
158
32.4%
33.5%
115
124
25.5%
26.3%
In € million
EBITDA
As % of sales
Current operating income
As % of sales
Improvement in line with expectations
€/$ H1 2007 = 1.34 and H1 2006 = 1.24 ; €/£ H1 2007 = 0.68 and H1 2006 = 0.69
+8.0%
+7.5%
15
A 6.4% INCREASE OF DILUTED EPS
31/07
31/07
Change
2006
2007
%
Sales
450
470
+4.5%
Current operating income
115
124
+7.5%
1
1
116
125
(6)
(12)
(33)
(33)
0
0
77
80
17.1%
17.0%
2.36
2.51
In € million
Results of disposals and others
Operating income
Financial results
Taxes
Results of associated companies
Net income
As % of sales
Diluted EPS
+3.9%
+6.4%
16
€/$ H1 2007 = 1.34 and H1 2006 = 1.24; €/£ H1 2007 = 0.68 and H1 2006 = 0.69
AN IMPROVEMENT IN WORKING CAPITAL
REQUIREMENTS HALF-ON-HALF
31/07
31/07
Change
In € million
2006
2007
%
Inventories
61
55
-9.0%
135
144
+6.6%
Prepaid income
(125)
(127)
+2.0%
Other payables and receivables
(257)
(271)
+5.2%
(186)
(199)
+7.0%
Accounts receivable
Total excluding leasing
17
CASH FLOW GENERATION IN H1 2007
31/07
31/07
2006
2007
EBITDA
146
158
Capex (net of disposals)
(53)
(57)
(5)
(54)
(33)
(33)
55
14
In € million
Change in working capital
Taxes
Cash flow
H1 2006: a particularly favourable trend in working capital
H1 2007: seasonal variation in working capital relative to 31 January
18
*Before debt service, dividens and share buy-backs
REFINANCING OF ALL REVOLVING CREDIT
LINES
Introduction of a single line in June 2007 intended to finance:
 Neopost's general requirements
 The leasing subsidiaries
Characteristics of this new syndicated revolving credit line:
 Total amount of €750m (€650m initially requested)
 Multi-currency
 Five-year term, with two options for a one-year extension
 Conditions: Libor + fixed margin of 20 basis points
 Banking syndicate comprising 17 international banks
Optimal conditions and very good timing
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PURSUED POLICY OF HIGHER GEARING
31/07
31/01
31/07
2006
2006
2007
510
496
646
(105)
(158)
(113)
Net financial debt
405
338
533
Shareholder’s equity
462
537
485
87.6%
63.0%
109.8%
1.4
1.1
1.7
15.6
22.0
12.4
In € million
Financial debt
Cash and marketable securities
Net debt / Shareholder’s equity
Net debt / EBITDA ratio
EBITDA / Financial charges
Financing investment and returning value
to shareholders
20
SIGNIFICANT ACQUISITIONS
21
ACQUISITIONS IN 2007
Strengthening the offering
 Acquisition of PFE
 Acquisition of ValiPost
Optimisation of the distribution network
 In Europe
 In the USA
Significant opportunities
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STRENGTHENING THE OFFERING
PFE International Limited (1/2)
 A world player in folder/inserters
 Sales of £29.3m in 2006
 Excellent complement to Neopost’s offer
 Range marketed in 55 countries, including 10 directly:
Australia, Austria, Belgium, France, Germany, Ireland, Portugal,
Singapore, UK and USA
 480 staff
 Research and production unit at Loughton, Essex
 Current operating margin of 5%
Significant synergy in the product range and
distribution structure
23
STRENGTHENING THE OFFERING
PFE International Limited (2/2)
 Acquisition of the majority of PFE's activities, representing total
sales of £27.5m in 2006
 Enterprise value: £27.2m
Around 1 times sales
 Acquisition financed from existing credit lines
 Deal subject to approval from the relevant competition
authorities
 Significant commercial synergies: offering and distribution
 Objective: boost current operating margin to 15%
within 24 months
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STRENGTHENING THE OFFERING
Acquisition of ValiPost in February 2007
 France's leading provider of software solutions for industrial
mailers:
Destination sorting prior to printing
Identification labels and tracking of mail crates
Production planning
 Sales of around €3m in 2006
Neopost's first steps into
the industrial mailing market
25
OPTIMISING THE DISTRIBUTION
NETWORK: EUROPE
Objective: strengthening the direct distribution
In € million
Year of
acquisition
Sales
Sales
acquired
2006
Italy
1998
2
12
Netherlands
2000
9.5
16
Belgium
2001
3.5
13
Norway
2003
4
7
Ireland
2004
5
8
Initial geographical expansion
The ability to reap the benefits of
the acquisitions made
26
OPTIMISING THE DISTRIBUTION
NETWORK: EUROPE
Acquisitions in H1 2007
 Ruf AG in Switzerland (Zurich), July 2007; 2006 sales of €10m
 Two small distributors in Italy, sales of €0.4m
Opportunities remain
 In Switzerland
 In Scandinavia
 In Spain
Continuing our strategy of building market coverage
27
OPTIMISING THE DISTRIBUTION
NETWORK: USA
Objectives : strengthening the direct distribution
and unifying the distribution network
Review of previous acquisitions
 1st Feb. 2005: merger of Hasler branches with Neopost branches:
Chicago, Boston, New York and New Jersey
 2005: acquisition of dealers: Ohio, Pennsylvania, California,
Massachusetts, Oregon, Tennessee
 2006: acquisition of dealers: Alabama, Indiana, Texas, Michigan
Acquisitions in 2007
 Acquisition of dealers: Colorado, Maryland, Florida
 Sale of territories: Pennsylvania, Nevada
Strategy of rationalising market coverage
28
RATIONALISING COVERAGE
OF THE AMERICAN MARKET
Unified distribution
(installed base covered by a single network, %)
100
80
60
40%
40
53%
24%
20
0%
0
end-2004
end-2005
end-2006
end-August
2007
An effective and active policy of rationalisation
29
RATIONALISING COVERAGE
OF THE AMERICAN MARKET
Direct/indirect distribution
(installed base covered, %)
100
80
69
67
60
61
indirect
40
39
direct
20
31
33
Jan-05
Jan-06
0
Jul-07
Significant potential for strengthening
direct distribution
30
OUTLOOK
31
NEOPOST'S MODEL OF PROFITABLE
GROWTH
Taking advantage of regulatory and technological changes
Developing higher margin businesses
 Increasingly moving towards the high end
 Development of financial services and online services
Improving distribution
Specific productivity programmes
Boosting revenue and margins from each client
32
CONFIRMATION OF OUTLOOK
Sales
 2007: growth of 5% to 6%
 2008: sales of €1bn* (excluding PFE acquisition)
Operating profit
 2007-2008: an improvement of 30 to 50 basis points per year
(excluding PFE acquisition)
Beyond 2008
 An active market due to continued technological and regulatory
changes
 Neopost's model of profitable growth will continue to bear fruit
33
*Objective based on a €/$ rate of1.35. The 1bn objective announced in March 2006 was based on a €/$ rate of 1.23
APPENDICES
34
CONSOLIDATED BALANCE SHEETS (1/2)
31/07
31/07
2006
2007
526
544
51
50
Tangible fixed assets
138
142
Financial investments
15
21
4
5
Leasing receivables
350
433
Deferred tax assets
47
45
Inventory
61
55
Other short-term assets
136
31
144
66
Cash & marketable securities
105
133
1,464
1,618
Assets
In € million
Goodwill
Intangible fixed assets
Other long-term assets
Trade receivables
TOTAL
35
CONSOLIDATED BALANCE SHEETS (2/2)
31/07
31/07
2006
2007
462
485
55
27
Long-term financial debt
180
303
Leasing debt
136
0
Short-term financial debt
194
343
28
31
Prepaid income
125
127
Other short-term liabilities
284
302
1,464
1,618
Liabilities
In € million
Shareholders’ equity
Provisions
Deferred tax liabilities
TOTAL
36