2 0 0 7

Full Year Results

April 2008

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 Financiers’.

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 2

AGENDA

Introduction Market trends Acquisitions Product launch Full year accounts Outlook

3

INTRODUCTION

4

INTRODUCTION

2007, a transition year between 2 decertifications in the US     

After a great performance in 2006 Market conditions more difficult than expected during H2 in the US Sales growth of 2.4% excluding exchange rate effects Slight improvement in current operating margin at 26.1% of total sales Pursued policy of return to shareholders

More intense preparation for the future   

Acquisitions Major product launch Accelerated optimisation of the Group’s organisation 5

MARKET TRENDS

6

MARKET TRENDS

Postal sector evolution   

Mail volumes generally flat Deregulation in Europe: 2008-2011

 Opening up to competition  A situation being still different depending on the countries

Economic and competitive pressure within postal organisations in North America and in Europe for:

 Greater efficiency / productivity  Better service / flexibility Mailing systems: a critical CRM tool for postal organisations Enhancement of the mail preparation function  

Acceleration of equipment renewal Customer acquisition of new accessories

Evolution towards more complex Internet-based digital franking machines

7

MARKET TRENDS

Main steps

Decertification of all electronic machines in Canada and partially in the USA 2006 Shape-Based Pricing in the USA 2007 Decertification of the remaining electronic machines in the USA 2008 Decertification of the mechanical machines in the USA 1996-1999 2000-2001 Switch to the Euro and « intelligent » franking machines in France 2001-2002 2004-2005 Frankit in Germany Decertification of the mechanical machines in the UK 2006 Pricing in Proportion in the UK

Irreversible shortening of the product life cycle

8

ACQUISITIONS

9

SIGNIFICANT ACQUISITIONS

Reinforcement of the product range through acquisitions, following the « rounding the core » concept   

PFE, higher volume folders/inserters ValiPost, industrial mail NBG, RFID technology

Distribution optimisation through dealer acquisitions  

In Europe In the United States

Sustained rate of the number of acquisitions

10

PFE INTERNATIONAL LTD

Our most significant acquisition since 2002 Worldwide leader in the high-end folders/inserters market Sales of around £ 26 million in 2007, very low EBIT margin Consolidation over 11 months in 2008 Significant commercial synergies: product range and distribution Objective: EBIT margin at 15% within 24 months Reinforcement of Neopost’s high-end folders/inserters product range

11

VALIPOST

Acquisition in February 2007 Leader in France in software solutions for industrial mailers:   

Sorting by destination before printing Identification labels and mail box tracker Production planning

Top 6 French industrial mailers customers of ValiPost Sales above € 3 million in 2007, up 80% First steps of Neopost in industrial mail

12

NBG ID

Neopost had owned 24% of NBG ID since 2004 Stake increased to 100% in February 2008 NBG ID activity:    

Integrator of RFID technologies for the logistics sector A promising portfolio in pallet and asset tracking

 Important contract signed with Metro/DHL  Pilots in place notably at Mory and Kuehne & Nagel

Development of the RFID technology for applications in:

 Parcels  Mail (on a longer term)

Sales around € 2 million in 2007

Strategic choice to integrate RFID in the technological laboratory of Neopost

13

IMPROVING DISTRIBUTION: EUROPE

Objective: to reinforce direct distribution Dealer acquisitions in 2007:    

Ruf AG in Switzerland (Zurich) in July 2007 Ducourrier in Switzerland (Geneva) in October 2007 2 in Italy 1 in Germany

Remaining opportunities in:   

Switzerland Scandinavia Spain

Continuing downstream consolidation of distribution

14

IMPROVING DISTRIBUTION: US

Objectives: to reinforce direct distribution and to unify the network 2007 deals  

Acquisition of dealers: California, Colorado, Florida, Maryland and Wisconsin Sale of territories: Alabama, Minnesota, Nevada and Pennsylvania

Strategy of rationalising market coverage

15

RATIONALISING OF NEOPOST US DISTRIBUTION

100 80 60 40 20 0 24% 40%

56%

0%

end 2004 end 2005 end 2006 end 2007 Unified distribution

(installed base covered by a single network, in %) 100 80 60 40 20 0 69 31 67 indirect 60 33 direct 40

56% 44% end 2004 end 2005 end 2006 end 2007 Direct/indirect distribution

(installed base covered, in %) Potential for rationalising still significant

16

MAJOR PRODUCT LAUNCH

17

MAJOR LAUNCH OF MAILING SYSTEMS

Price 1 – IJ range renewal in mid-range 2 – Product range complement between IJ-25 and IJ-40 Low end IS-350 IS-420 IJ-40 IJ-25 About 10-30/day IS-440 IJ-50 IS-460 IJ-60 About 30-200/day IS-480 IJ-80 IJ-110 IJ-90 High end IJ-70 >200/day Volume 18

ENHANCED HARDWARE OPTIONS

IS-350 Manual barcode reader USB mass storage External printer Weighing Platform range IS-420 IS-440 IS-460 IS-480 Mixed size feeder Compact dynamic scale Inserter connection

19

TECHNOLOGICAL BREAKTHROUGH IN TERMS OF CONNECTIVITY AND SOFTWARE

IS-350 IS-420 100 Department upgrade Differential weighing IS-440 Online Services IS-460 Mail accounting systems IS-480

20

MAJOR LAUNCH OF MAILING SYSTEMS

Product range encompassing 50% of the worldwide franking machine installed base Launch programme  

April 2008 => in the US 2008 / 2009 => UK, Germany, France

Ergonomics   

Ease of use: customer interface, «smart start», simplified access 1 st colour touch screen Eco-conception:

 Decrease in the weight of both machine and packaging  Increase of the component recyclability Strong competitive edge and increased revenue per customer

21

IS480

22

FULL YEAR ACCOUNTS

23

GROWTH EXCL. EXCHANGE RATE EFFECTS

Sales

(€ m)

950 918.5

900 +22.0

-33.4

907.1

850 800 750 700 2006 currency impacts Currency impacts 2007

Growth of 2.4% at constant exchange rates

24

HIGH COMPARISON BASES ON THE 3 MAIN MARKETS

2007/2006 change* 2007 sales: €907.1m

North America France United Kingdom Germany Rest of the world

+ 0.0% + 1.2% - 2.9% + 12.7% + 18.8%

Rest of the world

11%

Germany

7%

United Kingdom

16%

North America

38%

France

28%

* At constant exchange rates Geographic balance between North America and Europe

25

STRONG GROWTH IN DOCUMENT SYSTEMS

2007/2006 change*

Mailing systems

- 0.3% 2007 sales: €907.1m

Document and logistics systems

27%

Document and logistics systems

+ 10.6%

Mailing systems

73%

Complementarities between the 2 activities * At constant exchange rates

26

STRONG GROWTH IN RECURRING REVENUES

2007/2006 change* 2007 sales: €907.1m

Recurring revenues Equipment sales

- 6.6% + 8.4%

Rental & financial services

30%

Services and supplies

33%

Equipment sales

37%

Complementarities between equipment sales and recurring revenues * At constant exchange rates

27

SLIGHT IMPROVEMENT IN PROFITABILITY

Current operating margin

(Current operating income / sales, %) 25 20 16.7

18.6

19.6

20.6* 21.0* 21.5* 19.2* 20.7

23.4

24.8

26.0

26.1

15

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

* Excluding Neopost Online

28

SLIGHT IMPROVEMENT IN PROFITABILITY

Recurring revenues 

Increase in revenues coming from supplies:

 Revenues increased by 19.4% excl. exchange rate effects, i.e. 13.6% of total Group revenues in 2007 

Financial services development (leasing and postage financing):

 Revenues increased by 21.2% excl. exchange rate effects, i.e. 8.0% of total Group revenues in 2007 Productivity improvement Currency impacts under control (EUR/USD and EUR/GBP) Relevance and strength of Neopost’s model

29

CURRENT OPERATING MARGIN OF 26.1%

2006 2007

€ m

Sales Gross Margin

As a % of sales

EBITDA

As a % of sales

Current operating income

As a % of sales

919 706

76.9%

297

32.3%

239

26.0%

907 708

78.0%

303

33.4%

237

26.1%

Relevance and strength of Neopost’s model Change %

-1.3% +0.2% +1.9% -0.7% 30

€/$ 2007 = 1.38 and 2006 = 1.26 ; €/£ 2007 = 0.69 and 2006 = 0.68

ACCELERATED OPTIMISATION OF THE GROUP’S STRUCTURE

Research & Development 

Grouping together some R&D centres



to strengthen R&D capacities within a budget of 5% of sales

Supply chain   

2 logistics platforms (Europe and USA) Direct shipment Optimisation of refurbishing unitS



to reduce supply chain cycles and inventories

Distribution 

Within the context of the optimisation of the US distribution



Standardization of the ERP and of the franking machine resetting systems



to improve productivity and customer service 31

ACCELERATED OPTIMISATION OF THE GROUP’S STRUCTURE

Schedule  

R&D and supply chain: H1 2008 US distribution: 2008-2009

Cost    

€ 20 million (net impact of € 13 million) Provisions recognised in the accounts at 31/01/2008 € 6 to 7 million savings per year by 2010 Mainly cash

To improve current operating margin growth

32

NET INCOME BEFORE PROVISIONS FOR OPTIMISATION

€ m

Sales Current operating income

Results of disposals and others 2006

919 239

1 2007

907 237

1 Change %

-1.3% -0.7% Operating income

Financial results Taxes Results of associated companies

Net income

As a % of sales Diluted EPS

240

(19) (65) 1

157

17.1% 4.91

238

(29) (62) 1

148

16.4% 4.68

-0.7% -5.7% -4.7%

€/$ 2007 = 1.38 and 2006 = 1.26 ; €/£ 2007 = 0.69 and 2006 = 0.68

33

NET INCOME

€ m

Sales Current operating income

Results of disposals and others Provisions for optimisation

Operating income

Financial results Taxes Results of associated companies

Net income

As a % of sales Diluted EPS

2006

919 239

1

240

(19) (65) 1

157

17.1% 4.91

2007

907 237

1 (20)

218

(29) (54) 1

136

15.0% 4.28

Variation %

-1.3% -0.7% -9.3% -13.7% -12.8%

€/$ 2007 = 1.38 and 2006 = 1.26 ; €/£ 2007 = 0.69 and 2006 = 0.68

34

WORKING CAPITAL REQUIREMENT UNDER CONTROL

2006 2007

€ m

Change % Inventories Trade receivables* Prepaid income Other payables and receivables

Total excluding leasing

50 143 (157) (289)

(253)

43 157 (167) (273)

(240) -13.6% +9.8% +6.7% -5.5% -5.3%

WCR maintained at a very high negative level *Include only trade receivables in 2006 and 2007. In last year presentation, income tax receivables and other receivable were also included

35

STRONG CASH FLOW GENERATION

€ m

EBITDA

Capex (net of disposals) Change in working capital requirements Taxes

Cash from operations*

2006

297

(96) 62 (65)

198

2007

303

(90) (13) (54)

146

Exceptional improvement of WCR in 2006 * Before leasing, debt service, dividends and share buybacks

36

PLANNED INCREASE OF GEARING

€ m

Financial debt Cash and marketable securities

Net financial debt

31/01 2007 496 (158)

338

31/01 2008 595 (149)

446 Equity

Net debt/equity Net Debt / EBITDA EBITDA / Financial charges

537

63.0% 1.1

15.8

493

90.5%

Impact of acquisitions, financial services development and return to shareholders

1.5

10.5

37

PURSUED POLICY OF RETURN TO SHAREHOLDERS

For 2006:   

2.1% of total shares bought back between July 2006 and July 2007

 655 782 shares for €62.1 million

€ 3.30 dividend paid in July 2007

 €102.6 million

Total value returned to shareholders: €164.7 million

For 2007:  

Buy-back of at least 2% of total shares € 3.65

dividend per share (€113 million)

100% of the increase in shareholder’s equity returned to shareholders

38

10% INCREASE FOR 2007 DIVIDEND

5 4 3 2 1 5 4 3 2 1

In €

1.26

2.30

1.00

2.75

1.25

3.58

3.50

4.32

3.00

4.99

4.35

4.75

3.30

3.65



EPS EPS excl.

provisions Ordinary dividend



Except. dividend 0 2001 Pay-out ratio: 2002 43% 2003 45% 2004 98% 2005 69% 2006 66% 2007 77%

A dividend of €3.65 per share for 2007, i.e. a yield above 5%* * Based on the closing price of the 31st of January 2008 (€67.83)

39

OUTLOOK

40

CONTINUING BENEFITS OF THE NEOPOST MODEL Development of higher margin activities

   

High end Supplies Leasing Postage financing



Online services

Structure optimisation

  

Research & Development Supply Chain Distribution

Potential to improve operating profitability

41

OUTLOOK

Impact of PFE consolidation over 11 months in 2007

 

Sales: €942 million Current operating margin: 25.2%

2008 

Sales:

  Growth of

at least 3%

excluding PFE consolidation  PFE impact: around 3 percentage points of growth (at constant exchange rates)

Current operating margin: gain of 50 bps (from a current operating margin of 25,2% in 2007 including PFE)

Beyond 2008    

Continued technological and regulatory evolutions Neopost model for profitable growth will continue to bear fruit Optimisation programmes and PFE synergies Current operating margin above 26% 42

APPENDIX

43

CONSOLIDATED BALANCE SHEETS (1/2) Assets

Goodwill Fixed intangible assets Fixed tangible assets Financial investments Other long term assets Leasing receivables Deferred tax assets Inventory Trade receivables Other short-term assets Cash and marketable securities

TOTAL

€ m

FY 2006 529 53 144 15 4 399 44 50 143 49 158

1,588

FY 2007 575 47 135 14 5 425 45 43 157 72 150

1,668 44

CONSOLIDATED BALANCE SHEETS (2/2) Liabilities

Shareholders’ equity Provisions Long-term financial debt Short-term financial debt Deferred tax liabilities Prepaid income Other short term liabilities

TOTAL

€ m

FY 2006 537 40 312 184 23 157 335

1,588

FY 2007 493 42 285 310 26 167 345

1,668 45

RETURN TO SHAREHOLDERS POLICY

€ m

Net income (previous year) Exercised stock options (previous year) Oceanes conversion

Impact on equity

Ordinary dividend Special dividend Share buy-backs

Return to shareholders

Number of shares (in millions)* July 2005 104 4 135

243

48 64 71

183

30.9

July 2006 138 12 0

150

69 25 63

157

31.5

2% of total shares bought back in 2007/2008 July 2007 157 11 0

168

103 0 62

165

31.4

*Does not include treasury stock held for cancellation July 2008 136 10 0

146

113 0 50

163

31.0

46