Corporate Finance

Interview - Christophe Liaudon The Neopost Group's CFO tells us about how the company's treasury department is structured and his career in treasury thus far.

Interview - Christophe Liaudon, CFO, The Neopost Group

Christophe Liaudon

Being open to new products in capital markets

Can you give us a few facts and figures about your company?

Our historical activities linked to the post, mailing machines, six station inserters and associated services, which still represent a significant amount of our revenue - 87% of the 1,070m euros in 2012 - have limited growth. They are now completed by associated activities which themselves, are truly springboards for growth. These activities concern packages, data information with Satori Software and Human Inference as well as customer service management - as we can see in documents written using GMC Software Technology. One thing that is characteristic of Neopost, apart from the high level of its recurring revenues, is its high level of internationalisation: just over a fifth of our sales take place in France, and North America represents roughly 40% of our turnover and the United Kingdom and Germany respectively represent 12% and 7% of it. What’s new is our geographical expansion into Asia, where our turnover increased five-fold in only two years. Neopost, with an Ebitda of 260m euros in 2012 and a net result of 161m euros, is listed on the Euronext Paris stock exchange, with a capitalisation of 1.8bn euros [on 27 August].

What is the operational structure of the company?

Except for cash management, it is very decentralised and local entities enjoy a large level of autonomy, in particular in managing their working capital requirements. In 2002, a major acquisition using debt led us to kick off a liquid asset optimisation campaign where we created a Group Treasury department and also rolled out steering tools adapted to a medium-sized, albeit already very international, company. In 2009, we decided to roll out SWIFTNet File Act, and to target software-as-a-service with Kyriba, in order to anticipate the end of Etebac and facilitate our international deployment to complete the organisation of our local cash pooling. As for cash management, our new challenges include rolling out the Asia-Pacific zone, with new questions linked to exotic currencies and the integration of new entities which have not yet been present on our traditional markets and whose ways of working are often quite different from ours.

What are the other prerogatives a Central Treasury enjoys?

Exchange and interest rate hedging are a part of them. In the field of currency exchange, in just ten years we went from three to ten parities to manage with a centralised organisation.

Our strategy allows us to almost systematically defend our budget quotations, with a stable volume of course. Concerning the exchange rate risk, we’re not really trying to optimise financial results in the short term. We implement a three- to five-year plan in order to smooth exchange rate increases and decreases as necessary. Forex Finance is supporting us in the implementation of our exchange and exchange rate strategies and also ensures the value of our operations in compliance with the IFRS standard and quite a bit of the back office. Lastly, the expansion of our leasing activity, which has been gaining ground since 2003, as well as actively managing our debts, currently represents one of the key functions of the Central Treasury. The amounts at stake are now high: over a billion euros of confirmed transactions and most of them have already been completed.

This makes diversification of sources of financing desirable and even necessary. So in 2012 we carried out six refinancing operations, supported by almost all the private debt markets accessible to a company like ours: a private placement in the United States - our first US PP dates back to 2003; a Schuidschein placement in Germany with a tranche in euros and another in dollars subscribed for exclusively by Asian investors; three private placements in France — two of them as a ‘loan’ with Axa and Crédit Agricole CIB for 100m euros and Societe Generale for 50m euros as well as a pre-placement of bonds listed on Euronext Paris for 150m euros; and last but not least, the renegotiation of a five-year revolving credit line with a network of eleven banks, of which nearly half are foreign ones. For a very international company like Neopost, which is of course listed but which targets a niche market, not only do you have to draw up a high quality financial marketing strategy, but also strive to be incessantly open to new products and to changes in capital markets.

How big is your Treasury Department?

Carine, who is my assistant, splits her time between working in the Treasury Department and financial communication. As the Group has grown sharply, as have the constraints it is subjected to, such as IFRS 13 and Emir, which impact both cash management and market and debt risk management, we’re now creating a new position. This was necessary in order to ensure a continuity of services and maintain and strengthen the back and front office separation.

Can you give us the milestones of your career?

My first job, after having completed my higher education at ESLSCA, was in 1993 in a subsidiary of Générale des Eaux, which was later rebranded Dalka, first of all in credit management and then progressively in cash resources. Then I began working in Vatéo, where I was the cash manager of a department, and then the Etablissement français du sang [French blood bank] as the CFO, and I joined Neopost in 2002 when the Group Treasury department was launched. At that time the company had a 600 million euro turnover; supporting its development was and remains a fantastic adventure.

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