15 Consolidated financial statements NOTES  TO  THE  CONSOLIDATED FINANCIAL  STATEMENTS Fiscal years ended 31 January 2004, 2003 and 2002 (All amounts stated hereafter are in millions of euros) NOTE 1: PRESENTATION OF THE NEOPOST GROUP AND ITS CONSOLIDATED FINANCIAL STATEMENTS Neopost  was  created  in  1992  through  a  leveraged  buyout (LBO)   of   Alcatel’s   mail   processing   equipment   division. A second LBO took place in 1997. Since 1997, Neopost has made acquisitions of varying sizes, of which the largest was the  2002  purchase  of  Ascom  Hasler  –  the  mailing  systems division of Swiss company Ascom – which ranked third in the world in its market. The   term   “Neopost   SA”   refers   to   the   parent   company (excluding  consolidated  subsidiaries)  while  “Neopost”  and “the  Group”  refer  to  the  economic  whole  formed  by  the parent company and its consolidated subsidiaries. NOTE 2: SCOPE OF CONSOLIDATION AND ACCOUNTING POLICIES The Group’s consolidated financial statements are prepared in  accordance  with  French  Generally  Accepted  Accounting Principles. Financial statements of foreign companies have been restated in accordance with Neopost Group accounting principles. The consolidated financial statements incorporates all items of assets and liabilities and the results of consolidated companies. Intra-group    transactions    and    profits    relating    to    these operations as well as intra-group capital gains are eliminated. A) SCOPE  OF  CONSOLIDATION The   financial   statements   of   all   companies   directly   or indirectly controlled by Neopost SA are fully consolidated. The scope of consolidation at 31 January 2004 includes three new fully consolidated companies: • Neopost   Holding   Gmbh   (Germany),   consolidated   since 1 February 2003, • Hasler Financial Services (USA), created in May 2003 and consolidated from the same date, • Neopost    Norge    AS    (Norway),    resulting    from    the 1   September   2003   acquisition   of   Neopost’s   Norwegian distributor, and consolidated from the same date. Only one company is accounted for under the equity method: Dynapost, in which the Neopost Group owns a 35% stake. A detailed statement of Neopost’s scope of consolidation is provided in note 4. B) FOREIGN CURRENCY PAYABLES AND RECEIVABLES Total foreign currency payables and receivables are translated at the exchange rate applicable at the end of the fiscal year. The  profits  and  losses  resulting  from  these  translations  are booked in the profit and loss account. C) TRANSLATION  OF  FINANCIAL  STATEMENTS DENOMINATED  IN  FOREIGN  CURRENCIES Assets and liabilities of subsidiaries operating outside France are translated into euros at rates in effect at the end of the period. Revenues and expenses are converted at the average exchange rate over the period. The    resulting    translation    difference    is    included    in shareholders’ equity as cumulative translation difference. The  conversion  rates  used  for  the  main  currencies  are  as follows: Au 31 janvier 2004 Au 31 janvier 2003 Au 31 janvier 2002 Average Period-end Average Period-end Average Period-end US dollar (USD) 1.1479 1.2384 0.9610 1.0816 0.8893 0.8637 Pound sterling (GBP) 0.6952 0.6846 0.6349 0.6557 0.6202 0.6111 Canadian dollar (CAD) 1.5831 1.6523 1.5355 1.6562 n-a n-a Swiss franc (CHF) 1.4743 1.5626 1.4647 1.4678 n-a n-a Japanese yen (JPY) 130.81 131.06 120.35 129.17 n-a n-a Norwegian krone (NOK) 8.3155 8.7190 n-a n-a n-a n-a