annual report 2012 our engagement, growth and excellence performance and quality tailored solutions social responsibility innovation in our services

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1 annual report 2012 our engagement, growth and excellence performance and quality tailored solutions innovation in our services social responsibility

2 bpost at a glance cover Message to our stakeholders 2 Key events for the year Financial review 8 The postal environment 18 Objectives 20 + growth and excellence Mail & Retail Solutions 26 + tailored solutions Parcels & International 34 + innovation in our services Mail Service Operations 40 + performance and quality Social responsibility at bpost 44 - Society 50 - Our employees 52 - Environment 57 - Paper : an effective, sustainable means of communication 62 Corporate Governance 63 Consolidated financial statements 73 Report of the Joint Auditors 137 GRI table 139 Glossary 143 Contacts 144 index Balance sheet : 15, 76 Board of Directors : 63 Corporate governance : 63 Corporate Social Responsibility : Customer satisfaction : 25, 43 EAT : I, 10 EBIT : I, 10 EBITDA : I, 10 Employees : Energy (consumption) : Environment : Group companies : Income statement : 8-14 Key figures : I Management Committee : 66 Management Contract : 132 Quality : 42 Risk management : Sales network : Shareholders : 132 Universal service : 18, 50

3 financial key figures for the year 2012 For the year ended 31 December In million EUR Evolution P&L and B/S key figures Operating income 2, , , % Payroll costs (1,238.5) (1,288.1) (1,314.5) -3.8% Other operating costs (854.2) (1,007.2) (680.9) -15.2% Profit from operating activities (EBIT) Normalized EBIT Profit attributable to equity holders (57.4) Equity , % Other key figures EBITDA % Normalized EBITDA % Normalized operating free cash flow % Basic earnings per share (after stock split), in EUR 0.87 (0.29) 1.05 Diluted earnings per share (after stock split), in EUR 0.87 (0.29) 1.05 Normalized basic earnings per share (after stock split), in EUR Normalized diluted earnings per share (after stock split), in EUR Number of employees (at year end) 29,922 32,110 33, % Number of FTE (average) 26,625 27,973 29, % Operating income (Mio EUR) 2,450 Normalized EBITDA (Mio EUR) 550 2, , , Normalized EBIT (Mio EUR) 450 Normalized operating free cash flow (Mio EUR)

4 main shareholders 49.99% CVC Capital Partners 50.01% The Belgian State (directly and indirectly) key figures 10,000 mail rounds 670 post offices and 670 PostPoints 10.5million letters and 100,000 parcels handled every day 13,400 red post boxes 4.7million households served 5 days a week key business and service units Mail & Retail Solutions (MRS) Commercial unit responsible for the provision of services in Belgium to residential and business customers, including transactional mail, advertising mail, press, value-added services and banking and financial products, as well as the points of sale network and products sold through it. Turnover: 2,052.0 million EUR; Employees: 4,076 FTE (at year end) Parcels & International (P&I) Commercial unit responsible for marketing and sale of parcels on the domestic Belgian market as well as international activities. Turnover: million EUR; Employees: 363 FTE (at year end) International Operations & Parcels Services (IOPS) Operating unit responsible for collection, sorting, transport and delivery of international mail and parcels through the European Mail Center at the Brussels Airport. Employees: 182 FTE (at year end) Mail Service Operations (MSO) Operating unit responsible for collection, sorting, transport and delivery of letters, press, unaddressed mail and parcels. 94% of mail items and parcels delivered on time; Employees: 19,081 FTE (at year end)

5 bpost annual report than simply letters bpost is Belgium s leading postal operator and universal service provider commercial and administrative communication solutions of delivery options and an outstanding international network of sale network bpost offers addressed and unaddressed mail services and efficient, high-quality bpost is well positioned in the Belgian parcels delivery market thanks to the wide range bpost offers an array of mail, financial and insurance products through its dense points bpost develops value-added solutions based on the integration of electronic communication, letters, parcel delivery and payment services We will be the strongest and most trusted postal operator We will leverage our core competencies and develop new capabilities in order to achieve sustainable and profitable growth in a changing world We will make the difference for our customers and the society thanks to our passionate people

6 2 bpost annual report 2012 our engagement? Clients than Johnny Thijs CEO Martine Durez Chairwoman of the Board of Directors 2012 was a demanding year for bpost. We have nevertheless ended it with good financial and operating results, in spite of the economic downturn, which has adversely affected the postal sector.

7 message to our stakeholders 3 message to our stakeholders We have had to deal with the consequences of some difficult decisions. In January 2012, the European Commission found that the Company had received million EUR of incompatible state aid and ordered the Belgian State to seek recovery of this amount. The Company has paid to the Belgian State the amount confirmed by the Belgian State to the Company, i.e million EUR (including interest and net of taxes). In 2011, the Company had recorded a provision in the amount of million EUR. The Belgian Competition Council ruled that bpost made abuse of a dominant position which resulted in a fine of 37.4 million EUR. bpost has appealed against the ruling, encouraged by the fact that similar models are used by other European operators. The downturn in volumes on the Belgian market (-3.5%) is more pronounced than in recent years and demands particular vigilance. Positive aspects in 2012 include strict cost control, increased customer satisfaction and the launch of new growth initiatives, such as the bpost by appointment pilots and the bpaid payment card. With that in mind, bpost employees deserve a great deal of gratitude. Their readiness to embrace change over the past decade and their efforts to provide highquality service to customers continue to deliver good results. Good results Martine Durez, Chairwoman of the Board of Directors : The 2012 financial results are good in spite of the downturn on the postal market. Turnover increased by 2.2% to 2,416 million EUR, despite the downswing in volumes. Net income was EUR million compared to a loss of EUR 57.4 million last year. Normalized EBIT and EBITDA amounted to million EUR and million EUR respectively, a rise of 12.7% and 11.6%. Reported EBIT and EBITDA amounted to 323 million EUR and 421 million EUR respectively. The repayment of 123 million EUR (interest included) to the Belgian State, to be made in connection with the decision of the European Commission of 3 May 2013 approving the Fifth Management Contract, for the period , has been provided for in our 2012 financial results. Johnny Thijs, CEO of bpost: The rise in turnover is due to the strengthening of our international activities, but in part also to the price rise applied at the beginning of In Belgium we must deal with a larger reduction in volumes, as a consequence of the economic downturn and growing competition from digital communication media. In 2012 that reduction was 3.5% (compared with the 0.5% to 2.0% reduction recorded over the last two years). The downturn remains relatively limited compared with the situation in many other countries of Europe. Its acceleration indicates that loss of volumes in the years to come may also be expected in Belgium. By cutting our costs quickly and flexibly we have been able to offset the declines in volume and maintain our level of income. In 2012 we were again able to achieve this, by reducing consistently the number of FTEs. Martine Durez: Our 2012 results strengthen our position in the leading group of European postal operators. Our financial wellbeing is maintained by high operating ratios, which allowed us to distribute 220 million EUR to shareholders in December 2012 by means of a capital reduction. Johnny Thijs: The life of our company in 2012 and early 2013 was punctuated by many striking events. In January 2012, the European Commission announced its decision on state aid granted in the period In May 2013 it approved the Fifth Management Contract for the period in accordance with European Union framework on services of general economic interest. Although the Company will repay 123 million EUR to the Belgian State, we now have clarity on the framework governing the public services and their compensation for the next three years.

8 4 bpost annual report 2012 Martine Durez: An absolute priority for 2012 was to improve customer satisfaction and loyalty. All employees were explicitly urged to rally round to achieve a customer loyalty rating of 70. The results have been encouraging: at the end of 2012, the rating was However, we can and must do even better. In this context, the Customer First program continues to be a priority. Johnny Thijs: Developing our growth opportunities was another priority. For instance, in early 2012 we launched successfully bpaid, a prepaid payment card that combines the advantages of cash with the simplicity of plastic. In 2012 we also launched pilots for the bpost by appointment project. Customers in four municipalities can use bpost for the consolidated delivery of food shopping and other purchases to their home. Other pilots will follow in It could prove to be an important growth project for bpost. Our outstanding knowledge on the ground every weekday we serve every letterbox in the country and the position of trust we enjoy with our customers are unique assets. We know where to find our customers and they are literally ready to open their door to our employees. In the years to come, we hope to be able to make the most of these assets within the framework of new services. We have targeted growth in line with our core competences. As part of this, in 2012 we took the decision to sell Certipost s digital document exchange activities. Furthermore, in early 2013 bpost acquired a majority shareholding in US parcel transporter Landmark Global. After the acquisition of a majority shareholding in MSI in 2010, this represents a new step for bpost as we look to consolidate our position on the blossoming North American e-commerce market. Martine Durez: bpost also made advancements in corporate social responsibility in Carbon emissions were reduced by 32% in and a 15% reduction in energy consumption was realized in bpost also renewed the partnership with WWF Belgium as part of our continued efforts to intensify the sustainability of our activities. We want to convince every customer whether it s a company that sends tens of thousands of mailings or a residential customer who sends a single parcel that we are able to provide the service they need with minimal impact on the environment. In social relations, 2012 was marked by employee concerns about increasing workloads and the physical feasibility of the tasks of postal workers in the future Mail organization. A survey was held among all employees. The results show that our employees are committed to their job, but that there is a feeling of stress. The bpeople action plan has now been launched to make sure that the pace of work takes account of the capacities of our employees. Our goals in 2013 Johnny Thijs: We face major challenges in The effects of the economic crisis will continue to be felt. That will have an impact on our volumes, which will We are committed to higher quality, growth, corporate social responsibility and dedication on behalf of our customers and employees.

9 message to our stakeholders 5 continue to be under pressure. To maintain them at the present standard as much as possible, we will do our utmost to explore new opportunities in the postal segments with growth potential. That especially goes for direct mail and parcels (in Belgium and abroad). Furthermore, we will keep up our efforts to strictly control costs, although this will not prevent us from pursuing our investment policy, among other things to implement our Vision 2020 plan for restructuring mail and parcels activities, install sequencing equipment and set up the new Brussels X sorting center. Martine Durez: We are constantly endeavoring to do better. We are committed to higher quality, growth, corporate social responsibility and dedication on behalf of our customers and employees. Every day, bpost delivers hundreds of thousands of letters and parcels, and takes care of thousands of customers at our points of sale or over the phone. Our employees do everything in their power to ensure they provide services and conduct transactions appropriately. Be that as it may, problems can always arise, which can engender a sense of dissatisfaction in some customers. We are permanently focused on improvement and as such we take every request or complaint seriously, so that we can rectify mistakes and avoid them in the future. The wellbeing of our employees is another of our key concerns. Some of them are finding it hard to keep up with the pace of change. Change is essential, but we will redouble our efforts to provide all employees with optimal guidance and support in these processes. All these aspects are key to our future development and the wellbeing of our company as a whole. Furthermore, we will continue to work on our operational excellence. We want to be best in class. That s our response to the high expectations of our stakeholders: shareholders, customers, employees and society at large.

10 6 bpost annual report 2012 key events for the year MARCH bpost starts first tests of its new home delivery service bpost by appointment JANUARY Decision of the European Commission On 25 January 2012, the European Commission communicated to the Belgian State its decision relating to the enquiry into alleged state aid that it had opened in July 2009 and relating to the period The European Commission found that the Company had been overcompensated. This resulted in a cash outflow of million EUR which includes an interest charge of approximatively 2 million EUR. The Company provided in its 2011 accounts provisions covering the majority of the financial impact. FEBRUARY bpost launches bpaid, a prepaid payment card On 13 February 2012, bpost launched bpaid, a prepaid universally accepted payment card. bpaid is a secured payment option that combines the advantages of cash with the easiness of a payment card. Thanks to the Mastercard network, it can be used worldwide as well as for online shopping. On 1 March 2012, bpost kicked off the first tests of consolidated home delivery of groceries and other orders: bpost by appointment. The service offers to customers the home delivery on a chosen day and time of groceries and parcels as well as the pick-up of goods, such as laundry, items for repair or empty bottles. MARCH New collective labor agreement covering the years On 22 March 2012, the Company and the representatives of the workforce signed a new collective labor agreement covering the years The agreement includes, among other things, provisions regarding bonus linked to the achievement of financial, customer loyalty and absenteeism targets in 2012 and in 2013, an increase of the year-end allowance and an improvement of the salary package of the postal distributors. Pursuant to this collective labor agreement, frame agreements were concluded in July and December 2012 regarding early retirement possibilities, partial career interruption and the extension of a non-recurring targets linked bonus payable in 2014.

11 key events for the year DECEMBER Organizational structure adapted OCTOBER Sale of a part of the activities of Certipost to Basware On 5 October 2012, bpost sold to the Finnish group Basware (market leader for digital invoicing) the activities of Certipost related to the exchange of electronic documents. The Certipost activities concerning the document protection, the digital certificates and the electronic ID cards remain bpost s property. The transfer of the sold activities became effective as from 2 January DECEMBER Reduction of the equity During the extraordinary shareholder s meeting on 27 September 2012, the shareholders decided: To reduce the capital by 55 million EUR by absorption of the losses carried forward from 2011; to return 220 million EUR to shareholders in the form of a capital reduction; to reduce the legal reserve by 28 million EUR and to distribute it to shareholders in the form of an extraordinary dividend. The decrease of the equity was effective after the extraordinary shareholders meeting held in December The shareholders decided to declare and pay an interim dividend of 170 million EUR, based on the results of the first ten months of the year. In December 2012, bpost restructured its commercial products and solutions organization. The bpost Business and Residential market and mass channels departments were merged. The new department, Mail & Retail Solutions, is responsible for the marketing and the sale of all postal and financial products in Belgium, for retail and professional customers. The department Parcels & International became entirely responsible for the sale and marketing of parcels on the domestic Belgian market. It remains in charge of all international activities. DECEMBER Fine from the Belgian Competition Council for tariff discounts applied to consolidators In December 2012, the Belgian Competition Council ordered bpost to pay a fine of 37,4 million EUR for abuse of dominant position. This decision is related to a tariff discount scheme that had at the time of the decision already been modified as a consequence of a previous decision of the Belgian postal regulator (IBPT/BIPT) in July bpost has lodged an appeal against the Council s decision as comparable discount schemes are still in use and not challenged in other EU-countries. DECEMBER bpost acquired a majority stake in Landmark Global and Landmark Trade Services Landmark Global is an American company specializing in the cross border transport of parcels between the United States and Canada, while other destinations are also covered. With this acquisition, bpost will benefit from an enriched customer portfolio for its parcels business from and to North America.

12 8 bpost annual report 2012 financial review 1. Income Statement In 2012, bpost registered a reported net profit of million EUR (2011: net loss of 57.4 million EUR). The increase compared to last year is primarily explained by non-recurring items (provisions), among which the most significant relates to the decision of the European Commission for the provision of services of general economic interest. The impact of these provisions for 2011 and 2012 respectively amounts to million EUR (299.0 million EUR before taxes) and 82.5 million EUR (124.9 million EUR before taxes). Excluding the impact of these non-recurring items, the profit for the year amounts to million EUR (2011: million EUR). The Company registered a profit from operating activities (EBIT) of million EUR compared to 69.2 million EUR last year. Excluding the nonrecurring items, among which the largest relates to the provisions related to the European Commission decision, EBIT rose by 12.7%. Operating income amounted to 2,415.7 million EUR (2011: 2,364.6 million EUR). This represents an increase of 2.2% (2.0% excluding the impact of the changes in scope), which has been achieved despite further decline in the volume of core domestic mail (3.5%). This negative volume trend was more than compensated by price increases in domestic mail, the growth in parcels, the further development of the international activities and the increase of the income generated by banking and financial products. The total reported operating expenses decreased by million EUR. However, after excluding the non-recurring items, operating expenses increased by 2.9 million EUR or 0.1%. non-recurring items, payroll costs showed an underlying decrease of 38.7 million EUR or 3.0%. The impact of the reduction of 1,348 FTE s amounts to 61.1 million EUR and is driven by the productivity enhancement initiatives. Furthermore, payroll costs are positively influenced by a personnel mix impact (3.4 million EUR) and the favorable evolution of the employee benefits liability. These positive evolutions are partially offset by the consumer price index related salary increases (30.8 million EUR) and seniority and merit increases. Services and other goods increased by 32.4 million EUR. Excluding the impact of the changes in scope, costs rose by 29.7 million EUR or 5.2%. This increase is mainly explained by : (i) an increase in transport costs (13.7 million EUR, out of which 2.2 million EUR due to scope change) directly correlated to the increase in volume of international mail and parcels; (ii) an increase (9.7 million EUR) in maintenance and repair for machines in sorting centers and ICT related software. Those increases are explained by the continuous rise in automation which enables the productivity increases; (iii) higher publicity and advertising costs (7.8 million EUR); and (iv) higher insurance costs (3.6 million EUR), mainly fleet related. Other operating expenses decreased by million EUR. In 2011, bpost had provided an amount of million EUR for the repayment of the SGEI related compensation whereas only million EUR was provisioned in The balance of the improvement is explained by the reversal of other provisions. Payroll costs show a decrease of 49.6 million EUR. Excluding the impact of the changes in scope and the

13 financial review 9 FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Evolution Turnover 2, , , % Other operating income % Total operating income 2, , , % Materials cost (34.6) (32.0) (27.3) 8.0% Services and other goods (602.8) (570.4) (545.1) 5.7% Payroll costs (1,238.5) (1,288.1) (1,314.5) -3.8% Other operating expenses (118.9) (313.5) % Total operating expenses excluding depreciations/amortizations (1,994.8) (2,204.0) (1,880.4) -9.5% EBITDA % Depreciation, amortization (98.0) (91.3) (115.0) 7.3% Profit from operating activities (EBIT) % Financial income % Financial cost (60.6) (19.7) (31.7) 207.8% Share of profit of associates % Profit before tax % Income tax expense (98.5) (123.4) (105.4) -20.2% Profit for the year (57.4) bpost also analyzes the performance of its activities on a normalized basis or before non-recurring items. Non-recurring items represent significant income or expense items that due to their non-recurring character are excluded from internal reporting and performance analyses. bpost strives to use a consistent approach when determining if an income or expense item is recurring or non-recurring and if it is significant enough to be excluded from the reported figures to obtain the normalized ones. An non-recurring item is deemed to be significant if it amounts to EUR 20 million or more. All profits or losses on disposal of activities are normalized whatever the amount they represent. Reversals of provisions whose addition had been normalized from income are also normalized whatever the amount they represent. All other normalizations must meet both the criteria of being non-recurring and of amounting to EUR 20 million or more. Both 2011 and 2012 were impacted by a number of non-recurring items which affected the EBITDA, the EBIT, the profit of the year and the operational free cash flow. Normalized EBITDA, normalized EBIT, normalized profit and normalized operational free cash flow for the year exclude the impact of those nonrecurring items.

14 10 bpost annual report 2012 Normalization of EBITDA, EBIT and profit of the year FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Evolution Reported EBITDA Provisions relating to the decision of the European Commission Collective Labor Agreement Pending litigation provision (22.7) (9.6) (9.3) Modifications in employee benefits schemes (21.1) - (21.2) Normalized EBITDA % FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Evolution Profit from Operating Activities (EBIT) Provisions relating to the decision of the European Commission Collective Labor Agreement Pending litigation provision (22.7) (9.6) (9.3) Modifications in employee benefits schemes (21.1) - (21.2) Normalized Profit from Operating Activities (EBIT) % FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Evolution Profit for the year (EAT) (57.4) Provisions relating to the decision of the European Commission Collective Labor Agreement Pending litigation provision (15.0) (6.3) (6.1) Modifications in employee benefits schemes (14.0) - (14.0) Normalized Profit for the year (EAT) % The non-recurring items split per line of the income statement (at EBIT level) can be summarized as follows: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Evolution Operating income Non-recurring income Payroll costs (21.1) (9.6) (3.2) (11.5) Other operating charges (196.8) Depreciation, amortization and impairment Non-recurring costs (3.2) (208.4) Non-recurring items (3.2) (208.4)

15 financial review 11 On 25 January 2012, the European Commission communicated to the Belgian State its decision with regards to the enquiry into alleged state aid relating to the period In its decision, the European Commission considered that the Company had been undercompensated for the period and overcompensated for the period The European Commission decided that the amount of overcompensation could not be offset against the amount of under-compensation as they related to different Management Contracts between the Company and the Belgian State. In determining the amount of over- or under-compensation, the European Commission compared the amounts received from the Belgian State in compensation for the services of general economic interest entrusted by the Belgian State to the Company with the costs of performing those services. The European Commission included in the amounts received from the Belgian State an amount corresponding to the profit realized by the Company on the reserved (i.e. monopoly) area of the universal service obligation above a certain level that the European Commission deemed reasonable. The Company provided in its 2011 accounts provisions covering all the financial impacts, with the exception of the interests from 1 st January 2012 to the date of repayment to the Belgian State, of the decision by the European Commission. The impact of the provisions on the 2011 EBIT amounts to million EUR. The impact on the profit for the year amounts to million EUR. On March and May 2012, the Company repaid in full the aid rejected by the European Commission and the interest thereon. The Board of Directors of bpost decided on 17 September 2012 to appeal the Commission s decision. Such an appeal does not suspend the decision. Pending the approval of the 5th Management Contract by the European Commission, the 4 th Management Contract has been extended to 2011 and Therefore, the method to calculate the amount of the SGEI related compensation hasn t changed. Although there is an appeal against the Commission s decision, it is more likely than not that the Commission will apply the same logic in the evaluation of the amount of overor under-compensation for 2011 and If so and based on bpost s understanding of the Commission s calculation method, the amount to be repaid for 2011 and 2012 is estimated at million EUR. Pending litigations provisions recorded in previous years were re-measured in A provision amounting to 22.7 million EUR was reversed in It had been set up to cover a risk of litigation relating to offbalance sheet transactions dating before As the matter was definitively resolved in the course of 2012, the provision was reversed. Reversals of 9.6 million EUR and 9.3 million EUR were recorded respectively in 2011 and 2010 as some payroll-related risks were definitively resolved. Since the charge of the original provision had been considered as non-recurring, the reversal of the provision is also considered to be non-recurring and is excluded from the normalized results. A Collective Labor Agreement covering the period was signed between the Company and the representatives of the workforce in March It approved the measure limiting the quota of days of sickness for civil servants to 63 days instead of 300 days in exchange for a payment of compensation for the days exceeding the new quota. The impact of this agreement is a reduction of the related plan and has led to the recognition of an actuarial gain (shown as negative personnel expenses) of 21.1 million EUR (2011: 0 million EUR). This gain has been considered as non-recurring and is excluded from the normalized results. In December 2010, the Company announced its intention to introduce a scheme under which employees who will reach the age of 58 by 31 December 2012, who work in certain departments and which functions became redundant and who are not replaced will have the possibility to apply for early retirement. In January 2011, the representatives of the workforce and the Company approved the proposed scheme. The cost of the scheme was estimated at 27.3 million EUR and a non-recurring charge of that amount was recorded in the 2010 income statement, given its significant impact in the Company s financial statements. During the reference period , this was by far the largest transformation plan and impacted several departments simultaneously. As far as the subsequent early retirement plans are concerned, their impact and scope was significantly reduced and most importantly they were part of the business as usual natural attrition levers. However, it is clear that the Company does not negotiate such schemes with the labor unions on a systematic basis, but rather depending on the circumstances at a certain point in time.

16 12 bpost annual report 2012 The Company has performed the periodic review of the accounting estimates relating to its liabilities for employee benefits. This review has led to the recognition of a non-recurring income (shown as negative personnel expenses) of 21.2 million EUR. In 2010, the source of the non-recurring income related to changes in the rules of a plan (the guaranteed salary for the beneficiaries reached 75% i.o 71%) as additional and improved data became available and were used for the computation. Normalization of operating free cash flow FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Evolution Net cash from operating activities Net cash used in investing activities (88.1) (70.1) (42.2) Operating free cash flow (16.8) % Deposits received from third parties Advances received from the Belgian State 84.3 Provisions relating to the decision of the European Commission Normalized operating free cash flow % Operating free cash flow represents net cash from operating activities less acquisition of property, plant and equipment (net of proceeds from sale of property, plant and equipment), acquisition of intangible assets, acquisition of other investments and acquisition of subsidiaries (net of cash acquired). Normalized operating free cash flow excludes, throughout the period, deposits received from third parties and the repayment of advances received from the Belgian State, as those relate to the quasi cash pool mechanism with the Belgian State, which was discontinued in the course of It also excludes the repayment of the alleged overcompensation for the SGEIs following the decision of the European Commission of January 25, Operating Income well as some shifts between Parcels and International Mail (net impact shift of 8.2 million EUR from Parcels to International Mail). Taking into account these changes, the 2011 figures at the level of the business units have been restated to reflect these changes. The restated figures are shown under the heading comparable. The variances mentioned hereafter within the evolution per business units compare the 2012 figures with the 2011 comparable figures. Operating income increased by 2.2% to 2,415.7 million EUR (2011: 2,364.6 million EUR). The changes in scope (bpost Asia was fully consolidated as from October in 2011) account for an increase in revenues of 3.3 million EUR. Excluding these changes in scope, the increase in operating income is 47.8 million EUR or 2.0%. Following a change in the internal reporting structure as of January 1st 2012, a series of product lines have shifted between business units. The product lines Parcels and International Mail have shifted from Mail & Retail Solutions (MRS) to Parcels & International (P&I), whereas Transactional Mail, Advertising Mail and Press revenues registered for a portion within P&I have been regrouped within MRS. Furthermore, some products have been transferred from International Mail to the product line Other (transfer of 2.3 million EUR), from Value Added Services to Parcels activities (4.1 million EUR) and to product line Other (4.5 million EUR) as

17 financial review 13 The evolution per product line can be summarized as follows: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR comparable Evolution Transactional Mail % Advertising Mail % Press % Parcels % Value Added Services % International Mail % Banking & Financial Products % Other % Total bpost 2, , , , % Domestic Mail, which includes Transactional and Advertising Mail as well as Press declined by 0.1% compared to last year as the volume decline of 3.5% was compensated by the improvement in pricing and mix. The Parcels activity grew by 7.1%. This was driven by a 4.7% increase in volume (mainly within Parcels International) and in price and an improvement in the product mix. Value Added Services rose to 95.8 million EUR thanks to increased revenues for the mail forwarding and temporary mail conservation services. Sales for International Mail rose by 17.2 million EUR or 8.4% mainly due to increased revenues for the International subsidiaries along with improvements in both volume and price of the other products. The increase of Banking & Financial Products is due to the higher revenues for the cashier activities, increased banking and insurance commissions received from bpost s associate bpost bank and the increase of the other financial products (predominantly due to the launch of a prepaid payment card). Prior to January 1, 2013 bpost operated through three business units: BIZ, RSS and P&I. Since January 1, 2013 BIZ and RSS have been merged into MRS. The table below presents the evolution per business unit and the reconciliation between the old and new structure: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR comparable Evolution BIZ 1, , , ,592.4 RSS MRS 2, , , , % P&I % Corporate % Total Operating Income 2, , , , % 1.2 Operating Expenses Operating expenses, including depreciation, amortization and impairment charges, amounted to 2,092.8 million EUR (2011: 2,295.3 million EUR), a million EUR decrease compared to last year. The changes in scope (bpost Asia) account for an increase in expenses of 3.0 million EUR. Excluding the impact of the scope and the evolution of the non-recurring expenses (mainly the provisions relating to the decision by the European Commission), underlying operating expenses increased by 2.9 million EUR or 0.1%. The raw material, consumables and goods for resale increased by 2.6 million EUR at 34.6 million EUR (2011: 32.0 million EUR). The evolution is amongst

18 14 bpost annual report 2012 others due to increased services performed by subcontractors in the express parcels delivery. The costs for goods and services increased by 32.4 million EUR or 5.7% compared to Excluding the impact of the changes in scope (2.6 million EUR), the costs for goods and services rose by 29.7 million EUR or 5.2%: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Evolution EUR Evolution % Rent and Rental costs % Maintenance and Repairs % Energy delivery % Other goods (1.0) -4.9% Postal and Telecom costs (0.9) -10.3% Insurance costs % Transport costs % Publicity and Advertising % Consultancy (2.5) -7.0% Interim % Third party remuneration, fees (3.7) -3.4% Other services % Total % Maintenance and repairs rose by 9.7 million EUR. As the Company increases the automation of its operations to improve productivity, the number of machines and the maintenance costs associated with them increase. The same phenomenon is observed for fleet costs. Insurance costs increased by 3.6 million EUR due to the settlement of a past claim, the increase in the insurance tariffs and an increase in self-insured damages. Transport costs showed a 13.7 million EUR increase. The changes in scope (bpost Asia) contributed to the increase by 2.2 million EUR. Excluding the scope change, the increase amounted to 11.5 million EUR mainly driven by the increased volumes outbound mail and parcels, resulting in 8.2 million EUR higher terminal dues and higher volumes in the international subsidiaries. Publicity and advertising costs climbed to 25.9 million EUR. bpost increased its advertising spend to support the introduction of new activities and new products such as the prepaid card (bpaid) and bpack. 3rd party remunerations declined by 3.7 million EUR compared to The reduced requirements for ICT developments was partly counterbalanced by higher costs for external parties (e.g. interim managers to bridge short term gaps in the internal organization), outsourcing of cleaning activities and the increased costs for money transport. Other services show an increase of 2.3 million EUR. This variance is related to higher training costs, IBPT-BIPT contributions and the administration costs related to prepaid cards. Payroll costs amounted to 1,238.5 million EUR in 2012 (2011: 1,288.1 million EUR) which represents a decrease of 49.6 million EUR. The scope changes caused by the consolidation of bpost Asia as from October 2011 generated an increase of 0.7 million EUR. Non-recurring items represented a decrease in expenses of respectively 9.6 million EUR in 2011 and 21.1 million EUR in The evolution of the nonrecurring items had therefore a positive impact of 11.5 million EUR compared to Excluding the impact of the changes in scope and of the evolution of the non-recurring items, payroll costs showed an underlying reduction of 38.7 million EUR or 3.0%. The average workforce was reduced by 1,348 FTE (2011: 1,351 FTE) generating a saving of 61.1 million EUR (2011: 58.3 million EUR) driven by the various productivity enhancement projects. This reduction should be analyzed alongside the decrease in the use of interims of 27 FTE (or 0.5 million EUR reported under cost of goods and services). All units contributed to the reduction in the headcount, except Parcel & International. Reorganizations and

19 financial review 15 productivity programs in the postal value chain activities (distribution, transport, collect), and in post offices continued to be implemented alongside the optimization of the support activities such as Cleaning, Facility Management and Human Resources. The payroll costs were also favorably influenced for an amount of 3.4 million EUR by the favorable salary mix effect generated by the recruitment of postal distributors at a lower salary scale. Besides this, a favorable evolution of the employee benefits liability (including the recognition of the unrecognized actuarial gains) and lower performance related premiums have a positive impact of 13.9 million EUR on the payroll costs. These positive evolutions were partially compensated by: the cost-of-living increases of June 2011 (full impact in 2012) and March 2012 which generated an increase in payroll of 30.8 million EUR; regular seniority and merit increases for 4.8 million EUR; increased social security charges for certain categories of personnel, resulting in increased costs of 5.6 million EUR. Depreciation, amortization and impairment charges increased by 6.7 million EUR due to higher impairment charges. Other operating charges decreased by million EUR versus last year. The decision of the European Commission (299.0 million EUR) impacted the 2011 figures while the 2012 figures include an estimation of the repayment to be done on the amounts received in 2011 and 2012 from the Belgian State in compensation for services of general economic interest (124.9 million EUR). The remaining decrease is mainly due to a reversal of a pending litigation provision for 22.7 million EUR. Financial results decreased by 48.6 million EUR. The variation is mainly explained by the evolution of the financial charges relating to employee benefits (increase of 41.2 million EUR). This increase is non-cash and is due to the significant lower risk-free interest rate leading to lower discount rates in 2012 compared to This in turn led to an increase of the employee benefit liability which is shown as a financial charge. Taxes decreased from million EUR in 2011 to 98.5 million EUR in The 2012 tax charge represents 36.1% of the profit before tax which is in line with the 2011 tax figures (the impact of the decision of the European Commission on last year s figures being excluded). 2. Statement of financial position 2.1 Assets During 2012, additions of property, plant and equipment (57 million EUR) were lower than depreciations and impairments (78.5 million EUR). The net transfers towards assets held for sale and from investment property amounted to 0.9 million EUR. As a result of these movements, the net value of the property, plant and equipment declined by 20.3 million EUR. The main investments of the year related to the refurbishing, upgrade and maintenance of the buildings of the mail and retail networks (17.8 million EUR), production facilities for sorting and printing activities (19 million EUR), ATM- and security infrastructure (7.7 million EUR) and IT- and other infrastructure (12.5 million EUR). Intangible assets increased by 25.5 million EUR. This increase is mainly due to the following factors: goodwill increase (20.8 million EUR) mainly as a result of the acquisition of the Landmark companies (18.2 million EUR), goodwill on the acquisition of the customs activity of DSV (2.1 million EUR) and share price adjustment relating to the acquisition of bpost Asia (0.8 million EUR); investments in software and licenses (9.4 million EUR), development costs capitalized (15.2 million EUR), business combinations effects (0.9 million EUR) and other intangible assets (0.5 million EUR); partially compensated by amortization of the year: 21.3 million EUR. The investment in associates increased by million EUR from 84.3 million EUR to million EUR, reflecting the increase of the unrealized gains on bpost bank s bond portfolio (263.8 million EUR) and the pickup of the Company s share of bpost bank s 2012 results (3.5 million EUR compared to 2.2 million EUR in 2011). Investment properties decreased from 18.2 million EUR in 2011 to 15.2 million EUR in 2012 as fewer buildings were rented out.

20 16 bpost annual report 2012 Deferred taxes assets amount to 61.0 million EUR (2011: 72.4 million EUR). The decrease of 11.4 million EUR is mainly explained by the reduction in the timing difference between the accounting and the tax value of the provisions and the employee benefits. Investment securities decreased by million EUR to 22.0 million EUR (2011: million EUR). At year-end, the Company was holding its available cash on its current bank accounts rather than in instruments such as commercial paper as it did in the past. Current trade and other receivables decreased by 2.4 million EUR to million EUR (2011: million EUR), driven by a 9.9 million EUR decrease in trade receivables partially compensated by a rise of 7.3 million EUR in other receivables. The decrease in trade receivables is mainly due to a decrease of 11.6 million EUR in the terminal dues owed by foreign operators. Other receivables rose due to the higher commission to be received (18.5 million EUR in 2012). Cash and cash equivalents increased by 64.5 million EUR to million EUR (2011: million EUR) driven by increase of cash available on current bank accounts partially offset by the reduction of short term deposits. 2.2 Liabilities Equity amounts to million EUR (2011: million EUR). The addition of the million EUR net profit for the 2012 period and the increase of the Company s share of the unrealized gains on bpost bank s bond portfolio of million EUR is compensated by the payment of an interim dividend amounting to million EUR, a capital decrease of million EUR and the payment as an exceptional dividend of the excess in legal reserve for 28.0 million EUR. In 2012, Post Invest Europe Sàrl (PIE) purchased 2,589 shares of bpost held by Alteris NV-SA, a 100% subsidiary of bpost, which were considered as Treasury Shares in the equity (14.0 million EUR). Equity was further reduced by an amount of 73.6 million EUR mainly due to the fact that the exercise price of the put options granted to the minority shareholders of Landmark and MSI exceeded the net asset value of the companies. Interest-bearing loans and borrowings decreased to 82.7 million EUR (2011: 92.2 million EUR) as an amount of 9.1 million EUR, corresponding to the amount to be repaid on the European Investment Bank in 2013 was transferred to current financial liabilities. Non-current trade and other liabilities climbed to 83.1 million EUR (2011: 13.0 million EUR), driven by the commitments relating to the full acquisition of MSI Worldwide and Landmark. Employee benefits have decreased compared to last year and amount to million EUR (2011: million EUR). This decrease of 15.7 million EUR is mainly due to the following elements: the payment of benefits decreased the balance by 84.8 million EUR (2011: 55.5 million EUR) including 36.9 million EUR for the one-off settlement of accumulated compensated absences (as part of the 2012 Collective Labor Agreement, a significant number of sick days was repurchased from the civil servants) and 19.4 million EUR for the payment of early-retirement and part-time work benefits; service costs and interest costs relating to the year increased the balance for a total amount of 57.3 million EUR (2011: 35.9 million EUR). In 2011, service costs were impacted for an amount of 7.8 million EUR by the approval of termination benefits. The new part-time and early-retirement schemes negotiated in the Collective Labor Agreement during 2012 represent an amount of 28.4 million EUR; An actuarial loss of 18.6 million EUR offset by a transfer of 6.8 million EUR to unrecognized actuarial gains/losses resulting in a net P&L and balance sheet effect of 11.8 million EUR. This increase in liability reflects: - an actuarial financial loss of 38.5 million EUR related to high decrease of the discount rates in 2012 compared to 2011, - and, an actuarial operating gain of 26.7 million EUR mainly related to changes by Collective Labor Agreement 2012 with regards to the maximum number of days allowed in this plan (25.1 million EUR). As mentioned above, 6.8 million EUR were transferred to the unrecognized actuarial gains/losses which increased the unrecognized loss from 7.2 million EUR to 14 million EUR. After deduction of the deferred tax asset relating to employee benefits which amounts to 60.4 million EUR, the net liability amounts to million EUR (2011: million EUR).

21 financial review 17 Non-current provisions amount to 42 million EUR (2011: 79.6 million EUR). The decrease (37.6 million EUR) comes mainly from the litigation (33.3 million EUR) and environmental provision (7.4 million EUR). Current provisions amount to million EUR (2011: million EUR). The decrease of 194 million EUR comes mainly from the utilization of the provision related to the decision of the European Commission (299.0 million EUR) partially compensated by the addition for the repayment to be done on the amounts received in 2011 and 2012 from the Belgian State in compensation for services of general economic interest (124.9 million EUR). Current trade and other liabilities increased to million EUR (2011: million EUR), driven by the change in other payables (60.4 million EUR). This evolution is mainly due to higher advances related to terminal dues transactions and the recognition as a debt of the fine imposed of the Belgian Competition Authority. Payroll and social security payables remained almost stable while trade payables showed an increase of 10.4 million EUR. 3. Statement of cash flows Operating activities generated a net cash inflow of 71.3 million EUR (2011: million EUR). This decrease of 225 million EUR compared to last year is due to the repayment of million EUR related to the SGEI overcompensation. Without this repayment, cash flow from operating activities increased by 75.8 million EUR. This was due to a favorable evolution of operating performance, the positive evolution of terminal dues (resulting from to a positive contribution of 32.3 million EUR in 2012 compared to a negative contribution of 26.3 million EUR in 2011, including the payment of previously delayed terminal dues by postal operators) and the positive development of social debt and tax payable in respect of previous years, partially offset by higher tax pre-payments (an increase of 12.3 million EUR) and a cash outflow in employee benefits mainly driven by the buy-out of sick days of statutory employees. Acquisitions of property, plant and equipment decreased to 57.0 million EUR (2011: 66.8 million EUR). Acquisition of intangible assets amounted to 27.2 million EUR (2011: 11.4 million EUR). The acquisition of subsidiaries, net of cash acquired includes in 2012 the payment for the acquisition of 20% of MSI, 51% of Landmark and the remaining 24.91% of Secumail. Normalized operating free cash flow, which includes net cash from operating activities excluding the European Commission fine of million EUR minus net cash used in investing activities, increased by 57.8 million EUR to million EUR (2011: million EUR) Financing activities used million EUR of cash in the year ended December 31, 2012, compared to million EUR in the year ended December 31, The use of cash comprised the payment of dividends of million EUR and a capital and legal reserve reduction of million EUR. Net cash as reported in note 6.5 and including cash and cash equivalent, investment securities reduced by the amount of interest bearing loans and borrowing and by non-interest bearing loans and borrowing decreased by million EUR to million EUR (2011: 1,039.9 million EUR). The net cash decrease is mainly explained by the payment of the fine related to the decision of the European Commission ( million EUR), the capital and legal reserve reductions paid out to shareholders (-248 million EUR) and the interim dividend payment (-170 million EUR). Together, these elements represent a cash-outflow of million EUR which was only partially compensated by the normalized free cash flow) of 284 million EUR (2011: million EUR). Proceeds from sale of property, plant and equipment decreased by 1.1 million EUR to 10.9 million EUR (2011: 12 million EUR). During 2012, the Company continued to sell properties which are no longer used for its operations.

22 18 bpost annual report 2012 the postal environment As in most of the European Union, the postal market was fully opened up to competition in Belgium, on the 1 st of January The mail market is undergoing significant changes, with increasing competition from other forms of communication. The legislative framework for Belgium for a term of eight years commencing in bpost is accordingly responsible for collecting and delivering letters and parcels five days per week throughout the whole territory until 31 December Provision of public services In Belgium the law of 13 December 2010 transposes the EU directives on the liberalization of the postal market 1. It lays down the conditions postal operators must fulfill to operate an addressed mail service on the Belgian territory, among other things on the social and operational aspects (geographical coverage, delivery regularity). Other provisions are also covered, such as those concerning the freedom bpost has to adjust its prices. The universal service in Belgium In accordance with the EU directives, the Belgian State designated bpost as the universal service provider The relationship between the Belgian State and bpost is regulated in a Management Contract, which sets down how bpost is to fulfill its tasks for the provision of the public services entrusted to it, as well as the payment it receives from the Belgian State for doing so. Every year bpost receives financial compensation for providing all these services, such as the doorstep payment of pensions and allowances to people with a disability, and the delivery of newspapers, magazines and printed election matter. A new Management Contract is expected to enter into force in the Spring of Competition in Belgium 1 The liberalization of the postal market is the result of a gradual process following the implementation of three EU directives adopted in 1997, 2002 and 2008 respectively. The third postal directive (Directive 2008/6 of the European Parliament and the Council, adopted on 20 February 2008) established the framework for the full opening of the market. Since 1 January 2011 bpost has operated in fully liberalized markets. Several competitors are active in mail segments of parcels, unaddressed mail, international mail and express mail. There is still no Since 1 January 2011 bpost has operated in fully liberalized markets.

23 the postal environment 19 direct competition in the Belgian market in traditional mail, i.e. addressed mail. Direct competition means an alternative mail delivery network. Mail s current competitors are to be found in other media. The letter used as a means of personalized communication or advertising has to deal with other media, such as radio, press (free and paid) and electronic forms of communication. Compared with the innumerable advertising messages everyone is bombarded with on a daily basis, the advantages of personally addressed letters (direct mail) include the limited number of messages per letterbox and the daily routine of Belgian households: they always empty their letterbox and read their mail. So-called administrative mail, like invoices or certificates, is challenged by document digitalization. Some organizations that issue a lot of invoices started utilizing electronic invoicing in 2009, many of them have had to revert to paper invoices following complaints from their customers. That being said, there is a slow but sure move towards electronic invoicing. However, bpost has experienced direct competition in other domains for many years: Unaddressed direct mail (door-to-door mail items) has always been subject to competition. The parcels market was liberalized at the end of the 1990s and is today highly competitive following the rapid expansion of e-commerce. The market for banking and insurance products is highly competitive, characterized by the presence of a large number of national and international parties. Mail volumes in Belgium The fall in mail volumes has been moderate in Belgium in recent years, declining by 0.5% in 2010 and 2.0% in 2011, which is lower and more stable than that experienced in other European countries. Last year, mail volumes decreased by 3.5% in Belgium.

24 20 bpost annual report 2012 We want to maintain our march towards growth, excellence, customer loyalty, full employee engagement and social responsibility objectives growth and excellence

25 bpost annual report

26 22 bpost annual report 2012 Defending our core letters and parcels businesses by offering good value for money and modern solutions that take advantage of the unique assets of our sales and delivery network. Strengthening our position in parcels delivery to both residential and business customers. Offering integrated added-value solutions that capitalize on the complementary nature of mail, electronic communication, parcels delivery and payment services. Going beyond the post box to offer our services on our customers doorstep. Protecting and enhancing our profitability by constantly improving our productivity and cost control. Winning the loyalty of our customers on the basis of our operational excellence with the support of enthusiastic, committed employees. Achieving the right balance between economic continuity and the expectations Belgian society has of a public enterprise.

27 objectives 23 bpost is now a modern, efficient company that is ready to face the challenge of adapting to a constantly evolving environment. This is the result of a decade characterized by many changes, which has enabled us to assure our financial wellbeing; adapt to the expectations of our customers; propose alternative, competitive solutions to electronic means of communications; and pass the important milestone of the total liberalization of the postal market. The future is now in our own hands. We have to maintain our march towards growth, excellence, customer loyalty, full employee engagement and social responsibility by leveraging our experience over this past decade. growth We can grow first and foremost by defending our basic products, that is letters and parcels, and our banking & insurance services. While mail volumes such as traditional letters are under pressure, there is nevertheless room for growth in some postal segments. bpost has developed innovative strategies to demonstrate and defend the strengths of paper as a means of communication. Likewise, through our bpack offering, launched in 2011, we are able to play a major role on the Belgian parcels shipment and delivery market. Internationally, the growing success of e-commerce offers prospects for growth and we are capitalizing on these with our presence in European, Asian and North American markets. We have acquired and taken shareholdings in companies that handle mail and parcels. Growth also depends on how well we use new technologies in our core businesses to develop

28 24 bpost annual report 2012 innovative, attractive and competitive solutions in line with our customers needs, combining four fundamental elements: mail, electronic messages, parcels and payment processing. The management of the whole process for delivering vehicle license plates and of the administrative fines for the City of Anderlecht are two examples hereof. Lastly, growth tomorrow will depend on how well we capitalize on our main competitive advantages our knowledge of the territory we serve and the density of our network, our proximity and our relationship of trust with customers. Every day, bpost employees travel the length and breadth of Belgium, passing every letterbox in the country. We want to offer new services that cover the last few yards separating our customers letterbox from their front door. In this respect, our ongoing bpost by appointment pilot assumes a strategic importance that may contribute to mitigating the fall in mail volumes. excellence Every day we target operational excellence. That entails using innovation and new technologies, revising our working methods and routines, permanently improving the quality of services provided to our customers and controlling costs. For example, the introduction of state-of-the-art technologies at our sorting centers has helped cut costs while offering services of even higher quality, be that delivery terms or tracking options. We will continue to automate and centralize our mail activities. The Vision 2020 strategic project currently being deployed is expected to help our organization protect our ability to adapt as efficiently as possible to future volume evolutions and reduce costs by generating economies of scale in terms of infrastructure, without any adverse impact on service quality. We want to offer new services that cover the last few yards separating our customers letterbox from their front door.

29 objectives 25 loyalty It is no longer enough to have satisfied customers. We want to take it to the next level and earn our customers loyalty. In concrete terms, that means fulfilling their demands or expectations and ensuring that they use our services again and recommend them to others. We continuously evaluate the satisfaction and loyalty of our customers based on their perceptions and experience through our Customer First program known as My Client, Our Future in internal communications. This plays a central role in identifying and guiding all actions needed to earn their loyalty. In order to drive up loyalty in 2012, it has proven crucial to work throughout the company, making especially sure we deliver exactly what we promise. We also seek the customers loyalty through innovative solutions with strong added value that better meet the needs and expectations of customers, offering high quality at a competitive price, through the deployment of a multichannel sales network close to our customers and by improving accessibility to our basic postal products and services. In 2012 Customer First targeted three priority areas. First, getting the fundamentals right, such as delivering mail on time to the right address, responding to customer complaints earlier and in a more professional way and improving our products. Second, showing our customers that we care, especially in our firstline contacts, because our employees really make the difference there. Third, ensuring that all employees put our customer-oriented approach into practice. In 2012 communication campaigns were rolled out to raise awareness on the importance of customer loyalty and the fact that every employee has a role to play. As a result, we exceeded our target, achieving a loyalty score of Our goal is to drive up our customer loyalty score even further in the future. engagement bpost is now one of the leading postal operators in Europe. This is the result of many years of change and the efforts of all employees. More than ever, the future of bpost depends on the satisfaction and loyalty of our customers. This loyalty is primarily based on the natural, spontaneous enthusiasm and engagement of each employee. From this perspective, we have set up the bpeople project. It focuses on the conditions that need to be fulfilled to promote the wellbeing and engagement of all employees at the company. It is expected to help us establish customer loyalty based on what we do and how we act. social responsibility At bpost, we work on a daily basis to safeguard our social mission, promote equal opportunities and the wellbeing of our employees and contribute to better environmental performance. Social responsibility is an integral part of the company strategy, both in our procedures and our corporate culture. Our roots in Belgian society naturally lead us to work to ensure that bpost is viewed by all stakeholders (customers, shareholders, public authorities, employees) as a fully committed company. In 2013 we want to retain our focus on customer loyalty and consolidate the improvements we have achieved.

30 26 bpost annual report 2012 We offer to residential and business customers a wide range of innovative and added-value solutions mail & retail solutions tailored solutions

31 bpost annual report

32 28 bpost annual report 2012 The bpost Business and Residential market and mass channels departments were merged at the start of Mail & Retail Solutions (MRS) now manages all commercial relations with large customers, both private and public (focusing on specific and often complicated solutions), the self-employed and small businesses. It provides marketing and administrative communication solutions, as well as integrated solutions. The aim of these various approaches is to defend the letter and the strengths of paper as a modern, ecological, profitable means of communication that complements digital and other forms of communication. MRS also serves residential customers through the management and development of mass channels (post offices, PostPoints, eshop, stamp shops, Contact Center, social media). Banking and insurance solutions, offered on behalf of bpost bank, as well as other partner products, complement the postal offering through these channels. Administrative communication We develop and market paper-based and digital administrative and financial communication solutions and home services. We also offer flexible mail collection and franking solutions with high added value. In 2012 we implemented a more intensive rationalization in the product range to increase profitability at bpost. Within this context, we sold the digital document exchange activities of our Certipost subsidiary to Finnish group Basware, a global player in digital invoicing. However, Certipost s document security, digital certification and electronic identity card (e-id) activities remain the property of bpost. We believe these activities are part of the integrated bpost solutions that are important for our future. RelatioMail, launched in 2011, aims to help our customers turn their large volumes of administrative and financial mail into an added-value communication channel and possibly even a marketing channel. Such organizations as temporary employment agencies, social secretariats and insurance companies are increasingly interested in using this transactional channel to communicate with their customers. Twelve RelatioMail pilots were launched in 2012 together with banks, financial institutions, public utilities and telecoms companies. Marketing communication bpost markets responses to our customers commercial communication needs. We market such communication and direct marketing products as addressed advertising mail, door-to-door drops and opt-in addresses. We also deliver newspapers and magazines.

33 mail & retail solutions 29 growth by defending our core mail business in the fields of business communication and administrative communication with integrated, innovative solutions in banking and insurance with simple, trustworthy, accessible products and services 2012 was characterized by the continued optimization of how we market our direct mail solutions. The DM Boost approach allows us to emphasize the strengths of our direct mail offering as a response to the sales challenges of our customers. It can for example materialize in an optimization of the media mix, the definition of an innovative promotional offering or the identification of new consumers. Distripost customers have also benefited from solutions that better meet their door-to-door media needs. Customers can access an on-line tool to schedule their door-to-door campaigns in a simple and effective way. In 2012, new functionality was added (choice of products, possibility of home pickup, on-line payment). The success of the tool, which is available 24/7, has grown year on year. In 2012 it was used to schedule more than 95% of one-shot national campaigns. bpost has developed a solution that permits a brand to sponsor free advertising postcards that consumers can send to each other. This solution is an updated version of the MaxiResponse product. It offers advertisers improved visibility based on communication between private individuals. Under the new strategic vision for mail delivery (Vision 2020), we have launched pilots of a completely new concept among residential customers and advertisers: byou. The concept entails collecting all mail in an open bundle printed with information likely to interest the customer (such as local news and adverts). We are running these pilots to check whether bundling mail facilitates the work of mail delivery and sorting staff and to see whether customers appreciate this new delivery mode. The product could generate additional revenue through the sale of communication space on the bundle. For newspaper publishers 2012 was characterized by the continued optimization of operational, administrative and financial processes. We invested in two addressing machines for magazines published by non-profit organizations. This has enabled us to further improve the speed and reliability of delivery and so the satisfaction of these publishers and their subscribers, while optimizing bpost s delivery costs. Integrated solutions bpost markets integrated solutions whereby we manage end-to-end complex processes on behalf of our customers, from order to delivery by way of document printing, payment processing or contacts

34 30 bpost annual report 2012 loyalty by developing a diversified delivery retail network that can be accessed locally and is tailored to the lifestyle of our customers by constantly improving our call center with suppliers. We position ourselves in key markets, generating new opportunities and added value for our customers. Examples include producing and issuing books of certificates for health care providers on behalf of RIZIV/ INAMI, processing traffic fines for the federal police, managing the production and delivery of new EU vehicle license plates and, since 2012, the automation and follow up of administrative parking fines for the City of Anderlecht. As part of our efforts to offer more integrated solutions, we are developing the concept of homebased customer service. The aim is to provide large customers with services that complement their own customer channels, such as call centers, shops and the web. Our knowledge and daily presence on the ground, all the way to the front door of citizens and consumers, are key differentiating factors in this regard. The first pilots were launched in Banking services Banking is an integral part of our business and a segment that is steadily growing. In 2012 Bank van de Post / Banque de La Poste changed its name to bpost bank / bpost banque, marking its transformation into a modern bank after substantial efforts and investments since 2009, particularly in the retail network and IT. These include Bankstation, a system that enables us to manage and commercialize banking products in a more efficient way. bpost bank is accessible through the extended post office network, as well as on the web, with a successful on-line banking applications around. True to its values, bpost bank positions itself as a simple, secure and accessible bank. 92% of its customers say they are satisfied or very satisfied with the services offered and provided. In February 2012 we launched bpaid, a prepaid payment card using the MasterCard network in Belgium and abroad. It immediately caught on, with some 100,000 cards issued by year s end. The card is ideal for the large number of people in Belgium who do not have a credit card, want to strictly control their finances or minimize the risks of shopping on-line. Solutions for residential customers bpost also offers many innovative products through digital and mobile channels. The Do My Move service (mail forwarding when changing address) has been a

35 mail & retail solutions 31 The document management of administrative parking fines for the City of Anderlecht is a good example of bpost s integrated solutions know-how. In 2012 bpost formed a partnership with an IT systems development specialist for data integration and sharing between the city and bpost. This system completely automates the administrative fines process, from input of the offender s license plate in the city s database until the verification that fines have been paid. Printing and delivery of parking tickets, as well as management of appeals are also integrated in bpost s offering. The solution could be replicated in other cities. big success, as has the new version of MyStamp a personalized self-adhesive stamp available through the internet. Mobile Postcard, an application for creating and sending personalized postcards from a smartphone or tablet, is winning over more and more users. As well as postal and financial transactions, post offices also offer customers partner products. Our wish is to concentrate on a selection of major partners who create value. Through our partner Western Union we were the first in Belgium to launch the new direct2bank service, which enables customers to deposit cash onto a bank account. Postmobile, the mobile phone card we offer in partnership with Belgacom and its Proximus mobile network is a good example of bpost product diversification in all our sales channels. Sales network bpost has a diversified points of sale network that is close to our customers and tailored to their life habits, daily commuting and schedules. This strong network consists of 670 post offices, 670 PostPoints and 4,100 stamp shops. It also addresses the Belgian State s requirement that there be a guaranteed local network accessible to all inhabitants of Belgium. The network scope and scale are laid down in the Management Contract signed between bpost and the Belgian State. In 2012 we continued to invest in post offices as part of our strategy to modernize the network while improving convenience and security. These improvements include the gradual introduction of open counters equipped with a secure management system and the fitting out of specially designed, user-friendly spaces where customers can meet with an adviser to talk about banking products. The new post offices are also equipped with selfservice areas, accessible outside business hours, where customers can serve themselves without having to go to the counter, which also helps our efforts to reduce waiting times at our post offices. The deployment of PostPoints has also greatly contributed to improving the accessibility of basic postal products. Between 2006 and 2012, opening hours across the post office and PostPoint network rose by 38%. While stocking only a limited range of postal products (essentially domestic stamps), stamp shops contribute to the success of the multi-channel strategy developed by bpost. bpost s on-line store, eshop, has become a key channel for the purchase of stamps and other postal products over the past few years. eshop attracted 12% more visits in 2012 than in bpost s one-stop call center ( ) is also an integral part of our customer contact network. It is staffed by almost 400 agents, each with specific knowledge of selected bpost products and services, who fielded a little over two million calls in In June 2011 bpost signed the Customer Charter, an initiative of consumer organization Test-Achats and the Minister for Enterprise and Simplification. In subscribing to the Customer Charter, bpost commits itself to undertake every sensible step to improve how customer questions and complaints are handled. Since January 2012 customers can evaluate Contact Center performance based on selected key figures.

36 32 bpost annual report 2012 FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR comparable Evolution Transactional Mail % Advertising Mail % Press % Parcels % Value Added Services % International Mail % Banking & Financial Products % Other % Total MRS 2, , , , % Mail & Retail Solutions Revenues The operating income of the Mail & Retail Solutions business unit slightly increased from 2,033.2 million EUR in 2011 to 2,052.0 million EUR in 2012 (0.9%). Transactional Mail includes the Daily, Registered, Social Outbound and Administrative Mail product families. The increase in price and the improvement of the product mix contributed to an overall increase of 5.0% compensating the volume decline of 3.3%. The Administrative Mail volumes increased by 5.2%, out of which 3.8% concerns substitution from other portfolios, whereas Daily, Registered and Social Outbound volumes continued their decline -6.6% (out of which 1.2% due to substitution by clients in favor of Administrative Mail). The volume decline for Daily, Registered and Social Outbound is mainly observed within the mass market channels (-8.7%). Advertising Mail includes both the Addressed Direct Mail and the Unaddressed Mail product families. Volumes declined by 5.8% due on the one hand to the soft economic environment impacting Addressed Direct Mail and on the other hand due to the loss of a major, but low margin, client within Unaddressed Mail, partially compensated by the fact that elections were held in 2012 which generated political advertising mail. Pricing and mix decreased by 1.3% due to the new tariff bpost s on-line store, eshop, has become a key channel for the purchase of stamps and other postal products over the past few years.

37 mail & retail solutions 33 structure imposed by the ruling of the postal regulator IBPT-BIPT in 2011 and the impact of a promotional action for certain Addressed Direct Mail lines of products, partially offset by the price increase and a better customer mix for Unaddressed Mail. Press includes the distribution of newspapers and periodicals. Price and mix delivered a net increase in sales of 2.7%, whilst volumes slightly decreased by 1.0%. Parcels revenues include the parcels sold throughout the mass market channels. Pricing and mix delivered an increase in sales of 4.7%, whilst volumes slightly declined by 2.0%. Value Added Services include bpost s document management or data activities, other value added services such as the pick-up of mail from the clients premises and the franking of the mail items as well as the mail forwarding and temporary mail conservation services. The slight increase is mainly due to an improvement in price and mix by 3.3%. excellence by reducing waiting times in our post offices with a more efficient IT system for bpost bank products Banking & Financial Products grew by 8.3%. The key drivers are higher commissions received for the sale of banking and insurance products, higher revenues for the cashier activities provided to large customers and increased income for other financial products (among which the launch of the prepaid cards). Since January 1, 2013 BIZ and RSS have been merged into MRS. The table below presents the reconciliation between the old and new structure: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR comparable Transactional Mail Advertising Mail Press Parcels Value Added Services International Mail Banking & Financial Products Other (5.5) (5.8) (12.2) (5.3) Total BIZ 1, , , ,592.4 Transactional Mail Advertising Mail Press Parcels Value Added Services International Mail Banking & Financial Products Other Total RSS Total MRS 2, , , ,095.1

38 34 bpost annual report 2012 parcels & international innovation in our services

39 bpost annual report We will do our utmost to explore new opportunities with growth potential

40 36 bpost annual report 2012 Parcels & International is specialized in parcel sales, marketing, handling and dispatch in Belgium and abroad. Through bpost international it also manages activities related to international mail, such as parcels, administrative mail and addressed direct mail. Parcels e-commerce is experiencing strong growth at home and abroad. Almost half the Belgian population shops on-line. In 2012 they spent 25% more shopping online than in bpost intends to take full advantage of all the opportunities offered by the strong expansion of e-commerce. In 2011 we launched a full parcels and express offering under the bpack brand. The aim is to meet the complex needs of our customers who wish to prioritize service quality for their own customers. Besides normal delivery within 24 hours, bpost also markets special solutions, such as personalized express delivery, and activities ranging from storage to shipment and return management. Innovative tools have been developed to complement this range, such as Shipping Manager, which is available to both on-line vendors and end customers. The former has access through an administration interface that supports all parcel preparation activities (visibility of open orders, printing of labels) as well as individual tracking after shipment. End customers can use Shipping Manager to manage all aspects related to delivery and other practicalities, such as the choice of delivery method. With bpack consumers have access to a range of delivery options. Parcels can be delivered to their home, their nearest post office or PostPoint, an alternative address such as their place of work or one of the bpack 24/7 parcels stations, which, as the name suggests, are open all hours. An innovative solution has also been developed specially for on-line vendors in the United States and growth on the parcels market, not least through bpack, express solutions and the development of such innovative solutions as bpost by appointment on the international markets

41 parcels & international 37 Asia that target the European market. Globify allows European consumers to see the full cost of the product they wish to buy on-line upfront, including all extra charges (shipping, VAT, import and customs duty) and to pay for all of them in a single transaction. Service reliability and efficiency are essential for both on-line buyers and vendors. This full range of parcels services also enables bpost to strengthen its presence in the B2B (business to business) parcels segment. International bpost international s key strengths are good value for money and a customer-focused approach, based on innovative, added-value solutions. bpost international has been able to take advantage of the opportunities generated by market developments in recent years, bpost by appointment bpost by appointment is a pilot specially designed for customers that want to have their groceries and parcels delivered to their home at the time of their choosing. We have developed an open platform that allows consumers to arrange for the home delivery of their groceries and parcels ordered from local retailers, service providers, supermarkets and on-line vendors. When taking delivery customers can also hand over goods (returns, empties, ironing and so on). The initial pilots were launched in Geraardsbergen, Sint-Niklaas and Turnhout in spring The eastern part of the province of Walloon Brabant was included in November 2012 and the pilots will continue in bpost international has been able to take advantage of the opportunities generated by market developments in recent years, such as the emergence of e-commerce.

42 38 bpost annual report 2012 excellence through ISO 9001, and the IPC Certificate of Excellence such as the emergence of e-commerce, further proof of its status as a modern postal operator. bpost international has an extensive delivery network and cooperation agreements with foreign operators to ensure that it is always able to provide its services. bpost international is committed to continuing its pursuit of growth in Europe, Asia and North America. bpost international s presence on the second and third markets is bolstered by a subsidiary in the United States (MSI) and branches in Hong Kong, China and Singapore. In early 2013 bpost acquired a majority shareholding in US parcel transporter Landmark Global. We now have a beefed up logistical network and a customer portfolio for parcel shipment solutions to and from North America. In summer 2012 bpost boosted its presence in the United Kingdom, opening a branch that will operate completely independently under the bpost UK name. In recent years bpost international has been awarded a host of certificates. They are important because they give our customers an objective indication of our efficiency and provide proof of the quality of our services. They also show that we have competent, motivated employees in whom we invest. For example, bpost international has been awarded the IPC Certificate of Excellence three times in succession (certificate validity is three years). It is also ISO 9001 certified, while the Brucargo sorting center has been awarded ISO certification.

43 parcels & international 39 Parcels & International Revenues Since 1 October 2011 the Parcels & International business unit includes the contribution of bpost Asia. Excluding the contribution of bpost Asia, sales grew by 6.6%. Parcels include the parcels sold outside of the MRS market channels and the specialty logistics activities for business customers. Despite the decline in sales of new cars, which impacts the volumes of European compliant license plates (=ELP) distributed, sales for Parcels grew by 8.3% mainly due to increased volumes for Parcels International and an improved price and mix impact for Parcels. At comparable scope (without the incorporation of bpost Asia) the International Mail portfolio increased by 14.0 million EUR. This increase is mainly due to the increase in price and better mix for transit mail (7.3 million EUR) and the increased sales, driven by volumes from new clients, for MSI Worldwide Mail (6.3 million EUR in total, of which 2.8 million EUR is due to a more favorable exchange rate). FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR comparable Evolution Advertising Mail Parcels % International Mail % Other % Total Parcels & International % loyalty through our parcel home delivery options

44 40 bpost annual report 2012 mail service operations performance and quality

45 bpost annual report We work every day at improving our operational performance and at winning the enduring loyalty of our customers

46 42 bpost annual report 2012 Mail Service Operations is the operating entity responsible for collection, sorting, transport and delivery of letters, press, unaddressed mail and parcels. bpost is now a leading postal operator. That is the result of many years of change and efforts in every echelon of the company. We intend to continue along this path and improve our operational performance further, maintain and improve our profitability, and win the enduring loyalty of our customers. Constantly improving our performance in our core business The Georoute information system is at the heart of the daily management of the mail delivered by our staff. First introduced in 2003, Georoute enables us to determine the daily workload of all delivery staff, based on measured mail volumes, and how long they need to complete their work. This information enables us to constantly optimize delivery rounds. As a result, we can ensure an optimal cost structure for our delivery activities at all times. In recent years we have introduced new technologies in our core business, especially in our sorting infrastructure. These have helped cut costs through increased automation as well as improving overall quality. In 2012, 94% of mail was delivered within the agreed delivery term, an increase of 9% on the period We launched a new parcels drop and delivery channel bpack 24/7 to improve our service and customer satisfaction. Pilots were conducted in 2012 and additional parcel stations are expected to be opened in the course of The parcel station rollout is expected to continue over the coming years to achieve an optimal national coverage. The Mobile Device project was also piloted in The purpose of this project is to renew our stock of mobile terminals and equip our mail delivery staff with a mobile device with which to scan bar coded items and have recipients sign on screen for confirmation of delivery. This device creates a unique platform for new growth in our core businesses by constantly optimizing our sorting and delivery costs by launching a new delivery option for parcels: bpack 24/7 by implementing the Vision 2020 program to support future cost optimizations

47 mail service operations 43 excellence through new tools, such as Mobile Devices by modernizing the delivery of magazines by speeding up the return of undelivered mail innovations and can provide technological support for new products, services and integrated solutions. Given the convincing results of the pilots, we have decided to gradually equip all rounds starting in Two new machines have been installed in Antwerp and Liège for the preparation and distribution of magazines. They enable automation and centralization of address printing for these magazines to achieve economies of scale. They will allow us to maintain our high level of quality in magazine delivery while controlling the associated costs. An automation project was implemented to accelerate the return of undelivered mail and parcels. New ways to improve automation in 2013 are currently being examined. Lastly, under the Vision 2020 strategic plan, efforts have been invested to centralize and automate all the preparatory mail delivery tasks and will continue in 2013 with the gradual extension of four current sorting centers (Antwerp X, Ghent X, Charleroi X and Liège X). An agreement in principle has been reached with the government of the Brussels-Capital Region on the location of the new Brussels sorting center. The deployment of this plan will help ensure that we are able to continue to optimize our cost structure on a postal market undergoing huge change. All operational employees have been made aware of the impact they have on the loyalty of our customers on a daily basis. Concrete actions have been taken in these three priority areas. First, getting the fundamentals right. That means, for example, delivering mail to the right address and on time with special attention for parcels and registered mail, responding faster and in a more professional way to customer complaints, and improving such products as proxies for registered mail and the Do My Move mail forwarding service. Second, cherishing our customers, chiefly in their contacts with bpost, among other things through improvements implemented in the receipt of large mail volumes (Masspost). Third, ensuring all members of staff adopt a customeroriented approach. Communication campaigns were conducted in 2012 to raise awareness of the importance of customer loyalty and the fact that every employee has a role to play. loyalty thanks to our employees, who are committed to making the difference for our customers Earning the loyalty of our customers Our customers expect us to make unambiguous promises and to fulfill them at every level. Every day, they expect us to say what we are doing and do what we say in the delivery of letters, parcels and registered mail as well as contacts with our employees and representatives.

48 44 bpost annual report 2012 sustainable development social responsibility

49 bpost annual report We work on a daily basis to safeguard our social mission, promote equal opportunities and the wellbeing of our employees and contribute to better environment performance.

50 46 bpost annual report 2012 Scope of the report and application of the Global Reporting Initiative The Corporate Social Responsibility report has been written with due consideration for the guidelines of the Global Reporting Initiative (GRI). For the second year in succession, this report is self-declared at grade level B. Over the years bpost has developed a program focused on four strategic priorities directly linked to the activities: Proximity, Personnel, Planet and Paper. The themes developed in this section have been identified on the basis of an analysis of what is most important to bpost and the responsibilities we as a company must assume to reduce our impacts. This was done in-house and then presented to external stakeholders (such as WWF Belgium) for discussion. This enabled us to highlight the themes we prioritized in 2012.

51 social responsibility at bpost 47 Presentation of the themes Proximity One of bpost s main assets is a daily presence throughout the territory of Belgium. This presence expresses itself in the maintenance of an accessible points of sale network and the fact that our delivery staff visit every letterbox in the country every weekday. bpost is the only postal operator in Belgium to offer such proximity. We care deeply about maintaining this and we work on it every single day. Planet By the very nature of what we do, we have a certain impact on the environment, be that in terms of carbon emissions or energy consumption. The implementation of programs to systematically reduce carbon emissions is essential if we are to guarantee our customers and stakeholders that every letter and parcel entrusted to our care is handled with a minimal impact on the environment. Personnel The change programs introduced within our company in recent years have required considerable flexibility and engagement from each and every employee. They were successful because our employees were given the right support tools. Change will continue to be part of our daily lives. As will support for our employees and the desire to promote their engagement and wellbeing. Paper We intend to show that paper is a carrier of information that respects the environment, provided it is used in a responsible way.

52 48 bpost annual report 2012 As well as the four Ps, various other aspects are an integral part of CSR. They are linked to operating and financial results, corporate governance and customer satisfaction, and are handled elsewhere in this annual report. All the actions that we take in these fields are summarized in the table at the end of this publication. Main achievements in 2012 An extensive survey of all staff was held within the framework of the bpeople project to determine their level of wellbeing and engagement. The results were used as input to identify and shape the priority campaigns needed to maintain good working conditions. Carbon emissions were cut (by 32% compared with 2007), energy consumption was reduced (by 15% compared with 2005) and waste management was improved (7.5% less waste than in 2009). When it comes to environmental management, bpost ranks second in the International Post Corporation table (IPC EMMS Scorecard) on the basis of our achievements in A Market Probe survey of over 1000 residential and business customers in October 2012 led to the introduction of the Green Barometer. It appears that bpost s environmental reputation is improving and that major efforts must be agreed to support the image of paper as a sustainable means of communication. CEO Johnny Thijs signed the United Nations Global Compact (UNGC), committing bpost to ten principles in the fields of human rights, labor, environment and anti-corruption. In doing so, bpost expresses its desire to embed these principles in the company and its sphere of influence. Main challenges in the future The challenge we face is recognizing that the reduction in mail volumes, the increase in energy costs and the problems connected with personal mobility are all opportunities. They drive bpost to become more efficient (Vision 2020 project) and more creative in the development of innovative solutions ( bpost by appointment project). As shown by the Green Barometer, bpost must contribute to changing perceptions about paper, which is the main raw material of our business. With that in mind, bpost has formed partnerships with WWF Belgium, the FSC and other leading organizations in the paper industry. We have developed a range of communication tools and campaigns for customers and suppliers, which also have the aim of offsetting the use of greenwashing to the advantage of information technologies. CEO CSR Coordination Committee Coordination and reporting Internal and external communication Interface with CEO Green Post steering group Environment Electricity Fuel Carbon emissions Supplier commitment Green Marketing steering group WWF Belgium partnership Green services and products Paper People steering group Diversity Motivation Corporate culture Prevention

53 social responsibility at bpost 49 CSR organization bpost s CSR governance structure is integrated in the existing organization. It comprises a coordination committee, which reports directly to the CEO, overseeing three tasks forces that implement the various projects on the ground. The CFO is actively involved in decision making in the Green Post steering group. Relations with our stakeholders bpost is a company that is present everywhere and every day. Our process of engagement occurs across all business and with a range of stakeholder groups. The process for identifying them and their issues is part of the business-as-usual process that already exists across the company, such as surveys, participation in relevant forums, social dialogue, supplier contract review, customer feedback. The main stakeholders we maintain a dialogue with are listed in the table below. Who they are Shareholders - Belgian State - SFPI/FPIM - CVC Capital Partners Customers - Large accounts and corporate customers - SME, the self-employed and liberal professions - Residential customers Employees - Staff - Social partners Suppliers Media Public authorities - Federal government and the minister in charge (Minister of Public Enterprises) - Federal parliament (Infrastructure, Communications and Public Enterprises Commission) - Cities and municipalities Partners - NGOs and Associations: WWF Belgium, FSC, Goodplanet and Business & Society - International Post Corporation (IPC) - Carbon experts: Deloitte, Greenloop and CO 2 logic How we respond to their concerns - 11 board meetings in Publication of an information magazine for all customers - Establishment of a Green Barometer based on a survey of more than 1,000 customers - Active presence on social networks (Facebook, Twitter) and website - Annual employee wellbeing and engagement survey and development of action plans - Staff communication and awareness campaigns on CSR themes - Social dialogue: 11 Joint Committee meetings Organization of various meetings with the social partners during the implementation of the change projects - Study of the main suppliers to gain a better understanding of their vision and results in terms of sustainability (Ecovadis methodology) - Awareness raising among suppliers to get them to adopt a sustainable environmental approach - Circulation of 33 press releases and organization of 13 press conferences in Regular contact with the government and local authorities to inform them about the company s projects and look for solutions to the problems they may have with the services of bpost - Renewal of the strategic partnership with WWF Belgium - Campaign with Goodplanet to raise awareness in schools - Participation in the IPC s environmental program - Investment in tools and projects to reduce carbon emissions together with Deloitte, Greenloop and CO 2 logic

54 50 bpost annual report 2012 society bpost s foremost characteristic is our daily presence throughout the territory of Belgium. This is expressed in the accessibility of our products and services through a network of more than 1,300 points of sale, among other things. In addition, every one of the 589 municipalities in the Kingdom has at least one post office offering postal and other services to the public. Providing the universal service But our main mission is providing the universal service, which is the collection and delivery of mail and parcels five days a week throughout the territory. On a daily basis, some 10,000 staff visit every street in Belgium to deliver mail to some 4.7 million households. In 2011 the Belgian State entrusted this responsibility to bpost for a term of eight years. In the face of growing competition, both physical and electronic, the continuation of this mission depends on our ability to maintain a healthy economic and financial structure. Providing public services bpost is entrusted with several key public service missions that it provides to the Belgian population over the whole territory. Every year bpost receives financial compensation for the provision of all these services, which includes the doorstep payment of pensions and allowances to people with a disability, and the delivery of newspapers, magazines and printed election matter. Supporting literacy bpost has been involved in the fight to eradicate adult illiteracy in Belgium. This commitment is put into practice by providing financial support to the bpost Literacy Fund, which was established in 1997 and managed by the King Baudouin Foundation. Since 2009 we have given the fund a new impetus by donating part of the revenue from the sale of Christmas stamps. In the past four years the Literacy Fund has received over EUR 1,500,000, which has enabled it to support new literacy projects run by various organizations. Encouraging writing Brieven Brigade /Les Pros de la Plume is a bpost schools initiative launched in 2009 with the aim of promoting writing and passion for stamps among children aged between 2½ and 12 years old. Teachers have access to a range of educational tools, which are renewed every year and can be downloaded from the bpost website for their lessons, depending on the age group. For instance, students aged can learn to write creatively and find out all about the history of the EU and the postcard. Saint Nicolas Every year in November and early December children have a chance to write to Saint Nicolas. For six weeks, bpost employees help the holy man in his work by sending a gift to every child who contacts him. All records were broken in 2012, with over 300,000 letters addressed to Saint Nicolas. That is more than double what was received in 2011.

55 social responsibility at bpost 51 Supporting voluntary employee initiatives In 2012 bpost organized STAR4U for the third consecutive year. First held in 2010, the aim of STAR4U is to encourage employees who participate as volunteers in civil society, cultural, social and environmental projects in Belgium and elsewhere. The initiative has been a clear success since its launch. Over the three editions 521 applications have been received, 220 of which have been given financial support ranging from EUR 500 to EUR In total funds have been awarded to the tune of over EUR 200,000. Partnership with WWF Belgium In 2009 bpost entered into a partnership with WWF Belgium. The ambition was to draw on the experience and know-how of this NGO in pursuit of bpost s goals in the Green Post project, and to raise environmental awareness among both employees and customers. This partnership was renewed in Membership of Business & Society bpost joined Business & Society, a business network that sets the benchmark for CSR in Belgium, in Business & Society also provides support and tools to businesses that wish to integrate CSR into their management processes and operations. In December 2012, children have sent more than 300,000 letters to Saint Nicolas.

56 52 bpost annual report 2012 our employees bpost is now a leading postal operator, a fact we largely owe to the efforts of our employees over the past ten years. In an economic context characterized by the reduction in traditional mail volumes and change within the company, the wellbeing and engagement of every employee is key. With that in mind, as part of the bpeople project we held a new survey among all employees to gauge the situation in Generally, the results reveal that employees appreciate their work and have a proud bond with their employer. The survey also reveals that there are increased levels of stress across the organization. We have taken these results seriously, identifying a number of priorities for 2013 to ensure our employees continue to benefit from good working conditions in spite of the many ongoing change and modernization projects. In setting these priorities the aim is to provide stress support, set up a more participative dialogue, drive change, manage teams and improve their performance and social responsibility. Supporting employees bpost is a company in the midst of change. The jobs in the company are changing all the time. The Job Mobility Center is the department at bpost that forms the link between the organization as it is now and how it will be in the future, by providing support to staff members that have to retrain after a round of restructuring. The Job Mobility Center has three main concerns: employability, support and coaching, and temporary work management. bpost gives its employees a wide array of opportunities to grow and develop. We set great store by internal mobility. Proof of that lies in the fact that 90% of vacancies are filled by internal candidates. The wellbeing of our employees also involves guidance and support in terms of physical and mental health. The Psychosocial Prevention service is responsible for managing work-related stress. This comprises running prevention campaigns, raising awareness among managers, registering complaints, providing support and even stress management courses. The Psychosocial Prevention service also provides support in response to traumatic events, such as physical and verbal aggression, the death of a colleague and occupational accidents, as well conflicts between members of staff or complaints about unethical or sexual harassment.

57 social responsibility at bpost 53 Recognizing experience bpost positions itself on the job market as an organization that is also attractive to people with few qualifications. We offer them a job, training opportunities and the possibility of earning a diploma. Diplomas are invaluable in a career. They increase employment options and future prospects in the company. With that in mind, in 2011 bpost launched an initiative for employees without a higher secondary education qualification. In association with the Centra voor Volwassenonderwijs and the Centre de Promotion Sociale, bpost offers these employees the chance to follow a two to two-and-a-half-year course, mainly based on distance learning, to enhance the skills and knowledge acquired in their work, with the possibility of earning a higher secondary education diploma. By the end of 2012, 853 employees had expressed concrete interest in this initiative. In employees started a training program in Antwerp, Bruges, Brussels, Diest and Ghent. The first pilot phase of the program in the French Community began in the provinces of Hainaut and Liège in January It will be extended to other parts of the country in the course of the year. bpost has its own employee training centre. In 2012 bpost Academy gave some 25,000 days of training. Besides functional trainings, the employees had an opportunity to follow courses in communication, sales, languages and leadership also saw the development of a Summer Academy offering shorter courses on innovative subjects (such as neurosciences, dealing with other cultures, memory performance and the art of managing your energy), the set up of a new on-line training platform to add to the development offering through this channel and the creation and launch of a development path for all new post office staff. Formal training evolution (LA 10) Number of hours 235, ,526 Number of hours/year/employee 9 7 Informal training evolution (LA 10) Number of hours 235, ,526 Number of hours/year/employee 9 7

58 54 bpost annual report 2012 Diversity and equal opportunities Working together is one of the key bpost values. Our diversity program helps us put this value into practice on daily basis and remain in phase with society. We are also convinced that managed diversity is a source of performance and innovation for bpost. We run campaigns to encourage people to be open to these differences and to treat everyone fairly and respectfully, regardless of gender, culture, social status, age and other differentiating factors. We also endeavor to attract the most talented people in all categories of the population. In 2012 we continued our promotion of diversity and equal opportunities in the wider sense, stressing two aspects in particular: cultural diversity and a good gender balance. At bpost women make up around 34% of the workforce and 17.5% of senior management. Our results are rather encouraging in this field, certainly for our industry, but we have set ourselves the goal of driving up this percentage significantly. Distribution of employees by gender, age, minority and other diversity indicator (LA 13) Female Male 2011 Middle management 32.39% 67.61% Senior management 16.98% 83.02% 2012 Middle management 31.80% 68.20% Senior management 17.43% 82.57% Code of Conduct bpost first published its Code of Conduct in It sets out expectations the company has with regard to the ethical and interpersonal conduct of each of its employees. The Code was updated in 2011 to take account of the new mission and values of bpost as well as the growing importance of corporate governance. It applies to all bpost employees, regardless of their status or position in the organization. It also stresses the active role management must play in promoting compliance with the Code and the values of bpost. Employee relations Together with any specific points that may be mentioned in the collective agreements, the statutory provisions of bpost explicitly provide for dialogue/ negotiation in which plans to restructure the various departments are examined and discussed, including implementation schedules. The company s consultation structure provides for local (zonal consultation committees), regional (regional consultation committee) and national bodies (Mail, Retail, FM-Cleaning joint subcommittees, central services consultation committee).

59 social responsibility at bpost 55 In addition, before implementation the restructuring projects are discussed in the Joint Committee, the central body for negotiation and dialogue with the social partners. The collective agreement, which was concluded at the end of 2011, contains a commitment to implement all restructurings without compulsory redundancies during the period covered by the agreement. It also provides for the payment in 2012 and 2013 of a one-off bonus to all employees, based on the profitability achieved by the company in this period. At the end of 2012 the social partners and bpost reached an end-of-career management agreement under which pay-scale statute and contract staff aged 55 and over can reduce their hours. Support measures are in place to minimize the loss of salary. All these employees can work part time up to retirement while retaining almost 85% of their income. The agreement also allows employees to benefit from bpost s profitability through the extension of the one-off performance-related bonus system in 2013 (payment in 2014). Four one-off performance-related bonuses are provided for linked to profit, customer loyalty, the legal profit-sharing scheme and good attendance. This collective agreement covers pay-grade contract and statute staff, who make up around 85% of the workforce. It does not apply to non-pay grade contract employees. Auxiliary mail carriers are covered by a special agreement and benefit from some stipulations of the collective agreement, such as the non-recurring bonus system. Managed diversity is a source of performance and innovation for bpost.

60 56 bpost annual report 2012 bpost workforce (LA 1) Full time equivalents 31/12 27,245 25,675 Fixed term contract Female Male Open-ended contract 26,926 25,429 Female 8,421 7,938 Male 18,504 17,491 Replacement contract Female 84 / Male 17 / Total headcount 31,588 29,382 Full time 21,339 20,481 Part time 10,249 8,901 Female 10,856 9,929 Male 20,732 19,453 Distribution by age group ,983 3, ,718 2, ,688 3, ,757 4, ,997 4, ,310 4, and over 6,135 5,451 Average number of temporary staff Subsidiaries Full-time equivalent 31/ Total headcount 31/ Turnover (LA 2) In 2,289 1,461 Female Male 1,664 1,029 Out 3,798 3,570 Female 978 1,295 Male 2,820 2,275 Turnover* 10.90% 9.51% Female 9.39% 10.31% Male 11.61% 9.13% Turnover (LA 2) Distribution by age group In Out Turnover In Out Turnover , % % % % % % % % % % % % 56 and over 16 2, % 23 1, % * Turnover (in+out)/2 (FTE at start of year + FTE at end of year)/2

61 social responsibility at bpost 57 environment bpost delivers 10.5 million letters and 100,000 parcels every weekday. This obviously has an impact on the environment. To influence the whole of its value chain, from supplier to customer, in 2009 bpost developed a program to build a postal system that is more concerned about the environment. This program covers all energy and environmental aspects in the company, the development of green solutions and products for customers and support for innovative projects that meet the ecological criteria. By implementing a set of measures, bpost wishes to give customers peace of mind that their letters and parcels will be delivered in the most responsible conditions with minimal impact on the environment. Influencing our suppliers at the source In 2012 bpost finalized the implementation of a process broadening its sustainable purchasing policy with suppliers to take account of environmental (energy, water, waste, products) and social performance (health and safety, working conditions, child and forced labor) and to raise awareness at suppliers that present risks in certain domains. Almost a hundred suppliers are assessed with our partner Ecovadis in accordance with the relevant EU regulations. Optimizing the management of our impacts Reducing our environmental impacts bpost permanently works to reduce the impact of activities on the environment. The starting point is observing and applying the environmental regulations. The environmental criteria are included in the individual assessments of some management staff (including the CEO). The Environmental Management department arranges annual inspections, updates declarations and works closely with the various authorities. Besides the regulatory aspects, bpost works actively to implement environmental management systems. The ISO certificates of nine of our main sites (five

62 58 bpost annual report 2012 sorting centers, Stamps Production, bpost International, Mail Center Aalst and bpost head office in Brussels) were renewed in This means that the annual volume of letters and parcels continues to be handled in responsible environmental circumstances. The other sites are responding to a national policy, especially with regard to how waste management is organized. The goal is to reduce waste and the costs of waste management by generating income from waste paper. With that in mind, more than one third of paper discarded as unsorted waste since 2009 has been salvaged and sold for recycling. We were able to achieve our target to reduce waste by 10% between 2009 and 2012 thanks to an active awareness campaign at 50 Mail Centers and our administrative premises. A new goal has been set for 2020 (20% reduction compared to 2009). Waste collection (EN 22) Year Paper and cardboard (m 3 ) Class 2 waste (m 3 ) ,659 29, ,004 26, ,068 25, ,528 25,319 Waste recycling (EN 22) Year Paper (tons) Cardboard (tons) Plastic (tons) Polypropylene (tons) Cartridge recycling (EN 22) Year Cartridges (tons) , , , ,140 Reducing our climate change impacts Greenhouse gas emissions are the determining factor when measuring the environmental impact of bpost s operations. Road transport is the backbone of the mail collection and delivery network and bpost cannot provide its primary service without a large fleet. bpost implemented an action plan and successfully reduced carbon emissions by 32% in and energy consumption by 15% in In 2012 the Energy Management department began implementing an energy monitoring system to measure,

63 social responsibility at bpost 59 monitor and optimize energy flows in the main 50 premises. bpost also renewed its green electricity supply contract and continued efforts to optimize the energy efficiency of its various premises. Replacing oil by gas heating system, relighting and isolation are amongst the initiatives undertaken. region, this new mail center is a model of sustainable development in the low-energy building industry. The rational use of materials and energy, lighting and rainwater harvesting have been conceived to be economically and ecologically sustainable. In September 2012, bpost inaugurated its first green building. Built in the Plénesses in the Verviers Fossil fuel consumption (EN 3) Year Gas Heating oil MWh GJ MWh GJ , ,449 24,992 89, , ,726 25,176 90, , ,063 23,143 83, , ,745 20,476 73,714 We implemented an action plan and successfully reduced our carbon emissions by 32% in and energy consumption by 15% in

64 60 bpost annual report 2012 Electricity consumption (EN 4) Year MWh GJ , , , , , , , ,854 Greenhouse gas emissions in TeqCO 2 1 (EN 16) Year Teq CO , , , ,632 Sustainable mobility Our fleet, one of the largest in Belgium (comprising 6,198 vans, 2,364 mopeds, 124 trailers, 293 trucks and 3,189 bikes, 2,547 of which are electric), is also at the heart of our environmental challenge. At the end of 2012 the fleet was still responsible for almost 70% of our direct carbon footprint. We continued to train van drivers to drive in an ecological way. In total this campaign has saved close to 100,000 liters of fuel on an annual basis. The final of the Eco Driving Challenge begun in 2011 to raise awareness among employees of their actual consumption was held at the Zolder circuit in May The winning team qualified for the IPC s first international trophy, which was held in Montpellier in November. With a workforce of 30,000, bpost also faces a mobility challenge, especially when it comes to commutes. The green car policy, which encourages managers to choose transport solutions that emit less CO 2 was reviewed in 2012 to take account of the new regulatory measures. Fossil fuel consumption (EN 3) Year vehicle fuel (diesel + petrol) MWh GJ , , , , , , , ,285 1 bpost calculates its greenhouse gas emissions in accordance with the methodology developed by PostEurop and based on the Greenhouse Gas Protocol. This methodology is certified in accordance with ISO A more detailed report (scope, conversion factor) is published at the Carbon Disclosure Project website (

65 social responsibility at bpost 61 Development of more sustainable solutions for our customers bpost was the first postal operator and the first communication channel in Belgium to work on the development of a tool to measure the carbon footprint generated during the complete lifecycle of an addressed DM campaign. The Carbon Meter allows customers to measure the carbon footprint generated by their mail (not only advertising) and parcels flows, so that they can take well-informed decisions that minimize this environmental impact (paper type, use of cardboard, size, ink and so on). To complement this low-carbon offering, bpost gives its customers the possibility of offsetting the carbon emissions generated in delivering their mail items. This offering, a joint initiative with CO 2 logic, finances projects to cut greenhouse emissions in emerging countries. As well as offsetting its own carbon emissions, bpost is also committed to supporting Goodplanet in its work to raise awareness of environmental issues in Belgian schools. The carbon emissions resulting from the handling of more than 10% of the annual postal volumes of addressed direct mail were offset during the pilot launched among business customers in A green stage We set ourselves the target of being a top five postal operator in terms of environmental performance and bpost earned second place in the IPC ranking of 21 operators based on the 2011 results. The IPC conducted an external audit of these environmental performances in 2012 in accordance with ISO for greenhouse gas accounting and verification. Due to bpost s participation in the Carbon Disclosure Project and GRI, this environmental data is freely available to all interested stakeholders. We want to remain among the best students in the IPC class by launching new structural and behavioral initiatives to improve the environmental performance of our activities, premises and fleet.

66 62 bpost annual report 2012 paper: an effective, sustainable means of communication Paper is at the heart of our activities. bpost is committed to using only paper from sustainable sources (recycled or FSC / PEFC paper). To that end, we have worked with WWF Belgium since 2009 and published a brochure featuring ten questions and answers to explain why paper is a key means of communicating information, and emotions, provided we use it in a sustainable and responsible way, which is what bpost is committed to doing. Exemplary behavior bpost is committed to being best in class in terms of responsible paper consumption inside the company. 99% of the paper we buy is labeled or recycled and 100% of stamps are printed on FSC paper. bpost is the leading postal operator in Europe in this field. In 2012 bpost broke new ground with the first ever issue of certified stamps bearing the FSC logo. The theme was fittingly ecological: tree leaves. bpost monitors printing paper consumption at its offices. This is accompanied by a campaign to raise awareness, a reduction in the paper weight and the management of all printing costs. Paper consumption has fallen by 7.5% since the program was introduced at our ISO certified sites. Printing paper consumption (EN 1) 1 Year Volume (reams) Weight (kg) ,959 56, ,545 57, ,631 58,132 Points to remember: Paper production does not destroy forests. Less than 15% of the raw materials used to make paper come from the felling of specific trees, mainly in sustainably managed forests. Paper can be recycled five times without quality loss. Recycled fiber accounts for up to 43% of the raw materials used to make paper. The Belgian paper industry is committed to minimizing its environmental impact. Investments over the past 20 years have led, despite a production increase of 40%, to a 70% reduction in the discharge of waste into the water and a reduction in energy consumption of over 13%. Traditional mail does not have any greater impact on the environment than commercial . To prove it, bpost has worked with Greenloop to develop tools that measure and limit the carbon footprint of paper and cardboard mail items, as well as evaluating the environmental impact of . For more details about our corporate social responsibility program, visit ,168 52,073 1 Monitoring for ISO certified sites without bpost International and Stamps

67 corporate governance 63 General As a limited liability company under public law, bpost is governed by the Law of 21 March 1991 on the reform of certain economic public companies (the Law of 1991 ). For all matters not specifically covered by the Law of 1991, bpost is governed by the Belgian Companies Code. As an unlisted company, bpost is not subject to the Belgian Code on Corporate Governance of 12 March Nonetheless, bpost does wish to commit to observing the philosophy of good governance, integrity and transparent decision making, by adhering to the Corporate Governance principles laid down in this Code and the OECD s Guidelines on Corporate Governance of State-owned Enterprises. Some of these principles and guidelines have already been implemented in the Charter of the Board of Directors and the advisory committees (see Charter of the Board of Directors and the Committees below for more information). The main characteristics of bpost s governance model are the following: a Board of Directors that defines the general policy and strategy of bpost and supervises the operational management; a Strategic Committee, an Audit Committee and a Remuneration and Nomination Committee created within the Board to assist and make recommendations to the Board; a CEO who is responsible for the operational management and to whom the Board of Directors has delegated powers of day-to-day management; a Management Committee that, in addition to exercising the powers entrusted to it by the Law of 1991, assists the CEO in the exercise of his duties; a clear division of responsibilities between the Chairperson of the Board of Directors and the CEO. In 2011, the corporate governance framework at bpost has evolved as a result of the amendment of certain provisions of the Law of 1991 by the Law of 6 April 2010 in relation to corporate governance in listed companies and autonomous public enterprises (the Law of 6 April 2010 ). The amendments concern the content of the annual remuneration report, the payment of variable remuneration to the CEO, the directors and the members of the Management Committee and the payment of departure indemnities. Board of Directors Composition In 2012, the Board of Directors was composed of: Five directors, including the Chairperson of the Board of Directors (the category A directors), appointed by the Belgian State by Royal Decree deliberated by the Council of Ministers; Four directors (the category B directors) appointed by the other shareholders (i.e., all shareholders except the public authorities); and The CEO, who belongs to neither of the aforementioned categories, but is appointed by the Belgian State via Royal Decree deliberated by the Council of Ministers. Martine Durez has been Chairperson of the Board of Directors since 17 January Her mandate was renewed as per 17 January 2012 by Royal Decree date 2 February The mandates of all other Board members (except Christian Leysen (A) and Jean-François Robe (A)) have been renewed as per 17 January Besides the Chairperson, the Board is currently composed of the following members: Arthur Goethals (A) Luc Lallemand (A) Laurent Levaux (A) Caroline Ven (A) Geert Duyck (B) K.B. Pedersen (B) Søren Vestergaard-Poulsen (B) Bjarne Wind (B) Johnny Thijs (Chief Executive Officer)

68 64 bpost annual report 2012 This composition reflects the diversity requirements of the Law of 28 July 2011 which promotes the presence of women on the boards of directors of autonomous state enterprises. Powers and functioning With the exception of the actions reserved to other bodies, the Board has the authority to take all necessary and useful actions to realize the corporate purpose of the Company. The Board has adopted charters that organize the functioning of the Board and the advisory Committees. These charters are aimed at enforcing and clarifying the rules of good governance and thus increasing the transparency in the decision making process. The Board is convened by the Chairperson or the CEO, whenever the interest of the Company requires it or upon request of at least two directors. In 2012, the Board met 11 times. The Board can deliberate only if at least half of the members are present or represented. In principle, the decisions of the Board are taken by absolute majority. However, with respect to a number of specific matters (listed in article 27 2 of the Bylaws), the Board can only decide if at least two directors of each category are present or represented, and decision on such matters can only be adopted with the majority of 75 per cent of the votes cast. In addition, pursuant to the Law of 1991, the following decisions require a two-thirds majority: the approval of all renewals or amendments to the Management Contract; the acquisition of participations in companies, associations and institutions that exceed one of the thresholds laid down in article 13, 2, paragraph one, of the Law of In the event of a tie the Chairperson s vote prevails. The CEO presents an activity report on the Company s day-to-day management and reports on the financial situation at every meeting. The follow-up of decisions Board of Directors 1 Arthur Goethals (A) 2 Caroline Ven (A) 3 Luc Windmolders (Government Commissioner) 4 Johnny Thijs (CEO) 5 Bjarne Wind (B) 6 Martine Durez (Chairperson) 7 Geert Duyck (B) 4 8 Luc Lallemand (A) K.B. Pedersen (B) Laurent Levaux (A) (not present in the picture) 11 Søren Vestergaard-Poulsen (B) (not present in the picture)

69 corporate governance 65 taken at previous meetings is also discussed at every meeting. Charter of the Board of Directors and the committees The Board has adopted charters to clarify the rules of good governance and transparency and implement these at all levels. These charters contain rules with respect to: The duties of the Board of Directors and the Committees on the one hand and of the Management Committee and the CEO on the other; The responsibilities of the Chairperson and the Corporate Secretary; The periodic reporting to the members of the Board on the progress and the implementation of the Business Plan and other important developments regarding the Company s activities; Requirements with which the members of the Board of Directors need to comply in order to ensure that they have the adequate experience, expertise and competences to fulfill their duties and responsibilities; A system of disclosure regarding mandates held and rules aimed at avoiding conflicts of interests and providing guidance on how to inform the Board in a transparent way in case such conflicts occur. The Board may decide to exclude the member who has a conflict of interest from the deliberations and vote on that subject. The Board continuously evaluates and improves its functioning in order to steer the Company ever better and more efficiently. Committees created by the Board of Directors The Board of Directors has established three Committees, which are responsible for assisting the Board of Directors and making recommendations in specific fields: the Strategic Committee, the Audit Committee, and the Remuneration and Nomination Committee. Strategic Committee The Strategic Committee is responsible for assisting the Board of Directors in defining the group s strategy. Among other things, it makes recommendations on the strategic orientations of bpost, the business plan, and acquisition and partnership opportunities. The Strategic Committee is chaired by the CEO and is further composed of two directors of each category. It met 4 times in Audit Committee The Audit Committee is responsible for assisting the Board of Directors in accounting, audit and internal control matters. Among other things, it makes recommendations on the accounting policy, the examination of the accounts, the control of the budget, the examination of the reliability of financial information, and the organization and monitoring of the system of internal control and compliance. In addition to reviewing audit reports, the Committee monitors the work and the activities of the internal Audit Department. The Director of the internal Audit Department is accountable to the Chairperson of the Audit Committee and reports administratively to the CEO. The Audit Committee is composed of two directors of each category and is chaired by a director of category B. It met 6 times in Remuneration and Nomination Committee The Remuneration and Nomination Committee is responsible for making recommendations concerning management appointments and remuneration. Among other things, it makes recommendations on the appointment of the CEO and the remuneration of members of the Management Committee, and any share schemes that could be adopted for executive management and staff. The Committee is chaired by the Chairperson of the Board of Directors and is further composed of one director of category A and two directors of category B. It met 5 times in Composition of the committees Strategic Committee Arthur Goethals Laurent Levaux K.B. Pedersen Johnny Thijs (Chairperson) Søren Vestergaard-Poulsen Audit Committee Geert Duyck Luc Lallemand Caroline Ven Bjarne Wind (Chairperson)

70 66 bpost annual report 2012 Remuneration and Nomination Committee Martine Durez (Chairperson) Geert Duyck Arthur Goethals Bjarne Wind Chief executive officer (CEO) and the Management Committee After deliberation by the Council of Ministers, the CEO is appointed by Royal Decree for a renewable term of six years. If the Chairperson of the Board of Directors is Dutch-speaking, the CEO must be French-speaking and vice-versa. By Royal Decree of 26 February 2008, the mandate of the current CEO, Johnny Thijs, was prolonged for a new term of six years, effective as of 7 January 2008, upon proposal of the Board and recommendation of the Remuneration Committee. The CEO is responsible for the operational management of the Company. He has powers of day-to-day management that are delegated to him by the Board of Directors and he represents the Company within the framework of the day-to-day management and the other powers delegated to him. This representation includes the exercise of the voting rights attached to shares and interests owned by the Company. The CEO is assisted in the management of the Company by a Management Committee. The Management Committee also has the statutory powers to negotiate all renewals and amendments to the Management Contract concluded between the State Management Committee 1 Kurt Pierloot: Mail Service Operations 2 Pierre Winand: Chief Financial Officer, Service Operations, ICT 3 Peter Somers: Parcels & International 4 Johnny Thijs: CEO 5 Koen Van Gerven: Mail & Retail Solutions 6 Mark Michiels: Human Resources & Organisation

71 corporate governance 67 and the Company. Powers at operational level are delegated by the CEO to members of the Management Committee or any other employees of the Company. The Management Committee is currently composed as follows: Johnny Thijs: CEO Mark Michiels: Human Resources & Organisation Pierre Winand: Chief Financial Officer, Service Operations, ICT The persons listed below have been granted certain operational responsibilities and are added to the Management Committee: Kurt Pierloot: Mail Service Operations Peter Somers: Parcels & International Koen Van Gerven: Mail & Retail Solutions They are invited to participate in all meetings of the Management Committee to discuss issues relating to the management of the Company or matters that fall within the scope of their responsibilities. Corporate Secretary The Board of Directors, the advisory Committees of the Board and the Management Committee are assisted by the Corporate Secretary. This position is held by Dirk Tirez, who is also General Counsel of the Company. In addition, Ernst & Young and PVMD are responsible for the audit of the consolidated annual accounts of the Company and its subsidiaries. The remuneration for the year 2012 amounts to 325,000 EUR (excluding VAT) for the joint auditors (Ernst & Young and PVMD) and 52,560 EUR (excluding VAT) for the Court of Auditors. Furthermore Ernst & Young received 27,800 EUR (excluding VAT) in fees for non-audit services. Government Commissioner The Company is subject to the administrative supervision of the Belgian Minister responsible for public enterprises who exercises such control through a Government Commissioner. The role of the Government Commissioner is to ensure compliance with the requirements of Belgian law, the Articles of Association and the Management Contract. In addition, the Government Commissioner reports to the Minister of the Budget on all decisions of the Company having an impact on the Belgian state s budget. The Government Commissioner is Mr. Luc Windmolders. Board of Auditors The audit of the financial situation of the Company and of the annual accounts is entrusted to a Board of Auditors composed of four members, two of which are appointed at the general meeting of shareholders and the two others by the Court of Auditors. The Board is composed as follows: Ernst & Young Bedrijfsrevisoren BCVBA, represented by Mr. Eric Golenvaux; PVMD BCVBA, represented by Mr. Lieven Delva; Mr. Philippe Roland, First President of the Court of Auditors; Mr. Josef Beckers, Member of the Court of Auditors.

72 68 bpost annual report 2012 Remuneration report Declaration relating to the remuneration policy As a limited liability company under public law, bpost has developed a specific remuneration policy, decided by the Board of Directors upon recommendation of the Remuneration and Nomination Committee, taking into account the different groups of employees of the Company. The remuneration policy aims to offer an equitable reward package to all employees (statutory, contractual), and directors, which is competitive with the reference Belgian market. Any change in the remuneration policy is to be approved by the Remuneration and Nomination Committee. In general, bpost distinguishes different groups, for which the basis remuneration principles will be explained and detailed: 1. Members of the Board of Directors 2. CEO 3. Other members of the Management Committee and Senior Management Members of the Board of Directors The remuneration of the members of the Board of Directors was decided by the General Meeting of Shareholders of 25 April to receive the following annual remuneration for their mandate as member of the Board: 38, EUR for the Chairperson, who also chairs the Joint Industrial Committee (Paritair Comité / Commission Paritaire) of bpost; 19, EUR for the other directors, with the exception of the CEO. These amounts are indexed annually. No other benefits are paid to the members of the Board of Directors for their mandate as director. Pursuant to the abovementioned decision of the General Meeting of Shareholders of 25 April 2000, the members of the Board of Directors (with the exception of the CEO) are entitled to an attendance fee of 1, EUR (which as a result of indexation has increased to 1, EUR per meeting effective March 1, 2012) per attended meeting of one of the advisory Committees established by the Board of Directors of which they are a member. No additional attendance fees or remunerations are foreseen for the attendance of the meetings of the Joint Industrial Committee by the Chairperson of the Board. Messrs. Søren Vestergaard-Poulsen and Geert Duyck have waived the attendance fees and other remunerations linked to their position as a Board Member. During the financial year, the members of the Board of Directors received the following total gross annual remuneration: Pursuant to that decision, the members of the Board of Directors (with the exception of the CEO) are entitled Member Board meetings Audit Committee Strategic Committee Remuneration & Nomination Committee TOTAL Martine Durez 38, EUR Not a member Not a member 7, EUR 46, EUR Arthur Goethals 19, EUR Not a member 6, EUR 7, EUR 33, EUR Luc Lallemand 19, EUR 8, EUR Not a member Not a member 27, EUR Laurent Levaux 18, EUR Not a member 3, EUR Not a member 21, EUR Caroline Ven 18, EUR 9, EUR Not a member Not a member 27, EUR Bjarne Wind 19, EUR 9, EUR Not a member 7, EUR 36, EUR K.B. Pedersen 19, EUR Not a member 4, EUR Not a member 23, EUR Christian Leysen (*) 1, EUR Not a member Not a member Not a member 1, EUR Jean-François Robe (*) 1, EUR Not a member Not a member Not a member 1, EUR Geert Duyck 0 EUR 0 EUR Not a member 0 EUR 0 EUR Søren Vestergaard-Poulsen 0 EUR Not a member 0 EUR Not a member 0 EUR (*) Christian Leysen and Jean-François Robe were members of the Board of Directors before its renewal on 17 January 2012 and have, at this occasion, received an attendance fee.

73 corporate governance 69 Remuneration of the CEO The remuneration package of the CEO is reviewed annually by the Board of Directors upon recommendation of the Remuneration and Nomination Committee and is based on a market comparison with large Belgian companies. For the year ending 31 December 2012, a remuneration of 1,123,209 EUR was paid to the CEO (compared to 1,104,941 EUR for the year ended 31 December 2011) and can be broken down as follows: Base salary (gross remuneration): 770,231 EUR Variable remuneration (performance driven bonus paid in cash): 290,260 EUR (relating to the performance in 2011) Pension and death in service coverage: 59,418 EUR Other compensation components* : 3,300 EUR *representation allowances In addition to the above, the CEO also benefits from the use of a company car; leasing cost thereof amounts to 23,960 EUR. No stock options were awarded in 2012 to the CEO. During 2012, the CEO exercised 174 options granted in 2007 and 174 options granted in 2008 under the previous stock option plan approved by the Board of Directors in The shares delivered to the CEO following the cashless exercise of the options are no longer held by the CEO and are currently owned by Post Invest Europe S.à r.l. Remuneration of the other members of the Management Committee and Senior Management The remuneration package of the other members of the Management Committee and Senior Management is reviewed annually and approved by the Board of Directors upon recommendation of the Remuneration and Nomination Committee and is based on a benchmark exercise comparing bpost with large Belgian companies. The objective of bpost is to offer a total remuneration package which is in line with the median of the reference market, being understood that remuneration packages are set on a banding level rather than on an individual basis. The different elements of the remuneration package are: Base salary The base salary is benchmarked with other large Belgian companies, in line with the above principles. The individual base salary is based on: Function Compa-ratio within the banding Relevant experience Performance and competencies The performance of each individual is reviewed annually in a Performance Management Process (PMP). Variable salary A variable salary may be granted, based on the achievement of: corporate objectives individual objectives The target variable salary is between 5% to 30% of the annual base salary, depending on the banding. bpost uses a multiplication system whereby the actual variable salary paid out can vary depending on the corporate and individual performance. Other benefits bpost offers other benefits, such as pension, death and disability insurance, hospitalization insurance, company car, etc. These benefits are benchmarked regularly and adapted according to Belgian practices. The benefit varies according to the banding. During 2012, no stock option plan has been introduced. For the year ending 31 December 2012, a global remuneration of 3,258,115 EUR was paid to the members of the Management Committee, other than the CEO (compared to 3,229,868 EUR for the year ended 31 December 2011), and can be broken down as follows: Base salary: 2,209,225 EUR paid under an employment agreement, excluding social security contributions paid by bpost; Variable remuneration (performance driven bonus paid in cash) : 838,697 EUR (relating to the performance in 2011)

74 70 bpost annual report 2012 Pension and death in service and disability coverage: 186,070 EUR Other compensation components* : 24,123 EUR *representation allowances and luncheon vouchers In addition of the above, the members of the Management Committee also benefit from the use a company car; leasing cost thereof amounts to 106,929 EUR. No stock options were awarded in 2012 to the other members of the Management Committee. During 2012, the other members of the Management Committee exercised 293 options granted in 2008 under the previous stock option plan approved by the Board of Directors in The shares delivered to the other members of the Management Committee following the cashless exercise of the options are no longer held by the other members of the Management Committee and are currently owned by Post Invest Europe S.à.r.l. Baudouin Meunier Pierre Winand Mark Michiels Koen Van Gerven Peter Somers Kurt Pierloot Stock options exercised during current year: Severance compensation Other than in the case of termination on grounds of gross negligence, the CEO is entitled to a termination indemnity corresponding to remuneration for the remainder of his six-year term, with a maximum of two years remuneration. No other member of the Management Committee is entitled to a specific contractual termination arrangements. All members of the Management Committee, except for Mark Michiels, are subject to non-competition clauses for a period of 12 to 24 months from the date of their resignation or termination restricting them from working for bpost s competitors. All such members of the Management Committee, except for the CEO, are entitled to receive compensation in an amount equal to 6 to 12 months salary if these noncompetition clauses are applied. Mr Baudouin Meunier was member of the Management Committee until 31 December 2012 and left bpost as of this date. He received a severance compensation corresponding to 12 months remuneration. Taking into account Mr Meunier s strategic position, bpost and Mr Meunier entered into a non-competition agreement restricting Mr Meunier s ability to compete until 31 December For this, Mr Meunier received a compensation in accordance with standard practice. Internal control and risk management systems Internal control and risk management systems in relation to the preparation of the consolidated financial statements The following description of bpost s internal control and risk management activities is a factual description of the activities performed. The description uses the structure recommended by the Commission Corporate Governance. Control environment The control environment with regards to the preparation of the consolidated financial statements is organized through several functions. The accounting and control organization consists of three levels: (i) the accounting team in the different legal entities responsible for the preparation and reporting of the financial information, (ii) the business controllers at the different operating units of the organization responsible inter alia for the review of the financial information in their area of responsibility, and (iii) the Group Finance Department, responsible for the final review of the financial information of the

75 corporate governance 71 different legal entities and operating units and for the preparation of the consolidated financial statements. Next to the structured controls outlined above, bpost s external auditors perform independent interim and year-end control procedures on the financial statements. The Internal Audit Department conducts a risk based audit program to provide assurance on the internal control effectiveness and risk management in the different processes at legal entity level. bpost s consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards board and which have been endorsed by the European Union. All IFRS accounting principles, guidelines and interpretations, to be applied by all legal entities and operating units, are communicated on a regular basis by the Group Finance Department to the accounting teams in the different legal entities and operating units. IFRS trainings take place when deemed necessary or appropriate. The vast majority of the Group companies use the same software to report the financial data for consolidation and external reporting purposes. For those that do not use the software, the Group Finance Department ensures that their reporting is aligned with the Group s chart of accounts and accounting principles before introducing them in the reporting and consolidation software. Risk assessment Appropriate measures are taken to ensure a timely and qualitative reporting and to reduce the potential risks related to the financial reporting process, including: (i) careful and detailed planning of all activities, including owners and timings, (ii) guidelines which are communicated by Group Finance to the various participants in the process prior to the closing, including relevant points of attention, and (iii) followup and feedback of the timelines, quality and lessons learned in order to strive for continuous improvement. A quarterly review takes place of the financial results which are reviewed in details by management and are presented to and reviewed by the Audit Committee of the Board of Directors. A half-year review of the financial results is also performed which are reviewed by and discussed with the Statutory Auditor. Material changes to the IFRS accounting principles are coordinated by the Group Finance Department, reviewed by the Statutory Auditor, approved by the Audit Committee, and by the Board of Directors of bpost. Material changes to the statutory accounting principles of bpost or of other group companies are approved by the relevant Boards of Directors. Control activities The proper application by the legal entities of the accounting principles as described in the notes to the financial statements and as communicated to them by the Group Finance Department, as well as the accuracy, consistency and completeness of the reported information, is reviewed on an ongoing basis by the control organization (as described above) through a process of account justification and review. In addition, all relevant entities are controlled by the Internal Audit Department on a periodic basis. Policies and procedures are in place for the most important underlying processes (sales, procurement, investments, treasury, etc.) and are subject to: (i) regular controls by the respective management teams, and (ii) and independent evaluation and review by the Internal Audit Department during their audit. A close monitoring of potential segregation of duties conflicts in the main IT system is carried out on a regular basis. Information and communication A very significant proportion of the Group s turnover, expenses and profit is generated by the Group s parent company, bpost SA-NV which is also the main operating company. All operating units of this company use an ERP system platform to support the efficient processing of business transactions and provide its management with transparent and reliable management information to monitor, control and direct its business operations. The provision of information technology services to run, maintain and develop those systems is performed by a professional IT service delivery department which is monitored on its delivery performance through service level agreements as well as performance and incident reporting. bpost has implemented management processes to ensure that appropriate measures are taken on a daily basis to sustain the performance, availability and integrity of its IT systems. Proper assignment of responsibilities, and coordination between the pertinent departments, ensures an efficient and timely communication process of periodic financial information to management and to the Board of Directors. Information accuracy, security and availability are always considered by the

76 72 bpost annual report 2012 Internal Audit Department as part of the regular audits or special assignments. Detailed financial information is provided on a monthly basis to management and to the Board of Directors. Some limited financial information is disclosed to the wider public at midyear. At yearend all relevant financial information is disclosed. Prior to the external reporting, the financial information is subject to (i) the appropriate controls by the abovementioned control organization, (ii) review by the Audit Committee, and (iii) approval by the Board of Directors of the Company. Monitoring Any significant change of the IFRS accounting principles as applied by bpost is subject to approval by the Audit Committee and by the Board of Directors. When relevant, the members of the Audit Committee are updated on the evolution and important changes in the underlying IFRS standards. All relevant financial information is presented to the Audit Committee and the Board of Directors to enable them to analyze the financial statements. Relevant findings by the Internal Audit Department and/or the Statutory Auditor on the application of the accounting principles, as well as the adequacy of the policies and procedures, and segregation of duties, are reported to the Audit Committee on a quarterly basis. Also a quarterly treasury update is submitted to the Audit Committee. A procedure is in place to convene the appropriate governing body of the Company on short notice if and when circumstances so dictate. Internal control and risk management systems in general The Board of Directors and the Management Committee have approved the bpost Code of Conduct, which was first issued in 2007 and updated in The Code of Conduct sets forth the basic principles of how bpost wants to do business. Implementation of the Code of Conduct is mandatory for all companies of the Group. More detailed policies and guidelines are developed as considered necessary to ensure consistent implementation of the Code of Conduct throughout the Group. bpost s internal control framework consists of a number of policies for the main business processes. The Internal Audit Department monitors the internal control situation and reports to the Audit Committee on a quarterly basis. At the request of the Board of Directors and the Audit Committee management is in the process of developing a global enterprise risk management ( ERM ) framework to assist the Group in managing the material risks on an explicit basis.

77 financial report 73 consolidated financial statements 2012 Table of contents 1. Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements General information Change in accounting Significant accounting judgments Summary of significant accounting policies Risk Management Business combinations Segment information Turnover Other operating income Other operating expense Payroll costs Financial income and financial cost Income tax/deferred tax Earnings per share Property, plant and equipment Investment property Assets held for sale Intangible assets Lease Investment securities Investment in associates Trade and other receivables Inventories Cash and cash equivalents Financial liabilities Employee benefits Share-base payments Trade and other payables Provisions Contingent liabilities and contingent assets Rights and commitments Related party transactions Group companies Events after the statement of financial position date 136 Report of the Joint Auditors 137

78 74 bpost annual report Consolidated income statement FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR NOTES Turnover 6.8 2, , ,279.0 Other operating income Total operating income 2, , ,317.8 Materials cost (34.6) (32.0) (27.3) Services and other goods (602.8) (570.4) (545.1) Payroll costs 6.11 (1,238.5) (1,288.1) (1,314.5) Other operating expenses 6.10 (118.9) (313.5) 6.6 Depreciation, amortization (98.0) (91.3) (115.0) Total operating expenses (2,092.8) (2,295.3) (1,995.4) Profit from operating activities (EBIT) Financial income Financial cost 6.12 (60.6) (19.7) (31.7) Share of profit of associates Profit before tax Income tax expense 6.13 (98.5) (123.4) (105.4) Profit from continuing operations (57.4) Profit from discontinued operations Profit for the year (57.4) Attributable to: Owners of the Parent (57.4) Non-controlling interests

79 financial report 75 IN EUR Earnings per share basic, profit for the year attributable to ordinary equity holders of the parent (140.34) diluted, profit for the year attributable to ordinary equity holders of the parent (140.34) In May 2013, the shareholders meeting decided to split the number of shares. The total number of shares post stock split amounts to 200,000,944 shares (before stock split 409,838 shares). Calculated with the new number of shares, earnings per share for the period would have been: IN EUR Earnings per share basic, profit for the year attributable to ordinary equity holders of the parent 0.87 (0.29) 1.05 diluted, profit for the year attributable to ordinary equity holders of the parent 0.87 (0.29) Consolidated statement of comprehensive income FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Profit for the year (57.4) Fair value for financial assets available for sale by associates (49.4) (57.1) (Loss)gain on available for sale financial assets (74.8) (86.6) Income tax effect (135.8) Non-controlling interests Other comprehensive income for the year, net of tax (49.4) (57.0) Total comprehensive income for the year, net of tax (106.9) Attributable to: Owners of the Parent (106.9) Non-controlling interest

80 76 bpost annual report Consolidated statement of financial position AS AT 31 DECEMBER IN MILLION EUR NOTES Assets Non-current assets Property, plant and equipment Intangible assets Investment securities Investments in associates Investment properties Deferred tax assets Trade and other receivables , Current assets Assets held for sale Investment securities Inventories Income tax receivable Trade and other receivables Cash and cash equivalents , , , ,547.8 Total assets 2, , ,473.5 Equity and liabilities Equity attributable to equity holders of the Parent Issued capital Treasury shares 0.0 (14.0) - Reserves Retained earnings 3.7 (57.4) ,113.2 Non-controlling interests (0.0) Total equity ,114.3 Non-current liabilities Interest-bearing loans and borrowings Employee benefits Trade and other payables Provisions Deferred tax liabilities Current liabilities Interest-bearing loans and borrowings Bank overdrafts Provisions Income tax payable Trade and other payables , Total liabilities 1, , ,359.2 Total Equity and liabilities 2, , ,473.5

81 financial report Consolidated statement of changes in equity IN MILLION EUR ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT AUTHORIZED & TREASURY OTHER RETAINED ISSUED CAPITAL SHARES RESERVES EARNINGS TOTAL NON- CONTROLLING INTERESTS TOTAL EQUITY As per 1 January , ,132.5 Profit for the year Other comprehensive income (290.9) (57.1) 0.1 (57.0) Total comprehensive income (81.7) Dividends (Pay-out) - - (170.8) (170.8) (0.1) (170.9) As per 31 December , ,114.3 Profit for the year 2011 (57.4) (57.4) (57.4) Other comprehensive income (209.1) (49.4) (49.4) Total comprehensive income (266.5) (106.9) 0.0 (106.9) Dividends (Pay-out) (215.9) (215.9) (0.3) (216.2) Treasury shares (14.0) 0.0 (14.0) (14.0) As per 31 December (14.0) 64.0 (57.4) Profit for the year Other comprehensive income Total comprehensive income Capital Decrease (275.3) 55.3 (220.0) (220.0) Exceptional dividend (28.0) (28.0) (28.0) Dividends (Pay-out) (170.0) (170.0) (0.4) (170.4) Treasury shares Other (72.3) 0.4 (72.0) (1.3) (73.2) As per 31 December Other reserves per 31 December 2012 (225.5 million EUR) are composed of group reserves amounting to million EUR, legal reserves of 72.2 million EUR and 30.3 million EUR of tax free reserves. The amount under Other comprehensive income relates mainly to the unrealized gains and losses on the bond portfolio of bpost bank. See also section 6.21 for more details. PIE exercised its call option on the treasury shares in The 14.0 million EUR in treasury shares, held by Alteris NV- SA, acquired as part of the 2011 Employee Stock Option Plan exercise window ( ESOP ), were therefore sold. The main elements in Other are deductions from equity for MSI and Landmark, the two US subsidiaries. The reevaluations of the financial liabilities for MSI resulted in a deduction of 9.3 million EUR. As the fair value of Landmark, taking into account the put option, exceeds the amount of the non-controlling interest, the difference was recorded, as determined in note 6.4 significant accounting judgements/goodwill and negative acquisition differences, as a deduction from equity (63.4 million EUR). The fair value of the put option, as well as the contingent consideration, is booked as debt.

82 78 bpost annual report 2012 TOTAL SHARE CLASS A SHARE CLASS B SHARE CLASS C NUMBER OF NUMBER OF NUMBER OF NUMBER OF SHARES SHARES SHARES SHARES As per 1 January , , , Changes during the year - - (2,240.0) 2,240.0 As per 31 December , , , ,697.0 Changes during the year 2,695.0 (2,695.0) As per 31 December , , , The shares have no nominal value and are fully paid up. At 31 December 2011, Alteris NV-SA held 2,589 shares of bpost considered as Treasury Shares in the bpost equity. In 2012, PIE exercised its call option and repurchased these 2,589 shares of bpost which resulted in a transfer from class C to class B. As at 31 December 2012, Management owns 2 shares acquired through the exercise of options received under the Employee Stock Option Plan ( ESOP ). During 2012, 106 shares have been sold to PIE and thus transferred from class C to class B.

83 financial report Consolidated statement of cash flows AS AT 31 DECEMBER IN MILLION EUR Operating activities Profit from operating activities (EBIT) Depreciation and amortization Impairment on bad debts (2.2) Gain on sale of property, plant and equipment (8.5) (8.8) (21.8) Change in employee benefit obligations (68.9) (10.9) (19.1) Interest received Interests paid (7.5) (7.8) (4.9) Dividends received Income tax paid (114.6) (102.3) (110.3) Cash flow from operating activities before changes in working capital and provisions Decrease/(increase) in trade and other receivables (20.0) Decrease/(increase) in inventories Increase/(decrease) in trade and other payables 62.3 (52.9) (78.9) Deposits received from third parties (0.1) 0.0 (28.0) Repayment of SGEI overcompensation (300.8) Increase/(decrease) in provision related to the SGEI overcompensation Increase/(decrease) in other provisions (55.7) (5.8) (9.5) Net cash from operating activities Investing activities Proceeds from sale of property, plant and equipment Acquisition of property, plant and equipment (56.9) (66.8) (57.1) Acquisition of intangible assets (27.2) (11.4) (11.2) Acquisition of other investments (0.2) Acquisition of subsidiaries, net of cash acquired (14.8) (4.0) (0.4) Net cash used in investing activities (88.1) (70.1) (42.2) Financing activities Treasury shares 14.0 (14.0) - Payment of borrowings and financing lease liabilities (8.0) (0.5) (0.3) Dividends paid to equity holders of the Parent - (216.2) (170.9) Capital decrease (220.0) Exceptional dividend (28.0) Interim dividend paid to shareholders (170.4) Net cash from financing activities (412.5) (230.7) (171.2) Net increase in cash and cash equivalents (429.3) (4.6) (58.9) Cash and cash equivalent less bank overdraft as of 1st January , ,080.3 Investment securities as of 1st January Cash and cash equivalents and Investment securities 1 as of 1 st January 1, , ,205.5 Cash and cash equivalent less bank overdraft as of 31st December ,115.5 Investment securities as of 31st December Cash and cash equivalents and Investment securities as of 31 st December , ,146.8 Movements between 1 st January and 31 st December (429.3) (4.6) (58.9) 1. Investment securities meet the definition of cash & cash equivalents as per IAS 7.

84 80 bpost annual report Notes to the consolidated financial statements 6.1 General information Business activities bpost and its subsidiaries (hereinafter referred to as bpost ) provide national and international mail services comprising the collection, transport, sorting and distribution of mail, printed documents, newspapers as well as addressed and non-addressed documents. bpost, through its subsidiaries and business units, also sells a range of other products and services, including postal, banking and financial products, express delivery services, document management and related activities. bpost also carries out public-interest activities on behalf of the Belgian State. Legal status bpost is a limited-liability company under public law. bpost has its registered office at the Muntcentrum-Centre Monnaie, 1000 Brussels. 6.2 Change in accounting The accounting policies adopted are consistent with those of the previous financial year. As at 31 December 2012 and for the first time, bpost applies the two following standards: IAS 33 Earnings per share IFRS 8 Operating segments The adoption of these standards doesn t have any effect on the financial performance or position of bpost but requests to include specific disclosures in the Annual Financial Report. The following new or revised accounting standards and interpretations entered into force in 2012, but they did not have any effect on the presentation, the financial performance or position of bpost: IAS 1 Statement of Comprehensive income IAS 12 Income Taxes Deferred taxes: Recovery of Tax assets IFRS 7 Enhanced Derecognition Disclosure requirements Standards and Interpretations not yet applied by bpost The following new IFRS Standards and IFRIC Interpretations, which are yet to become mandatory, have not been applied by bpost for the preparation of its 2012 financial statements.

85 financial report 81 Standard or interpretation Effective for in reporting periods starting on or after IFRS 10 Consolidated Financial Statements 1 January 2013 IFRS 11 Joint Arrangements 1 January 2013 IFRS 12 Disclosure of Interests in Other Entities 1 January 2013 IFRS 13 Fair value Measurement 1 January 2013 IAS 19 Amendment to IAS 19 1 January 2013 IAS 27 Amendment to IAS 27 1 January 2013 IAS 28 Amendment to IAS 28 1 January 2013 IFRS 7 Financial Instruments: Disclosures Offsetting of financial assets and financial liabilities 1 January 2013 IFRIC 20 Stripping costs in the production phase of a surface mine 1 January 2013 IAS 32 Financial Instruments: Presentation Offsetting of financial assets and financial liabilities 1 January 2014 Various Annual improvements to IFRS N/A Standards and Interpretations applied by bpost As at 31 December 2012, the accounting policies of bpost are in compliance with the IAS / IFRS Standards and Interpretations SIC / IFRIC listed below: International Financial Reporting Standards (IFRS) IFRS 2 Share-based Payment IFRS 3 Business Combinations (issued in 2004) for acquisition completed before 1 January 2010 IFRS 3 Business Combinations (Revised in 2008) IFRS 5 Non-current Assets Held for Sale and Discontinued Operations IFRS 7 Financial Instruments: Disclosures IFRS 8 Operating segments

86 82 bpost annual report 2012 International Accounting Standards (IAS) IAS 1 Presentation of Financial Statements IAS 2 Inventories IAS 7 Statement of Cash Flows IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 10 Events after the Reporting Period IAS 12 Income Taxes IAS 16 Property, Plant and Equipment IAS 17 Leases IAS 18 Revenue IAS 19 Employee Benefits IAS 21 The Effects of Changes in Foreign Exchange Rates IAS 23 Borrowing costs IAS 24 Related Party Disclosures IAS 27 Consolidated and Separate Financial Statements (Revised in 2008) IAS 28 Investments in Associates IAS 32 Financial Instruments: Presentation IAS 33 Earnings per share IAS 34 Interim Financial Reporting IAS 36 Impairment of Assets IAS 37 Provisions, Contingent Liabilities and Contingent Assets IAS 38 Intangible Assets IAS 39 Financial Instruments: Recognition and Measurement IAS 40 Investment Property Interpretations SIC / IFRIC IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities IFRIC 4 Determining whether an Arrangement contains a Lease IFRIC 10 Interim Financial Reporting and Impairment SIC 12 Consolidation Special Purpose Entities The other standards and interpretations currently endorsed by the EU and effective for the preparation of the 2012 financial statements are not applicable in the context of bpost. bpost has not early adopted any other standard, interpretation, or amendment that was issued, but is not yet effective. 6.3 Significant accounting judgments and estimates A series of significant accounting judgments underlie the preparation of IFRS compliant consolidated financial statements. These impact the value of assets and liabilities. Estimates and assumptions are made concerning the future. These are re-assessed on a continuous basis and are based on historically established patterns and expectations with regards to future events that appear reasonable under the existing circumstances. Employee Benefits - IAS 19 The key assumptions, inherent to the valuation of employee benefit liabilities and the determination of the pension cost, include employee turnover, mortality rates and retirement ages, discount rates, expected long term returns on plan assets, benefit increases and future wage increases, which are updated on an annual basis. Given the increase of the reference database with each year of historical data that is added, the data become ever more stable and reliable. Actual circumstances may vary from these assumptions, giving rise to different employee benefit liabilities, which would be reflected as an additional profit or cost in the income statement.

87 financial report 83 Regarding the Accumulated Compensated Absences benefit, as at 31 December 2012, the consumption pattern of the illness days was derived from the statistics of the consumption average over the years 2007 to The number of days of illness depends on the age, identified per segment of the statutory population. Since 2010, the rate of guaranteed salary has been set at 75% in case of long-term illness. Thus, the percentage of the guaranteed salary used for determining the cost of days accumulated in the notional account is fixed to 25%. Under the Collective Labor Agreement for the years signed in March 2012, the balance of the cumulated un-used sickness days for civil servants is now limited to a maximum of 63 days instead of 300 days previously. For most benefits, an average cost per inactive member is used for the valuation of the benefits. This average cost has been estimated by dividing the annual cost for inactive members by the number of inactive beneficiaries based on the reference data received from the pensions administration. The discount rates have been determined by reference to market yields at the statement of financial position date. Since 2010, bpost used the Towers Watson tool for the determination of the discount rates, considering a mix of financial and non financial AA corporate bonds. 6.4 Summary of significant accounting policies The consolidated financial statements have been approved by the Board of Directors on 27 May 2013 and have been prepared using the measurement basis specified by the International Financial Reporting Standards (IFRS). The measurement bases are more fully described in the accounting policies below. The consolidated financial statements are presented in Euros (EUR) and all values are rounded to the nearest million except when otherwise indicated. All accounting estimates and assumptions that are used in preparing the financial statements are consistent with bpost s latest approved budget / long-term plan projections, where applicable. Judgments are based on the information available on each statement of financial position date. Although these estimates are based on the best information available to the management, actual results may ultimately differ from those estimates. Consolidation The parent company and all the subsidiaries it controls are included in the consolidation. No exception is permitted. Subsidiaries Assets and liabilities, rights and commitments, income and charges of the parent and the subsidiaries fully controlled are consolidated in full. Control is the power to govern the financial and operating policies of an entity in order to obtain benefits from its activities. Control is assumed to exist when bpost holds at least 50%, plus one share of the entity s voting power; these assumptions may be rebutted if there is clear evidence to the contrary. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether bpost controls an entity. Consolidation of a subsidiary takes place from the date of acquisition, which is the date on which control of the net assets and operations of the acquiree is effectively transferred to the acquirer. From the date of acquisition, the parent (the acquirer) incorporates into the consolidated income statement the financial performance of the acquiree and recognizes in the consolidated statement of financial position the acquired assets and liabilities (at fair value), including any goodwill arising on the acquisition. Subsidiaries are de-consolidated from the date on which control ceases. Intragroup balances and transactions, as well as unrealized gains and losses on transactions between group companies are eliminated in full.

88 84 bpost annual report 2012 Consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. Associates An associate is an entity in which bpost has significant influence, but which is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not to control those policies. It is assumed to exist when bpost holds at least 20% of the investee s voting power but not to exist when less than 20% is held; these assumptions may be rebutted if there is clear evidence to the contrary. Consistent accounting policies are applied throughout the whole group, including associates. All associates are accounted for using the equity method: the participating interests are separately included in the consolidated statement of financial position (under the caption Investments in associates ) at the closing date at an amount corresponding to the proportion of the associate s equity (as restated under IFRS), including the result for the period. Dividends received from an investee reduce the carrying amount of the investment. The portion of the result of associates attributable to bpost is included separately in the consolidated income statement under the caption Share of result of associates (equity method). Unrealized profits and losses resulting from transactions between an investor (or its consolidated subsidiaries) and associates are eliminated to the extent of the investor s interest in the associate. bpost bank is an associate and is accounted for using the equity method as bpost has significant influence but does not control the Management of the Company. The bond portfolio of bpost bank is classified as Available-for-sale financial assets. The bonds include: Fixed income securities (bonds, negotiable debt instruments, sovereign loans in the form of securities, etc.); Variable income securities (shares, investments, etc.); Fixed and/or variable income securities containing embedded derivatives (which are accounted for separately if necessary). Securities classified in Available-for-sale financial assets are measured at fair value and changes in fair value are recorded in other comprehensive income under a specific heading Unrealized or deferred gains or losses. For fixed income securities, interest is recognized in the income statement using the effective interest rate method. For variable income securities, revenues are recorded in profit or loss as soon as the shareholders general meeting confirms the distribution of a dividend. Goodwill and negative acquisition differences Where an entity is acquired, the difference recorded on the date of acquisition between the acquisition cost of the investment and the fair value of the identifiable assets, liabilities and contingent liabilities acquired is accounted for as goodwill (if the difference is positive) or directly as a profit in the income statement (if the difference is negative). Contingent consideration, if any, is measured at fair value at the time of the business combination and included in the consideration transferred (i.e. recognized within goodwill). If the amount of contingent consideration changes as a result of a post-acquisition event (such as meeting an earnings target), the change in fair value is recognized in profit or loss. Goodwill is not amortized, but is tested for impairment annually.

89 financial report 85 Intangible assets An intangible asset is recognized on the consolidated statement of financial position sheet when the following conditions are met: (1) the asset is identifiable, i.e. either separable (if it can be sold, transferred, licensed) or it results from contractual or legal rights; (2) it is probable that the expected future economic benefits that are attributable to the asset will flow to bpost; (3) bpost can control the resource; and (4) the cost of the asset can be measured reliably. Intangible fixed assets are carried at acquisition cost (including the costs directly attributable to the transaction, but not indirect overheads) less any accumulated amortization and less any accumulated impairment loss. The expenses in relation to the research phase are charged to the income statement. The expenses in relation to the development phase are capitalized. Within bpost, internally generated intangible assets represent mainly IT projects. Intangible assets are amortized on a systematic basis over their useful life, using the straight-line method. The applicable useful lives are: Intangible assets IT development costs Licenses for minor software Concessions, patents, customers, know-how, trade marks and other similar rights Goodwill Useful life 5 years maximum 3 years To be determined on a case by case basis N/A, but annual impairment test Property, plant and equipment Property, plant and equipment are carried at acquisition cost, less any accumulated depreciation and less any accumulated impairment loss. Cost includes any directly attributable cost of bringing the asset to working condition for its intended use. No borrowing cost is included in the cost of property, plant and equipment. Expenditure on repair and maintenance which serve only to maintain, but not increase, the value of fixed assets are charged to the income statement. However, expenditures on major repair and major maintenance, which increases the future economic benefits that will be generated by the fixed asset, are identified as a separate element of the acquisition cost. The depreciable amount is allocated on a systematic basis over the useful life of the asset, using the straight-line method. The depreciable amount is the acquisition cost, except for vehicles. For vehicles, it is the acquisition cost less the residual value of the asset at the end of its useful life. The applicable useful lives are: Property, plant and equipment Useful life Land N/A Central administrative buildings 40 years Network buildings 40 years Industrial buildings, sorting centers 25 years Fitting-out works to buildings 10 years Tractors and forklifts 10 years Bikes and motorcycles 4 years All other vehicles (cars, trucks, etc,) 5 years Machines 5-10 years Furniture 10 years Computer Equipment 5 years

90 86 bpost annual report 2012 Lease transactions A finance lease, which transfers substantially all the risks and rewards incident to ownership to the lessee, is recognized as an asset and a liability at amounts equal to the present value of the minimum lease payments (= sum of capital and interest portions included in the lease payments) or, if lower, the fair value of the leased assets. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability in order to obtain a constant rate of interest on the debt over the lease term. The depreciation policy for leased assets is consistent with that for similar assets owned. Rentals paid/received under operating lease (ones that do not transfer substantially all the risks and rewards incidental to ownership of an asset) are recognized as an expense by the lessee/ as an income by the lessor on a straight-line basis over the lease term. Investment properties Investment properties are carried at acquisition cost less any accumulated depreciation and less any impairment loss. The depreciation amount is allocated on a systematic basis over the useful life of the asset, using the straightline method. The applicable useful lives can be found in the table that is included in section Property, plant and equipment. Assets held for sale Non-current assets are classified as assets held for sale under a separate heading in the statement of financial position if their carrying amount is recovered principally through sale rather than through continuing use. This is demonstrated if certain strict criteria are met (active program to locate a buyer has been initiated, property is available for immediate sale in its present condition, sale is highly probable and is expected to occur within one year from the date of classification). Non-current assets held for sale are no longer depreciated but may be impaired. They are stated at the lower of carrying amount and fair value less costs to sell. Stamp collection The stamp collection that is owned by bpost and used durably by it is stated at the re-evaluated amount less discount for the lack of liquidity. The re-evaluated amounts are determined periodically on the basis of market prices. bpost proceeds to the reevaluation of its collection every five years. The stamp collection is recorded in the section Other Property, Plant and Equipment of the statement of financial position. Impairment of assets An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell (corresponding to the cash that bpost can recover through sale) and its value in use (corresponding to the cash that bpost can recover if it continues to use the asset). When possible, the tests have been performed on individual assets. When however it is determined that assets do not generate independent cash flows, the test is performed at the level of the cash-generating unit (CGU) to which the asset belongs (CGU = the smallest identifiable group of assets that generates inflows that are largely independent from the cash flows from other CGUs). An impairment test is carried out annually for a CGU to which goodwill is allocated. For a CGU to which no goodwill is allocated, impairment test is only carried out when there is an indication of impairment. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination.

91 financial report 87 Where impairment is identified, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit. Any excess is then allocated to reduce the carrying amount of other fixed assets of the CGU in proportion to their book values, but solely to the extent that the selling price of the assets in question is lower than their carrying amount. Impairment on goodwill may never be reversed at a later date. Impairment on other fixed assets is reversed if the initial conditions that prevailed at the time the impairment was recorded cease to exist, and solely to the extent that the carrying amount of the asset does not exceed the amount that would have been obtained, after depreciation, had no impairment been recorded. Inventories Inventories are measured at the lower of cost and net realizable value at the statement of financial position date. The acquisition price of interchangeable inventories is determined by application of the FIFO method. Inventories of minor importance whose value and composition remain stable over time are stated in the statement of financial position at a fixed value. The cost of inventories comprises all costs incurred in bringing inventories to their present location and condition, including indirect production costs. The cost price of stamps includes the direct and indirect costs of production, excluding costs of borrowing and overheads that do not contribute to bringing them to the present location and condition. The allocation of fixed costs of production to the cost price is based on normal production capacity. A write-down is necessary when the net realizable value at the statement of financial position date is lower than the cost. Share based payments The stock option plan is measured using valuation techniques based on option pricing models. Under these models, the options are measured at fair value on the grant date. The option price thus calculated is recognized in the income statement under the section Payroll costs and spread over the term of the options. Revenue recognition Revenue arising from the sale of goods is recognized when bpost transfers the significant risks and rewards of ownership to the buyer and it is probable that the economic benefits associated with the transaction will flow to the entity. Revenue from the rendering of services is recognized according to the stage of completion of the services rendered. In application of this principle, the revenue relative to the stamp sale and franking machine activity is recognized in income at the time the mail is delivered. The remuneration of the SGEI is based on the contractual provisions of the Management Contract and the revenue is recognized when the services are rendered. bpost also receives commissions on sales of partner products through its network of post offices. Commission income is recorded at the time the services are provided. Interest income is recognized using the effective yield method and the revenue related to dividends is recognized when the group s right to receive the payment is established. Rental income arising from operating leases or investment properties is accounted for on a straight line basis over the lease term.

92 88 bpost annual report 2012 Receivables Receivables are initially measured at their fair value and later at their amortized cost, i.e. the present value of the cash flows to be received (unless the impact of discounting is not significant). An individual assessment of the recoverability of the receivables is made. Impairment is recognized where cash settlement is wholly or partially doubtful or uncertain. Prepayments and accrued income are also presented under this caption. Investment securities Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of the instrument and its purpose. A financial instrument s category is relevant for the way it is measured and whether any resulting income and expenses is recognized in profit or loss or directly in equity. There are different categories of financial assets: (1) Financial assets held for trading include (a) derivatives and (b) assets that bpost has voluntarily decided to classify in the category at fair value through profit or loss at the time of initial recognition. These financial assets are measured at their fair value at each statement of financial position date, changes in fair value being recognized in the income statement. (2) Held-to-maturity financial assets are financial assets, other than derivatives, with fixed or determinable payments and fixed maturity dates, which bpost has the positive intention and ability to hold to maturity. These assets are measured at amortized cost using the effective interest method. (3) Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortized cost using the effective interest method. (4) Available-for-sale financial assets constitute a residual category that includes all the financial assets not classified under one of the previous categories, for instance investments in equity instruments (other than shares in subsidiaries, jointly controlled entities and associates), investments in open-ended mutual funds and bonds that bpost has neither the intention nor the ability to hold to maturity. These available-for-sale financial assets are measured at fair value, with changes in fair value recognized directly in equity until the financial assets are derecognized, at which time the cumulative gains or losses previously recognized in equity are recycled in profit or loss. Regular way purchases or sales of financial assets are recognized and de-recognized using settlement date accounting. The fair values of the financial assets are determined by reference to published price quotations in an active market. Cash and cash equivalents This caption includes cash in hand, at bank, values for collection, short-term investments (with maturity date not exceeding three months as from acquisition date) that are highly liquid and are readily convertible into a known amount of cash and that are subject to an insignificant risk of changes in value, after deduction of bank overdrafts. Share capital Ordinary shares are classified under the caption issued capital. Treasury shares are deducted from equity. Movements of treasury shares do not affect the income statement.

93 financial report 89 Other reserves comprise the results of the previous periods, the legal reserve and the consolidated reserve. Retained earnings include the result of the current period as disclosed in the income statement. Employee benefits Short-term benefits Post-employment benefits are recognized as an expense when an employee has rendered the services to bpost. Benefits not paid for on the statement of financial position date are included under the caption Payroll and social security payables. Post-employment benefits Post-employee benefits are valued using an actuarial valuation method and provisions are set up for them (under deduction of any plan assets) in so far as bpost has an obligation to incur the costs in relation to these benefits. This obligation can be a legal, contractual or constructive obligation ( vested rights on the basis of past practice). In application of these principles, a provision (calculated according to an actuarial method laid down by IAS 19) is set up in the context of the post-employment benefits to cover: the future costs relative to current retirees (a provision representing 100% of the future estimated costs of those retirees); the future costs of potential retirees, estimated on the basis of the employees currently in service, taking account of the accumulated service of these employees on each statement of financial position date and the probability that the personnel will reach the desired age to obtain the benefits (the provision is constituted progressively, as and when members of the personnel advance in their careers). The provision is calculated as follows: Actuarial valuation of the obligation under IAS 19 Past service costs not yet recognized + Actuarial gains/ actuarial losses not yet recognized Fair value of the plan assets = Provision to be constituted (or asset to be recognized if the fair value of the plan assets is higher). The calculation of the obligation is done using the projected unit credit method. Each year of service confers entitlement to an additional credit unit to be taken into account in valuing the benefits granted and the obligations pertaining thereto. The discount rate used is the yield of high-quality corporate bonds or is based on government bonds with a maturity similar to that of the benefits being valued. In the event that the benefits are modified, the past service cost is spread over the period that the employees may yet have to work in order to qualify for the benefits. The benefits vest immediately in bpost. The impact of the remeasurement of a net defined benefit liability (asset) is recognized in other comprehensive income. Actuarial assumptions (concerning the discount rate, mortality factor, costs of future benefits, inflation, etc.) are used to assess employee benefit obligations in conformity with IAS 19. Actuarial gains and losses inevitably appear, resulting (1) from changes in the actuarial assumptions year on year, and (2) deviations between actual costs and actuarial assumptions used for the IAS 19 valuation. bpost has opted (a) not to recognize actuarial gains and losses that remain within a corridor of 10% of the higher of the following amounts: the amount of the IAS 19 obligation and the fair value of the plan assets, and (b) to spread in the income statement the actuarial gains and losses that fall outside this corridor over two years (or average remaining service period for the active population, if shorter than two years).

94 90 bpost annual report 2012 Long-term benefits Long-term employee benefits are valued using an actuarial valuation method and provisions are set up for them (under deduction of any plan assets) in so far as bpost has an obligation to incur the costs in relation to these benefits. This obligation can be a legal, contractual or constructive obligation ( vested rights on the basis of past practice). A provision is created for long-term benefits to cover benefits that will only be paid in a number of years but that are already earned by the employee on the basis of the past service. Here, as well, the provision is calculated according to an actuarial method imposed by IAS 19. The provision is calculated as follows: Actuarial valuation of the obligation under IAS 19 Fair value of the plan assets = Provision to be constituted (or asset to be recognized if the fair value of the plan assets is higher). The calculation of the obligation is done using the projected unit credit method. Each year of service confers entitlement to an additional credit unit to be taken into account in valuing the benefits granted and the obligations pertaining thereto. The discount rate used is the yield of high-quality corporate bonds or is based on government bonds with a maturity similar to that of the benefits being valued. In the event that the benefits are modified, there is a past service cost that is recognized in the income statement (an expense for the year if there is an increase in benefits, profit for the year in the event of a reduction in benefits). The benefits vest immediately in bpost. Any modification to these benefits therefore has a direct impact on the income statement. Any re-measurement of a net defined benefit liability (asset) is recognized in the income statement. Actuarial assumptions (concerning the discount rate, mortality factor, costs of future benefits, inflation, etc.) are used to assess employee benefit obligations in conformity with IAS 19. Actuarial gains and losses inevitably appear, resulting (1) from changes in the actuarial assumptions year on year, and (2) deviations between actual costs and actuarial assumptions used for the IAS 19 valuation. These actuarial gains and losses are recognized directly in the income statement. Termination benefits Where bpost terminates the contract of a member of its personnel prior to his normal retirement date or where the employee voluntarily agrees to leave in consideration for benefits, a provision is constituted in so far as there is an obligation on bpost. This provision is discounted if the benefits are payable after more than one year. All benefit obligation plans of all employee benefits are wholly unfunded. Provisions A provision is recognized only when: (1) bpost has a present (legal or constructive) obligation as a result of past events; (2) it is probable (more likely than not) that an outflow of resources will be required to settle the obligation; and (3) a reliable estimate of the amount of the obligation can be made.

95 financial report 91 Where the impact is likely to be material (mainly for long-term provisions), the provision is estimated on a net present value basis. The increase in the provision due to the passage of time is recognized as a financial expense. A provision for restoring polluted sites is recognized if bpost has an obligation in this respect. Provisions for future operating losses are prohibited. If bpost has an onerous contract (the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it), the present obligation under the contract is recognized as a provision. A provision for restructuring is only recorded if bpost demonstrates a constructive obligation to restructure at the statement of financial position date. The constructive obligation should be demonstrated by: (a) a detailed formal plan identifying the main features of the restructuring; and (b) raising a valid expectation to those affected that it will carry out the restructuring by starting to implement the plan or by announcing its main features to those affected. Dividends payable in respect of year N are only recognized as liabilities once the shareholders rights to receive these dividends (during the course of year N+1) are established. Income taxes Income tax includes current taxation and deferred taxation. Current taxation is the amount of taxes to be paid (recovered) on the taxable income for the current year together with any adjustment in the taxes paid (to be recovered) in relation to previous years. It is calculated using the rate of tax on the statement of financial position date. Deferred taxation is calculated according to the liability method on the temporary differences arising between the carrying amount of the statement of financial position items and their tax base, using the rate of tax expected to apply when the asset is recovered or the liability is settled. In practice, the rate in force on the statement of financial position date is used. Deferred taxes are not recognized in respect of: (1) goodwill that is not amortized for tax purposes; (2) the initial recognition of an asset or liability in a transaction that is not a business combination and that affects neither accounting profit nor taxable profit; and (3) investments in subsidiaries, branches, associates and joint ventures if it is likely that dividends will not be distributed in the foreseeable future. A deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. The same principles apply to recognition of deferred tax assets for unused tax losses carried forward. This criterion is reassessed on each statement of financial position date. Deferred taxes are calculated at the level of each fiscal entity. The deferred tax assets and liabilities of various subsidiaries may not be presented on a net basis. Deferred revenue Deferred revenue is the portion of income received during the current or prior financial periods but which relates to a subsequent financial period.

96 92 bpost annual report 2012 Transactions in foreign currencies Transactions in foreign currencies are initially recorded in the functional currency of the entities concerned using the exchange rates prevailing on the dates of the transactions. Realized exchange rate gains and losses and non-realized exchange rate gains and losses on monetary assets and liabilities on the statement of financial position date are recognized in the income statement. On consolidation, the assets and liabilities of foreign operations are translated into euros at the rate of exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognized in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognized in profit or loss. Derivative financial instruments Derivative financial instruments are measured at fair value with changes in fair value recognized in the income statement. Special rules may apply in the case of hedging transactions by means of derivatives, but bpost has not entered into this type of transaction. Nor does bpost enter into speculative-type derivatives transactions. 6.5 Risk Management Any of the following risks could have a material adverse effect on the Company s financial position, results of operation and liquidities. The risks described below are not the only risks that the company is facing. There may be additional risks to the ones described below which the company is currently unaware of. There may be risks that are currently believed to be immaterial, but which may ultimately have a material adverse effect in the long run. Risks relating to the regulatory and legislative framework Pursuant to the Fifth Management Contract and the 1991 Law, the Company will continue to be the provider of certain SGEIs through December 31, In respect of the period commencing January 1, 2016, the Belgian State may cease to provide certain public services or may conclude that such services do not constitute SGEIs and hence do not warrant compensation. The Belgian State may also substantially change the scope and content of the SGEIs that it continues to provide. Furthermore, the public services that the Belgian State continues to provide may not be entrusted to the Company. The Belgian State has committed to the European Commission that it will organize a competitive, transparent and non-discriminatory tendering procedure, with a view to awarding a service concession at national level in respect of the distribution of newspapers and periodicals in Belgium. This process is expected to commence during The successful candidate in this tender process will be entitled to begin providing such services as of January 1, The Belgian State has also committed to the European Commission that it will reassess the approach for the entrustment of the other SGEIs set forth in the Fifth Management Contract and in the 1991 Law for the period after December 31, The Company may be required to provide other postal operators with access to specific elements of its postal infrastructure or certain services, such as post boxes, information on change of address, re-direction and return to sender services. It may be required to provide access at uneconomic price levels or the access conditions imposed upon it may otherwise be onerous. In the event it fails to comply with this requirement, it may also be subjected to fines and/or other operators may initiate proceedings seeking damages in national courts. The Company is required to demonstrate that its pricing for the services falling within the USO complies with the principles of affordability, cost orientation, transparency, non-discrimination and uniformity of tariffs. Tariff increases

97 financial report 93 for certain single piece mail and USO parcels included in the small user basket of postal services within the scope of the USO are subject to a price cap formula and prior control by the IBPT/BIPT and the IBPT/BIPT may refuse to approve such tariffs or tariff increases if they are not in compliance with the aforementioned principles or price cap formula. The IBPT/BIPT may issue injunctions requiring the Company to cease applying certain pricing policies. It may also impose fines of up to 5% of the Company s turnover in the postal sector during the preceding year (which may be doubled in certain circumstances) or other sanctions for the infringement of regulatory requirements applicable to the USO. In addition, in relation to activities for which bpost is deemed to have a dominant market position, its pricing must not constitute an abuse of such dominant position. Failure to observe this requirement may result in fines of up to 10% of its consolidated annual turnover in cases. bpost may also be ordered by national courts to discontinue certain commercial practices or to pay damages to third parties. The Company is subject to the requirement of no cross-subsidization between public services on the one hand and commercial services on the other hand. In addition, according to state aid rules, if the Company engages in commercial services, the business case for providing such services must comply with the private investor test, that is, the Company must be able to demonstrate that a private investor would have made the same investment decision. If the Company is found not to be in compliance with the no cross-subsidization principle or the private investor test, the European Commission could find that commercial services have benefited from unlawful state aid and order the recovery of this state aid from the Company. The Company may also be subjected to other adverse consequences as a result of a failure to comply with the cross-subsidization principle or the private investor test. The Company was designated by the Belgian State as a USO provider for an eight-year term commencing in The obligation to provide the USO may represent a financial burden on the Company. Although the 1991 Law provides that the Company is entitled to compensation by the Belgian State in the event the USO has created an unfair burden, there can be no assurance that the entire net cost of the USO will be covered. Furthermore, following the expiration of the Company s current term as designated USO provider on December 31, 2018, if the Company were to be designated as a USO provider, there is uncertainty regarding the terms and conditions and financing mechanism that would apply to the provision of the USO. If enacted, opt-in legislation or any similar legislation, whether at the national or EU level, would contribute to a significant decline in advertising mail volumes and could have an adverse impact on bpost s business. The enactment of legislation granting registered the same legal status as registered mail could also adversely affect volumes of registered mail sent by bpost s clients. bpost is subject to certain risks in relation to employment matters. In particular, bpost is involved in litigation initiated by a number of auxiliary postmen (which include all postmen recruited from January 1, 2010 performing certain core functions such as collection, sorting, transport and distribution of mail). bpost s contractual employees could also challenge their employment status and claim damages to compensate them for being deprived of statutory employment protection and benefits. There can also be no assurance that the Company will not face challenges regarding certain employment matters on state aid grounds. Risks relating to business operations and company environment The use of mail has declined in recent years primarily as a result of the increased use of and the Internet, and is expected to continue to decline. The rate of decline in mail volumes may also be affected by e-government initiatives or other measures introduced by the Belgian State or other public authorities or private enterprises that encourage electronic substitution in administrative mail. In addition, the enactment of any legislation that requires explicit prior consent of the addressee for the use of personal data (commonly referred to as opt-in legislation) would contribute to a significant decline in advertising mail volumes. Adverse economic conditions have a negative impact on mail and parcels volumes. In particular, during times of economic distress, volumes of advertising mail may be adversely affected as bpost s clients reduce their advertising budgets or shift their spending to media other than paper. Volumes of parcels may also be adversely affected due to the effect of economic distress on the level of business activity and e-commerce.

98 94 bpost annual report 2012 Due to the relatively fixed nature of its cost base, a decline in mail volumes may translate into a significant decline in profit unless bpost can reduce its costs. Accordingly, bpost has introduced a series of productivity enhancement initiatives to reduce its costs. There can be no assurance, however, that bpost will realize all of the benefits expected from such initiatives. bpost bank, the Company s associate, is subject to certain risks as a result of its status as a financial institution. It may experience losses in respect of its investment portfolio, as it has in the past. It is also exposed to interest rate risk and volatility in interests rates may affect its business. bpost bank may also be required to increase its capital, in particular as a result of new capital requirements. bpost s strategy involves the development of new products and services to partially compensate for the effects of declines in mail volumes, and if it is unable to introduce such products and services, it may encounter difficulties in increasing operating income. Risk relating to litigation On 25 January 2012, the Commission found that bpost has received incompatible State aid of million EUR and ordered recovery. The Belgian State has recovered this amount, net of taxes plus interest, from bpost. bpost appealed the Commission s decision on 17 September While the Commission s Decision was pending, the 4th Management Contract was prolonged by operation of law to cover bpost s provision of public services in 2011 and In meetings with the Belgian State, the Commission suggested that amounts received by bpost for 2011 and 2012 could also be considered excessive and may need to be reimbursed. On this basis, the Company booked a provision of million EUR in the 2012 accounts in case the Commission adopts a final decision ordering recovery of the 2011 and 2012 alleged overcompensation. The 5th Management Contract between the Belgian State and the Company covers the provision of universal service obligation and other public services for the period 1 January 2013 to 31 December This Contract was notified to the Commission on 7th of March 2013 and no final decision has been adopted yet. However, on the basis of the discussions to date, the Company understands that the Commission does not consider the terms and compensation amounts in the 5th Management Contract as being incompatible State aid. bpost currently is involved in the following pending litigation relating to competition law based claims: a claim for damages in an alleged (provisional) amount of approx million EUR (exclusive of late payment interest) in the context of legal proceedings initiated by Publimail NV-SA on 27 October 2005 and pending before the Brussels commercial court; and a claim for damages in an alleged amount of approx. 28 million EUR (exclusive of late payment interest) in the context of legal proceedings initiated by Link2Biz International NV-SA on 3 August 2010 and pending before the Brussels commercial court. Certain aspects of the contractual relationship between Link2Biz and bpost are also the subject of a cease and desist proceeding, which is currently pending before the Brussels Court of Appeal. Moreover, on 20 July 2011 the Belgian postal regulator ( BIPT/IBPT ) concluded that the Company s 2010 pricing policy infringed the Belgian Postal Act and imposed a fine of 2.3 million EUR. bpost contests the BIPT/IBPT s findings and appealed the decision. The appeal is pending before the Brussels Court of Appeal. Finally, on 10 December 2012 the Belgian Competition Authority ( BCA ) concluded that the Company s pricing policy for the period January 2010 July 2011 infringed the Belgian and European competition rules and imposed a fine of approx million EUR. bpost contests the BCA s findings and appealed the decision. The appeal is pending before the Brussels Court of Appeal.

99 financial report 95 Financial risks Exchange rate risk bpost s exposure to exchange rate risk is limited and is not actively managed. Interest rate risk bpost s associate bpost bank is, like any bank, subject to the interest rate risk, which directly influences its margin. Interest rates likewise influence valuation of bpost bank s bond portfolio, which is measured at an available for sale asset (reflected as fair value through Other Comprehensive Income). Since bpost bank is an equity-accounted entity, 50% of the change in its equity directly influences the consolidated equity of bpost. The following table illustrates the impact of a change in interest rates of 1% on bpost bank equity and, through the equity pick up, on bpost s: AS AT 31 DECEMBER IN MILLION EUR Equity bpost bank Equity bpost % -1% (10.0) 10.0 (5.0) 5.0 bpost is also directly exposed to interest rate risks. The loan granted by the European Investment Bank, with an outstanding balance of 91.1 million EUR for which the cost amortization is foreseen in 2022, carries a floating interest rate (3 months Euribor rate minus 3.7 basis points). Credit risk bpost is exposed to credit risks through its operational activities, in the investment of its liquidities and through its investment in bpost bank. AS AT 31 DECEMBER IN MILLION EUR Credit risk classes of financial assets Held to maturity financial assets Financial assets at fair value through P&L, designated as such upon initial recognition Cash and Cash equivalents ,115.5 Trade and other receivables Credit risk classes of financial assets 1, , ,539.0 Operational activities The credit risk by definition only concerns that portion of bpost s activities that are not paid upfront in cash. bpost actively manages its exposure to credit risk by investigating the solvency of its customers. This translates into a credit rating and a credit limit. The credit rating is updated every day for all Belgian customers. For foreign customers, the credit rating is updated at contract renewal (and ad hoc in case of change or doubt in the customer solvency situation). The credit limit is followed up on a daily basis. If the solvency investigation produces a negative result, bpost requests the customers to make upfront cash payments, to provide bank guarantees and/or to grant bpost a direct debit.

100 96 bpost annual report 2012 Trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and the movements can be found in the table below. IN MILLION EUR At 1 January Impairments: Additions Impairments: Utilization (1.9) (1.0) (15.2) Impairments: Reversal (0.3) (0.3) (2.5) At 31 December Some of the trade receivables are past due as at the reporting date. The ageing analysis of the trade receivables that are past due is as follows: AS AT 31 DECEMBER IN MILLION EUR Current < 60 days days > 120 days Total Investment of liquidities Regarding the Company s investment of its liquidities, which includes cash and cash equivalents and investment securities, the exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. The changes in the fair value of the financial liabilities (see Note 6.25) are not due to changes in credit risk. This is presented in the table hereunder: IN MILLION EUR Carrying amount at 1 January Changes attributable to changes in credit risk Reimbursement loan (9.1) Other changes 1.1 (0.5) (0.2) Carrying amount at 31 December bpost bank bpost bank invests the funds that have been deposited by its customers. The bank has adopted a strict investment policy that determines an overall allocation of the investments across Belgian State bonds, other sovereign bonds and bonds from financial and commercial corporations. In addition, maximum concentration limits per issuer, per sector, per rating, per country and per currency have been established and are constantly monitored.

101 financial report 97 Liquidity risk bpost s current liquidity risk is limited due to the high level of cash at hand and due to the fact that a significant portion of its revenues is paid by its customers prior to bpost s performing the service. The maturity of the liabilities in the previous reporting period were as follows: IN MILLION EUR 31 DECEMBER 2011 CURRENT LESS THAN 1 YEAR NON-CURRENT WITHIN 1 YEAR BUT NOT LATER THAN 5 YEARS LATER THAN 5 YEARS Finance lease obligations Trade and other payables Bank loan As at 31 December 2012, liabilities have contractual maturities which are summarized below: IN MILLION EUR 31 DECEMBER 2012 CURRENT LESS THAN 1 YEAR NON-CURRENT WITHIN 1 YEAR BUT NOT LATER THAN 5 YEARS LATER THAN 5 YEARS Finance lease obligations Trade and other payables Bank loan The above contractual maturities are based on the contractual undiscounted payments, which may differ from the carrying values of the liabilities at the statement of financial position date. Capital management policies and procedures bpost monitors capital on the basis of the ratio of the carrying amount of equity versus net debt. The elements composing the equity for this ratio are the same as stated in the equity reconciliation. Net debt is composed of loans less investment securities and cash and cash equivalents. The ratio is calculated as [Net debt / Capital]. Currently, bpost has not established a formal set of upper and lower limits for this ratio, given the absence of any significant loans up until December 2012 (except the EIB loan). The main objectives for the capital management are to ensure the Company s ability to continue as a going concern and to provide an adequate return to shareholders.

102 98 bpost annual report 2012 The table below details the elements of the monitoring ratio. AS AT 31 DECEMBER IN MILLION EUR Capital Issued capital / Authorized capital Other reserves Retained earnings 3.7 (57.4) Non-controlling interests (0.0) Total ,114.3 Net Debt / (net cash) Interest bearing loans and borrowings Non-interest bearing loans and borrowings Investment securities (22.0) (515.6) (31.3) - Cash and cash equivalents (691.2) (626.7) (1,115.5) Total (618.6) (1,039.9) (1,043.8) Net Debt/(Net Cash) to Capital ratio (0.8) (1.3) (0.9) The non-interest bearing loans and borrowings, which included the advances received from the State and the deposits received from third parties, both recorded under other current payables, were almost completely refunded in 2010 as part of the reorganization of the relationship with the State Treasury. 6.6 Business combinations MSI On November 2nd 2012, bpost NV-SA exercised its right to acquire an additional 20% of the shares of Mail Services Incorporated for a price of 7.7 million USD (5.9 million EUR) to reach a total of 80% shares in The transaction led to a deduction of equity of 5.9 million EUR. The re-evaluation of the put and call option on the remaining 20% increased the financial liability by 3.4 million EUR. This was recognized in the equity. SECUMAIL On November 13th 2012, Speos Belgium NV-SA exercised its right to purchase the remaining 24.91% shares of Secumail NV-SA that it did not hold for a price of 0.4 million EUR. As a result of this purchase, Speos Belgium NV-SA became the 100% shareholder of Secumail NV-SA. On December 31st 2012 Secumail NV-SA was merged into Speos Belgium NV-SA pursuant to the procedure provided for in article 676, 1 of the Companies Code. LANDMARK On December 28th 2012 bpost NV-SA purchased 51% of the shares of the California (United States) based Landmark Global Inc. and of the Ontario (Canada) based Landmark Trade Services, Ltd. These Landmark entities provide crossborder shipping and logistics services and are specialized, in particular, in the delivery of products from the United States to Canada. This partnership enables bpost to further expand its operations in the US. The purchase price for the 51% share of Landmark Global Inc. and Landmark Trade Services LTD. was 10.2 million USD (7.7 million EUR), and is subject to an adjustment in 2013 based on the EBITDA achieved in 2012 and on the net cash and net working capital on the date of the closing.

103 financial report 99 In addition, the agreement provides for a contingent consideration arrangement (so-called earn-out), whereby bpost NV-SA will potentially pay two additional earn-out amounts. The amount of each earn-out payment is either 5.1 million USD (3.9 million EUR) or 7.64 million USD (5.8 million EUR) depending on the extent to which certain pre-defined EBITDA targets are achieved in 2013 and Finally, the agreement provides that bpost NV-SA will purchase the remaining shares of Landmark Global, INC. and Landmark Trade Services, LTD., in two tranches of 24.5% each, in 2016 and The fair value of the earn-out (11.6 million EUR) and of the contractually agreed future purchases of the remaining shares (64.5 million EUR) are based on the business plan of Landmark Global, INC. and Landmark Trade Services, LTD. The total amount (76.1 million EUR) is recognized as a financial liability. As the fair value of the contractually agreed future purchase of the remaining shares exceeds the amount of the noncontrolling interest, the difference is recorded as a deduction from the equity (63.4 million EUR). The future value of the commitment to purchase the non controlling interests is revised at each reporting period and changes in the corresponding financial liability lead to an adjustment within equity. The calculated goodwill could still be subject to change, as the initial purchase price will be adjusted once audited full year 2012 figures will be available. As the share purchase agreement was signed at the end of the year, no figures are included within the profit and loss statement. Landmark s statement of financial position is fully consolidated. CARRYING AMOUNT IN THE ACQUIRED ENTITY IN MILLION EUR Current assets 7.0 Non-current assets 1.2 Liabilities 6.0 Net assets 2.2 Non controlling interest at proportional share -1.1 Goodwill arising on acquisition 18.2 Purchase consideration transferred 19.3 of which: - Cash paid Contingent consideration 11.6 BPOST INTERNATIONAL LOGISTICS (BEIJING) CO. LTD. On May 14th 2012 bpost Hong Kong Ltd. completed the incorporation in the People s Republic of China of a wholly foreign owned entity, named bpost International Logistics Co., Ltd. based in Beijing, China. The shares are 100% held by bpost Hong Kong Ltd. The paid in registered capital amounts to 0.67 million EUR and was contributed in full by bpost Hong Kong Ltd.on August 30th CITIPOST (HOLDINGS) LTD. In October 2011, bpost acquired 100% of the shares of Citipost (Holdings) Ltd. In 2012, bpost paid a price adjustment of 0.8 million EUR based upon the final audited figures. CERTIPOST NV-SA In October 2012, the Company has reached an agreement with the Finnish group Basware on the sale of the activity of electronics document exchange as of January Certipost continues his activities for securing documents, digital certificates and Belgian electronic cards.

104 100 bpost annual report 2012 DSV In February 2012 bpost acquired the branch of the custom activities of DSV AIR & SEA NV-SA for an amount of 2.1 million EUR. No assets, nor liabilities are being taken over by bpost and 34 FTE have transferred to bpost, hence the purchase price is attributed to goodwill. 6.7 Segment information bpost s business is organized based on business units, service units and corporate units. Effective January 1, 2013, it has operated through two business units: the MRS business unit and the P&I business unit. The Mail & Retail Solutions business unit (MRS) offers solutions to big customers, private and public, selfemployed workers and Small and Medium Businesses on one hand and serves the residential customers as well as all customers using mass market channels such as the post offices, the Post Points or the bpost s eshop to purchase their mail products on the other hand. It also sells banking and insurance products under an agency agreement with bpost bank and AG Insurance and offers to its clients a number of other payment products. The Parcels & International (P&I) business unit specializes in worldwide mail, parcel and e-commerce logistics solutions (fulfillment, handling, delivery and return management). bpost provides products and services based on the following product lines: (i) transactional mail, (ii) advertising mail, (iii) press, (iv) parcels, (v) value-added services, (vi) international mail, (vii) banking and financial products and (viii) other. Turnover from the transactional mail, advertising mail, press, value-added services product lines are included within the MRS business unit. Turnover from the international mail product line is included within the P&I business unit. Turnover from parcels sold through the retail network, mainly C2X parcels, is included in the MRS business unit, with the remainder of turnover from parcels included within the P&I business unit. Other turnover is allocated across the MRS and P&I business units. bpost has service units that support the business whose costs are recharged to the business and corporate units using a cost allocation mechanism. The service units include the MSO unit, IOPS unit, the ICT and Service Operations units and the Human Resources & Organization (HR&O) unit. The MSO service unit is in charge of collecting, sorting and distributing mail and parcels in Belgium. The IOPS service unit comprises the operations of the European Mail Center, which is located at Brussels Airport and serves as a hub for international mail and parcels. bpost s corporate units include Finance, Legal/Regulatory and Internal Audit and some costs related to the employee related liabilities and provisions. The costs of the corporate units are not recharged to other units and are reported under the category Corporate. The two business units are also operating segments for financial reporting purposes. Operating income at the level of each of these two segments captures external sales to third parties. The sum of the operating income of the two segments, together with the operating income of the reconciling category Corporate, reconciles to bpost s operating income. bpost computes its profit from operating activities (EBIT) at the segment. Prior to January 1, 2013 bpost operated through three business units: BIZ, RSS and P&I. BIZ business unit was dedicated to large and medium domestic customers. The RSS business unit serves the residential customers as well as all customers using mass market channels such as the post offices, the Post Points or the bpost s eshop to purchase their mail products. The RSS business unit also sells banking and insurance products under an agency agreement with BPO and AG Insurance as well as a number of other payment products. Since January 1, 2013 BIZ and RSS have been merged into MRS. As bpost discloses its operating segment results for the first time in the 2012 financial statements for the periods , bpost has opted to present the operating segment results according to (i) the decision making organizational unit that was in force during the period and (ii) the new decision making organizational structure that is in place as from 1 January 2013.

105 financial report 101 The operating segments are the lowest level on which performance is assessed by the Chief Operating Decision Maker (CODM) under the definition of IFRS The CODM is the Board of Directors. Following a change in the internal reporting structure as of January 1st 2012, a series of product lines have shifted between business units. The product lines Parcels and International Mail have shifted from Mail & Retail Solutions (MRS) to Parcels & International (P&I), whereas Transactional Mail, Advertising Mail and Press revenues registered for a portion within P&I have been regrouped within MRS. Furthermore, some products have been transferred from International Mail to the product line Other, from Value Added Services to Parcels activities and to product line Other as well as some shifts between Parcels and International Mail. Taking into account these changes, the 2011 and 2010 figures at the level of the business units have been restated to reflect these changes. The restated figures are shown under the heading comparable. The table below presents the evolution per business unit, the reconciliation between the old and new structure and the comparison between the different product structures for the year ended 31 December 2012, 2011 and 2010: AS AT 31 DECEMBER IN MILLION EUR 2012 comparable comparable BIZ 1, , , , ,592.4 RSS MRS 2, , , , ,095.1 P&I Total operating income of segments 2, , , , ,299.1 Corporate (Reconciling category) Total operating income 2, , , , ,317.8 There is no inter-segment nor internal operating income. Excluding the remuneration received to provide the services as described in the Management Contract (see note 6.8), no single external customers exceeds 10% of bpost s operating income. The following table introduces the revenues from external customers attributed to Belgium and to all foreign countries in total from which bpost derives its revenues. The allocation of the revenues of the external customers is based on their location. AS AT 31 DECEMBER IN MILLION EUR Belgium 2, , ,203.7 RoW Total operating income 2, , ,317.8

106 102 bpost annual report 2012 The following tables present EBIT 1 and EAT 1 information about bpost s operating segments for the year ended 31 December 2012, 2011 and 2010, calculated on a comparable basis operating income: AS AT 31 DECEMBER IN MILLION EUR BIZ RSS MRS excluding provision related to the SGEI overcompensation MRS including provision related to the SGEI overcompensation P&I (4.1) EBIT of segments excl provision related to the SGEI overcompensation EBIT of segments incl provision related to the SGEI overcompensation Corporate (Reconciling category) (46.3) (87.4) (72.8) EBIT AS AT 31 DECEMBER IN MILLION EUR BIZ RSS MRS excluding provision related to the SGEI overcompensation MRS including provision related to the SGEI overcompensation P&I (4.1) EAT of segments excl provision related to the SGEI overcompensation EAT of segments incl provision related to the SGEI overcompensation Corporate (Reconciling category) (237.6) (222.1) (185.5) EAT (57.4) Financial income, financial costs, share of profit of associates and income tax expenses are all included reconciling category Corporate. The following table provides detailed information on the reconciling category Corporate : AS AT 31 DECEMBER IN MILLION EUR Operating Income Central departments (Finance, Legal, Internal Audit, CEO, ) (73.8) (71.6) (69.4) Other reconciliation items 6.3 (28.8) (21.9) Operating expenses (67.5) (100.4) (91.4) EBIT (46.3) (87.4) (72.8) Share of profit of associates Financial Results (53.9) (5.3) (20.6) Income Tax expense (141.0) (131.6) (105.4) EAT Corporate (237.6) (222.1) (185.5) Profit from operating activities (EBIT) attributable to the Corporate reconciling category improved by 41.1 million EUR, to negative 46.3 million EUR for the year ended December 31, 2012 from negative 87.4 million EUR for the year ended December 31, The improvement was primarily due to the reversal of a pending litigation provision for 22.7 million EUR recorded in the past to cover a risk of litigation relating to off-balance sheet transactions conducted prior to 2010, combined with variances in revenue recognition and an increase in the 1 EBIT: Earnings before interests and taxes 2 EAT: Earnings after taxes

107 financial report 103 amortization of actuarial gains and losses for employment benefits in The costs of the corporate units (including Finance, Legal/Regulatory and Internal Audit) remained stable. Assets and liabilities are not reported per segment to the Board. 6.8 Turnover FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Turnover excluding the SGEI remuneration 2, , ,953.3 SGEI remuneration , , , Other operating income AS AT 31 DECEMBER IN MILLION EUR Gain on disposal of property, plant and equipment Benefits in kind Rental income of investment property Other rental income Third party costs recovery Other The third party costs recovery relates to the sales realized by the Company s restaurants. Other sources of operating income mainly consist of reimbursements by third parties of damages suffered by bpost and its subsidiaries Other operating expense FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Provision related to the SGEI overcompensation Other Provisions (51.1) 7.1 (8.5) Local and real estate taxes Impairment on trade receivables (2.2) Penalty competition claim Other (0.1) (6.6) The evolution of the other provisions caption is mainly due to the following two items : a reversal of a pending litigation provision for 22.7 million EUR. This provision has been established to cover a risk of litigation relating to off-balance sheet transactions conducted prior to As the matter was definitively resolved in the course of 2012, the provision was no longer necessary and was reversed. This reversal is considered to be a non-recurring item. A provision constituted in previous years to cover the risk of a fine following the investigation by the Competition Commission relating to a pricing scheme, was used when the risk became certain in 2012 following the issuance of a 37.4 million EUR fine by the Competition Commission and a charge corresponding to the fine

108 104 bpost annual report 2012 was shown as separate line item ( Penalty competition claim ) of other operating expenses. As a result, there is no net impact of these movements on total other operating expenses. Note 6.29 provides more details on the evolution of the provisions Payroll costs FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Employee remuneration 1, , ,090.7 Compensation for termination of allowances (1.0) Social security contributions Other personnel costs , , ,314.5 As at 31 December 2012, the headcount of bpost amounted to 29,922 (2011: 32,110) and is composed as follows: Statutory personnel: 16,987 (2011: 18,899) Contractual personnel: 12,935 (2011: 13,211) The average FTE number for 2012 is 26,625 (2011: 27,973) Financial income and financial cost The following amounts have been included in the income statement line for the reporting periods presented: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Financial income Financial costs (60.6) (19.7) (31.7) Net financial result (53.9) (5.4) (20.6) Financial income FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Interest income from financial assets at fair value through P&L, designated as such upon initial recognition Interest income from financial assets held to maturity Interest income from liquidities put at the disposal of the State Interest income from short term bank deposits Interest income from current accounts Gain from exchange differences Other Financial Income

109 financial report 105 Financial costs FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Interest expense from financial liabilities at fair value through P&L, designated as such upon initial recognition Financial costs on benefit obligations (IAS 19) Interest on loans Loss from exchange differences Impairment current/financial assets (0.3) (0.2) (0.9) Other finance costs Financial costs Income tax/deferred tax Income taxes recognized in the income statement can be detailed as follows: AS AT 31 DECEMBER IN MILLION EUR Tax expense included: Current tax expenses (105.6) (120.3) (121.0) Adjustment recognized in the current year in relation to the current tax of prior years Deferred tax expense relating to the origination and reversal of temporary differences (11.4) (9.4) 11.0 Total tax expense (98.5) (123.4) (105.4) The reconciliation of the effective tax rate with the aggregated weighted nominal tax rate can be summarized as follows: IN MILLION EUR Tax expense using statutory tax rate Profit before income tax Statutory tax rate 33.99% 33.99% 33.99% Reconciling items between statutory and effective tax Tax effect of rates in other jurisdictions Tax effect of non tax deductible expenses Notional interest deduction (6.3) (8.0) (8.9) Tax effects prior year (7.7) (1.2) (4.6) Tax effect of tax losses utilized by subsidiaries (2.7) (1.2) (2.9) Subsidiaries in loss situation bpost bank (equity method) (2.4) (1.5) (9.0) Interco adjustments 1.2 (0.5) 7.6 Other: Tax effect of European Commission decision Other differences TOTAL Tax using effective rate (current period) (98.5) (123.4) (105.4) Profit before income tax Effective tax rate 36.1% 187.0% 33.5%

110 106 bpost annual report 2012 In 2011, the tax effect of the European Commission decision represents the tax cost relating to the non deductible provision of 275 million EUR generating 93.4 million EUR in tax charges in As of 31 December 2012, bpost recognized a net deferred income tax asset of 61.0 million EUR. This net deferred income tax asset is composed as follows: AS AT 31 DECEMBER IN MILLION EUR Deferred tax assets Employee benefits Provisions Other Total deferred tax asset Deferred tax liabilities Property plant and equipment Intangible assets Other Total deferred tax liabilities Net deferred tax asset Changes in deferred tax assets and liabilities are recognized in profit or loss. No deferred tax is recognized on temporary differences arising from investments in subsidiaries and associates, because bpost has control on the reversal of the temporary difference and it is probable that they will not be reversed in the foreseeable future. The temporary differences associated with investments in subsidiaries and associates for which a deferred tax liability has not been recognized amount to 0.7 million EUR (2011: 1.3 million EUR) Earnings per share In accordance with IAS 33, the basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts have to be calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. In case of bpost, no effects of dilution affect the net profit attributable to ordinary equity holders and the weighted average number of ordinary shares. The changes in the weighted average number of shares for the years 2010, 2011 and 2012 is due to a timing difference between the acquisition of shares by Alteris (a 100% bpost subsidiary) from the beneficiaries of the stock option plan in 2011 and 2012 and the repurchase in December 2012 of those shares by PIE (shareholder) from Alteris. As a result of this timing difference, treasury shares were recorded at Alteris. As a consequence, for both 2011 and 2012, the weighted average number of ordinary shares outstanding during the year is impacted by the Alteris-owned shares for the fraction of the year they are owned by Alteris

111 financial report 107 The table below reflects the income and share data used in the basic and diluted earnings per share computations, based on the number of shares before the share split decided in the shareholders meeting in May 2013: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Net profit attributable to ordinary equity holders of the parent for basic earnings (57.4) Adjustments for the effect of dilution Net profit attributable to ordinary equity holders of the parent adjusted for the effect of dilution (57.4) IN NUMBER Weighted average number of ordinary shares for basic earnings per share 407, , ,838 Effect of dilution Weighted average number of ordinary shares adjusted for the effect of dilution 407, , ,838 IN EUR Earnings per share basic, profit for the year attributable to ordinary equity holders of the parent (140.34) diluted, profit for the year attributable to ordinary equity holders of the parent (140.34) The table below reflects the income and share data used in the basic and diluted earnings per share computations, based on the number of shares after the share split decided in the shareholders meeting in May 2013: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Net profit attributable to ordinary equity holders of the parent for basic earnings (57.4) Adjustments for the effect of dilution Net profit attributable to ordinary equity holders of the parent adjusted for the effect of dilution (57.4) IN MILLION SHARES Weighted average number of ordinary shares for basic earnings per share Effect of dilution Weighted average number of ordinary shares adjusted for the effect of dilution IN EUR Earnings per share basic, profit for the year attributable to ordinary equity holders of the parent 0.87 (0.29) 1.05 diluted, profit for the year attributable to ordinary equity holders of the parent 0.87 (0.29) 1.05

112 108 bpost annual report Property, plant and equipment IN MILLION EUR LAND AND BUILDINGS PLANT AND EQUIPMENT FURNITURE AND VEHICLES FIXTURES AND FITTINGS OTHER PROPERTY, PLANT AND EQUIPMENT TOTAL Acquisition cost Balance at 1 January ,391.9 Acquisitions Acquisitions through business combinations Disposals (0.1) (1.9) (16.7) (4.7) 0.0 (23.4) Assets classified as held for sale or investment property (12.1) (5.3) 0.0 (17.4) Other movements (9.9) Balance at 31 December ,408.2 Balance at 1 January ,408.2 Acquisitions Acquisitions through business combinations Disposals 0.0 (1.2) (12.7) (4.8) 0.0 (18.7) Assets classified as held for sale or investment property (4.3) (2.4) 0.0 (6.7) Other movements (5.3) Balance at 31 December ,449.7 Balance at 1 January ,449.7 Acquisitions Acquisitions through business combinations Disposals 0.4 (7.5) (42.3) (6.0) 0.1 (55.5) Assets classified as held for sale or investment property (2.5) (1.2) 0.0 (3.7) Other movements (0.0) (1.2) (0.1) (0.0) Balance at 31 December ,447.9 Revaluation Balance at 1 January Balance at 31 December Balance at 1 January Balance at 31 December Balance at 1 January Balance at 31 December

113 financial report 109 IN MILLION EUR LAND AND BUILDINGS PLANT AND EQUIPMENT FURNITURE AND VEHICLES FIXTURES AND FITTINGS OTHER PROPERTY, PLANT AND EQUIPMENT TOTAL Depreciation and impairment losses Balance at 1 January 2010 (365.9) (165.6) (165.6) (34.1) - (731.2) Acquisitions through business combinations Disposals Disposals through the sale of subsidiaries Depreciation (20.2) (14.8) (23.5) (17.6) 0.0 (76.1) Impairment losses 0.4 (4.1) (6.9) (5.7) (3.4) (19.7) Assets classified as held for sale or investment property Other increase (decrease) (6.7) (0.0) (0.0) Balance at 31 December 2010 (384.1) (182.6) (179.4) (43.3) (3.4) (792.8) Balance at 1 January 2011 (384.1) (182.6) (179.4) (43.3) (3.4) (792.8) Acquisitions through business combinations Disposals Disposals through the sale of subsidiaries Depreciation (20.4) (14.3) (21.6) (16.3) 0.0 (72.7) Impairment losses 1.2 (3.2) (3.6) (1.4) 0.0 (7.1) Assets classified as held for sale or investment property Other increase (decrease) (5.1) (0.3) 0.0 Balance at 31 December 2011 (403.7) (199.0) (191.6) (50.3) (3.7) (848.2) Balance at 1 January 2012 (403.7) (199.0) (191.6) (50.3) (3.7) (848.2) Acquisitions through business combinations Disposals (0.4) (0.1) 55.5 Disposals through the sale of subsidiaries Depreciation (36.9) (14.2) (19.1) (1.1) 0.1 (71.3) Impairment losses (0.2) (0.8) (0.5) (5.7) 0.0 (7.2) Assets classified as held for sale or investment property Other increase (decrease) (1.3) (2.0) 0.0 (0.0) Balance at 31 December 2012 (440.5) (205.2) (167.0) (50.4) (3.7) (866.7) Carrying amount At 31 December At 31 December At 31 December Property, plant and equipment decreased from million EUR to million EUR, i.e. by 20.3 million EUR. This decrease is explained by: New acquisitions (57.0 million EUR) mainly relating to production facilities for sorting and printing activities (19.0 million EUR), mail and retail network infrastructure (17.8 million EUR), ATM- and security infrastructure (7.7 million EUR), IT- and other infrastructure (12.5 million EUR) Depreciation & impairment losses (78.5 million EUR) Transfer to assets held for sale (2.0 million EUR) and from investment property (2.9 million EUR) All amortization and impairment charges are included in the section Depreciation, amortization of the income statement.

114 110 bpost annual report Investment property IN MILLION EUR LAND AND BUILDINGS Acquisition cost Balance at 1 January Acquisitions 0.0 Transfer from/to other asset categories 8.7 Balance at 31 December Balance at 1 January Acquisitions 0.0 Transfer from/to other asset categories (0.3) Balance at 31 December Balance at 1 January Acquisitions Transfer from/to other asset categories (5.7) Balance at 31 December Depreciation and impairment losses Balance at 1 January 2010 (19.2) Depreciations (0.1) Impairment losses 0.0 Transfer from/to other asset categories (4.9) Balance at 31 December 2010 (24.3) Balance at 1 January 2011 (24.3) Depreciations (0.1) Impairment losses - Transfer from/to other asset categories (0.8) Balance at 31 December 2011 (25.2) Balance at 1 January 2012 (25.2) Depreciations (0.2) Impairment losses Transfer from/to other asset categories 2.8 Balance at 31 December 2012 (22.6) Carrying amount At 31 December At 31 December At 31 December Investment property mainly relates to apartments located in buildings used as post offices. Investment properties are carried at acquisition cost less any accumulated depreciation and less any impairment loss. The depreciation amount is allocated on a systematic basis over their useful life (in general 40 years). The rental income of the investment property amounts to 1.7 million EUR (2011: 2.0 million EUR). The estimated fair value of the investment property decreased from 41.3 million EUR to 34.8 million EUR or by 6.5 million EUR driven by a reduction in the number of properties rented out.

115 financial report Assets held for sale AS AT 31 DECEMBER IN MILLION EUR Property, plant and equipment Assets held for sale decreased from 0.5 million EUR to 0.3 million EUR. The decrease by 0.2 million EUR is due to deeds signed in 2012 (2.2 million EUR) partially counterbalanced by new sales agreements signed in 2012 (2.0 million EUR). The number of buildings recognized in assets held for sale decrease from 4 at the end of 2011 to 3 at the end of These assets are retail outlets which are vacant as a consequence of the optimization of the post offices network. Profits on disposal of 8.5 million EUR (2011: 8.8 million EUR) were accounted for in the income statement in the section Other operating income. In 2012, no impairment charges were recorded for in the section Depreciation, amortization (2011: 0.2 million EUR) Intangible assets IN MILLION EUR GOOD- WILL DEVELOP- MENT SOFT- WARE OTHER INTANGIBLE ASSETS TOTAL Acquisition cost Balance at 1 January Acquisitions Acquisitions and additions through business combinations (0.0) 0.4 Disposals 0.0 (0.2) (8.8) 0.0 (9.0) Disposals through the sale of subsidiaries Transfer to other asset categories Other movements (3.7) Balance at 31 December Balance at 1 January Acquisitions Acquisitions and additions through business combinations Disposals Disposals through the sale of subsidiaries Transfer to other asset categories Other movements (0.1) Balance at 31 December Balance at 1 January Acquisitions Acquisitions and additions through business combinations Disposals 0.0 (12.7) (2.5) 0.0 (15.2) Disposals through the sale of subsidiaries Transfer to other asset categories Other movements 0.0 (0.1) Balance at 31 December

116 112 bpost annual report 2012 IN MILLION EUR GOOD- WILL DEVELOP- MENT SOFT- WARE OTHER INTANGIBLE ASSETS TOTAL Amortization and impairment losses Balance at 1 January 2010 (12.1) (69.1) (56.1) (2.9) (140.2) Acquisitions and additions through business combinations Disposals Disposals through the sale of subsidiaries Amortization 0.0 (7.5) (12.9) (1.4) (21.9) Impairment losses (1.2) (0.4) Transfer to other asset categories Other movements (3.0) 0.0 Balance at 31 December 2010 (13.2) (75.7) (57.3) (7.3) (153.5) Balance at 1 January 2011 (13.2) (75.7) (57.3) (7.3) (153.5) Acquisitions and additions through business combinations (0.1) (0.1) Disposals Disposals through the sale of subsidiaries Amortization 0.0 (5.7) (7.6) (1.5) (14.7) Impairment losses Transfer to other asset categories Other movements Balance at 31 December 2011 (13.2) (80.7) (64.9) (8.9) (167.7) Balance at 1 January 2012 (13.2) (80.7) (64.9) (8.9) (167.7) Acquisitions and additions through business combinations Disposals Disposals through the sale of subsidiaries Amortization 0.0 (5.4) (9.3) (1.5) (16.2) Impairment losses 0.0 (4.9) (0.2) 0.0 (5.1) Transfer to other asset categories Other movements (0.1) Balance at 31 December 2012 (13.2) (78.2) (71.9) (10.4) (173.7) Carrying amount At 31 December At 31 December At 31 December Intangible assets increased from 70.0 million EUR to 95.5 million EUR or by 25.5 million EUR. This increase can be decomposed as follows: Goodwill increase (20.8 million EUR) mainly as a result of the Landmark acquisition (18.2 million EUR), goodwill on the acquisition of the customs activity of DSV (2.1 million EUR) and share price adjustment relating to the acquisition of bpost Asia (0.8 million EUR) Investments in software and licenses (9.4 million EUR), development costs capitalized (15.2 million EUR), business combinations effects (0.9 million EUR) and other intangible assets (0.5 million EUR) Amortization & impairment losses (21.3 million EUR) All amortization and impairment charges are included in the section Depreciation, amortization of the income statement. The carrying value of goodwill arising on cash-generating units of 48.4 million EUR (2011: 27.6 million EUR) is for 50% related to acquisitions of cash-generating units in 2012 and In line with the Group s accounting policy, this goodwill has been reviewed for impairment. An impairment loss is recognized for the amount by which the carrying value of an asset or cash generating unit exceeds the recoverable amount. The recoverable amount is the higher of net realisable value and value in use.

117 financial report 113 The carrying value of all these cash-generating units, excluding interest bearing and tax related assets and liabilities represents, on average, a multiple of 4.2 on operating profit before exceptional items. The net realizable value of these cash-generating units, for purposes of the impairment review (i.e. the fair value less costs to sell ), has been assessed with reference to earnings multiples for recently acquired business combinations. On this basis, the net realizable value has been assessed to be in excess of the carrying value. For none of the current cash-generating units, impairment had to be recognized. The earnings multiples referenced would need to reduce by about 30% to reduce the net realizable value below the carrying value of all cash-generating units. Besides the goodwill, there are no other intangible assets with indefinite useful lives Lease Finance Lease The finance lease liabilities as of December 31, 2012 relate to the Saint-Denis building, leased machinery and vehicles. The building was acquired in the context of the disposal of Asterion. The net carrying amount and useful lives of the leased assets are as follows: IN MILLION EUR USEFUL LIVES CARRYING AMOUNT DEC 31, 2012 Land and Buildings (Saint-Denis) 25 years 2.3 Machinery and equipment 5 years 0.4 Vehicles 5 years 0.0 The future minimum finance lease payments at the end of each reporting period under review were as follows: AS AT 31 DECEMBER IN MILLION EUR Minimum lease payments Within 1 year to 5 years More than 5 years Total Less Future finance costs Present value of the minimum lease payments Within 1 year to 5 years More than 5 years Total The financial lease agreements include fixed lease payments and a purchase option at the end of lease term.

118 114 bpost annual report 2012 Operating Lease The group s future minimum operating lease payments are as follows: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Less than one year Between one year and five years More than five years The operating leases relate to buildings and vehicles. Lease payments are recognized as an expense in the section Services and other goods for an amount of 65.3 million EUR (2011: 63.8 million EUR). The operational lease agreements include fixed lease payments. The risks and rewards incidental to the ownership are not transferred to bpost. The group s future minimum operating lease income is as follows and relates to buildings: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Less than one year Between one year and five years More than five years The income that is related to operational lease agreements is recognized in the section Other operating income for an amount of 3.5 million EUR (2011: 3.6 million EUR) Investment securities IN MILLION EUR TOTAL NON CURRENT INVEST- MENTS FINANCIAL AS- SETS AT FAIR VALUE THROUGH PROFIT AND LOSS, DESIGNAT- ED AS SUCH UPON INITIAL RECOGNI- TION FINANCIAL ASSETS HELD TO MATURITY TOTAL CUR- RENT INVEST- MENTS TOTAL Acquisition cost Balance at 1 January Acquisitions Acquisitions through business combinations Changes in fair value Disposals - (125.2) - (125.2) (125.2) Balance at 31 December

119 financial report 115 IN MILLION EUR TOTAL NON CURRENT INVEST- MENTS FINANCIAL AS- SETS AT FAIR VALUE THROUGH PROFIT AND LOSS, DESIGNAT- ED AS SUCH UPON INITIAL RECOGNI- TION FINANCIAL ASSETS HELD TO MATURITY TOTAL CUR- RENT INVEST- MENTS TOTAL Balance at 1 January Acquisitions 3, , ,980.1 Acquisitions through business combinations Changes in fair value Disposals (25.2) (3,470.6) (3,495.8) (3,495.8) Balance at 31 December Balance at 1 January Acquisitions 2, , ,369.1 Acquisitions through business combinations Changes in fair value Disposals (2,862.7) (2,862.7) (2,862.7) Balance at 31 December Impairment losses Balance at 1 January 2010 Other movements Balance at 31 December 2010 Balance at 1 January 2011 Other movements Balance at 31 December 2011 Balance at 1 January 2012 Other movements Balance at 31 December 2012 Carrying amount At 31 December At 31 December At 31 December For all three years under review, the investment securities met the definition of cash & cash equivalents as defined by IAS Investment in associates IN MILLION EUR Balance at 1 January Share of profit Other movements in equity of associates (49.4) (57.1) Balance at 31 December

120 116 bpost annual report 2012 Share of profit/loss In 2012, the amount is composed of bpost s share in the profit of bpost bank of 3.5 million EUR. Last year, the share of profit was composed of bpost bank s profit amounting to 2.2 million EUR. Dividends received In 2011 and 2012, no dividend originating from associate companies was attributed to bpost. Other movements The amount represents the impact of the unrealized gains on bpost bank s bond portfolio (263.8 million EUR). An overview of the selected financial figures of the associates is presented in the following tables. IN MILLION EUR OWNERSHIP TOTAL ASSETS TOTAL LIABILITIES (excl. equity) REVENUES PROFIT/ (LOSS) 2011 bpost bank 50% 8, , bpost bank 50% 9, , Trade and other receivables AS AT 31 DECEMBER IN MILLION EUR Trade receivables Other receivables Non-current trade and other receivables AS AT 31 DECEMBER IN MILLION EUR Trade receivables Tax receivables, other than income tax Other receivables Current trade and other receivables AS AT 31 DECEMBER IN MILLION EUR Accrued income Deferred charges Other receivables Current - Other receivables

121 financial report 117 The non-current receivables are considered as a reasonable approximation of the fair value of this financial asset, as it is expected to be paid within a short timeframe, making the impact of the time value of money is not significant. Current trade receivables amount include third-party trade debtors (166.9 million EUR), receivables from the State (88.9 million EUR), invoices to be issued (8.3 million EUR) credit notes to be received, suppliers with debit balance mainly terminal dues related (53.8 million EUR) and prepayments (34.1 million EUR). Tax receivables relate to the outstanding VAT amounts to be received. Within current receivables, Other receivables consist almost entirely of accrued income and deferred charges. The main items herein are the commission to be received from bpost bank (18.5 million EUR), prepaid rent and other accruals. Trade and other receivables are mainly short-term. The carrying amounts are considered to be a reasonable approximation of the fair value Inventories AS AT 31 DECEMBER IN MILLION EUR Raw materials Finished products Goods purchased for resale Reductions in value (0.9) (1.3) (2.1) Inventories Raw materials include consumables, i.e. materials used for printing purposes. Finished products are stamps available for sale. Goods purchased for resale mainly include postograms, post cards, and supplies for resale. In 2012, an amount of 1.9 million EUR (2011: -0.3 million EUR) is recognized in the section Material cost. This figure represents the stock variation of the different product types Cash and cash equivalents AS AT 31 DECEMBER IN MILLION EUR Cash in Postal network Transit accounts (1.6) Cash payment transactions under execution (130.8) (122.5) (169.0) Bank current accounts Liquidities deposited with the State Treasury Short term deposits Cash and cash equivalents ,115.5 Since 2010, the quasi cash pool (between bpost and the State Treasury) is no longer operating. As a result, bpost has deposited its available cash with third party bank accounts.

122 118 bpost annual report 2012 The cash of the funding not yet disbursed on the date of the closing is shown in the Cash in Postal Network and in the Bank current accounts on the one hand and as negative cash in Cash payment transactions under execution so that the net impact of the funding on the Company s cash position is nil Financial liabilities AS AT 31 DECEMBER IN MILLION EUR Financial liabilities at amortized cost Bank loans Finance lease liabilities Non-current liabilities AS AT 31 DECEMBER IN MILLION EUR Financial liabilities at amortized cost Bank loans Other loans 1.6 Finance lease liabilities Current liabilities The financial liabilities consist mainly of a bank loan, with an outstanding balance of 91.1 million EUR, concluded in 2007 with the European Investment Bank. The tranche of the loan repayable in 2013 and amounting to 9.1 million EUR was transferred to the current financial liabilities. The last repayment will take place in Employee benefits bpost grants its active and retired personnel post-employment benefits, long-term benefits, other long term benefits and termination benefits. These benefit plans have been valued in conformity with IAS 19. Some of them originate from measures negotiated in the framework of Collective Labor Agreement ( CLA ). The benefits granted under these plans differ according to the three categories of employees of bpost: civil servants (also known as statutory employees), baremic contractual employees (as from 2010, included the auxiliary agents category) and non-baremic contractual employees. The employee benefits are as follow: AS AT 31 DECEMBER IN MILLION EUR TOTAL (364.1) (379.8) (378.8) Post-employment benefits (68.7) (68.1) (52.4) Long-term employee benefits (124.8) (157.9) (166.9) Termination benefits (28.8) (38.8) (42.3) Other long-term benefits (141.8) (115.0) (117.2) Net of the deferred tax asset related to them, employee benefits amount to million EUR (2011: million EUR).

123 financial report 119 AS AT 31 DECEMBER IN MILLION EUR Employee benefits (364.1) (379.8) (378.8) Deferred tax assets impact Employee benefits net of deferred tax (303.7) (316.2) (303.7) bpost s net liability for employee benefits comprises the following: AS AT 31 DECEMBER IN MILLION EUR Present value of total obligations (378.1) (387.0) (406.4) Fair value of plan assets Present value of net obligations for unfunded plan (378.1) (387.0) (406.4) Present value of net obligations (378.1) (387.0) (406.4) Unrecognized actuarial (gains)/losses Net liability (364.1) (379.8) (378.8) Employee benefits amounts in the statement of financial position Liabilities (364.1) (379.8) (378.8) Net liability (364.1) (379.8) (378.8) The changes in the present value of the obligations are as follows: IN MILLION EUR Present value at 1 January (387.0) (406.4) (400.3) Service cost (30.8) (13.2) (26.4) Termination expenses (14.0) (7.3) (0.4) Termination costs of CLA (27.3) Interest cost (14.6) (15.4) (16.7) Past service (cost)/gain Effect of part settlement Actuarial (costs)/gains (39.7) (0.2) (21.1) Benefits paid Defined benefit obligation at 31 December (378.1) (387.0) (406.4) The expense recognized in the income statement is presented hereafter: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Service cost (30.8) (13.2) (26.4) Termination expenses (14.0) (7.3) (0.4) Termination costs of CLA (27.3) Interest cost (14.6) (15.4) (16.7) Past service (cost)/gain 2.1 (0.0) - Effect of part settlement Actuarial gains and (losses) (32.9) (20.6) (22.7) of which reported as financial (38.5) 3.4 (10.1) of which reported as operating 5.6 (24.0) (12.7) Net expense (69.1) (56.5) (72.3)

124 120 bpost annual report 2012 The service cost recorded in 2012 includes the costs relating to the part-time plan (14.0 million EUR). Actuarial gains and losses, caused by changes in discount rates, are booked as a financial cost. In all other cases, actuarial gains and losses are recorded as operating expenses. In 2012, the Collective Labor Agreements negotiated in March 2012 have triggered the elimination of a number of sick-days for some specific civil servants in exchange for the payment of a compensation. As a result, the defined benefit obligation decreased and generated an operating gain of this part settlement of 21.1 million EUR. This income was considered as significant non-recurring. In 2010, the source of the non-recurring significant item related to changes in the rules of a plan following the Collective Labor Agreements, amounting to 21.2 million EUR, covering the years 2009, 2010 and In December 2010, the Company announced its intention to introduce a scheme under which employees who will reach the age of 58 by 31 December 2012, who work in certain departments and which functions became redundant and who are not replaced will have the possibility to apply for early retirement. In January 2011, the representatives of the workforce and the Company approved the proposed scheme. The cost of the scheme was estimated at 27.3 million EUR and a non-recurring charge of that amount was recorded in the 2010 income statement, given its significant impact in the Company s financial statements. During the reference period , this was by far the largest transformation plan and impacted several departments simultaneously. As far as the subsequent early retirement plans are concerned, their impact and scope was significantly reduced and most importantly they were part of the business as usual natural attrition levers. However, it is clear that the Company does not negotiate such schemes with the labor unions on a systematic basis, but rather depending on the circumstances at a certain point in time. Interest costs and financial actuarial gains or losses have been recorded as financial costs. All other expenses summarized above were included in the income statement line item Payroll costs. bpost recognizes all actuarial gains and losses of post-employment benefits in accordance with the corridor approach through profit and loss. As from financial year 2010, bpost adopted a new systematic method for faster recognition of actuarial gains and losses for post-employments benefits: Accumulated actuarial gains or losses, in excess of 10% of the maximum of the Defined Benefit Obligation and the Fair Value of Assets, are amortized over two years (or average remaining service period for the active population, if shorter than two years). The expense for 2012 calculated as explained here above amounts to 6.1 million EUR (2011: 19 million EUR). All net actuarial gains or losses amortized in the yearly expense are recognized as operating costs. FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Payroll costs (16.0) (44.5) (45.5) Financial cost (53.1) (12.0) (26.8) Net expense (69.1) (56.5) (72.3) The main assumptions used in computing the benefit obligations at the statement of financial position date are the following: Rate of inflation (long term) 2.0% 2.0% 1.9% Future salary increase 3.0% 3.0% 2.9% Mortality tables MR/FR MR/FR MR/FR

125 financial report 121 The discount rates have been determined by reference to market yields at the statement of financial position date. The discount rates used in 2012 range from 1.0% to 3.2% (2011: 3.6% to 5.3%): BENEFIT Discount rate 31/12/ /12/2012 Family allowances 4.35% 2.50% Transportation 4.85% 3.00% Bank 5.30% 3.25% Funeral expense 4.35% 2.65% Gratification 4.35% 2.50% Accumulated compensated absences 3.60% 1.00% Workers compensation in case of accidents 5.10% 3.10% Pension saving days 4.35% 2.65% Jubilee Premiums 4.35% 2.50% In November 2011, the Belgian Government has adopted new measures concerning the adaptation of the legal retirement age and the new conditions of part-time career interruption. The intention of bpost is to do everything possible to minimize their potential impact. At this moment, it is not possible to estimate the potential financial impact of the new law and its application on the Defined Obligation Benefits of bpost. Post-employment benefits Post-employment benefits include family allowances, transport costs, bank costs, funerary costs and retirement gifts. As all employees are members of the normal State pension scheme, bpost does not carry any pension liability above and beyond the post-employment benefits described in the following paragraphs. Family allowances The civil servants of bpost (both active and pensioners) with children at their charge (youths and disabled) receive a family allowance from Office National d Allocations Familiales pour Travailleurs Salariés (ONAFTS) Rijksdienst voor Kinderbijslag voor Werknemers (RKW). These costs are then re-invoiced to bpost. Transportation Inactive civil servants as well as their family members are entitled to personal vouchers that can be exchanged for a transport ticket for a trip in Belgium or for a price reduction on other transport tickets. When an affiliated worker or retired worker dies, the spouse and children continue to receive this benefit under some conditions. As from 1 January 2012, widow(er)s and orphans as relatives from inactive civil servants are no more eligible for this benefit. The gain of this change in plan is recognized for 2.2 million EUR in the 2012 consolidated income statement. Bank All active members, pre-pensioners and pensioners that have a Postcheque account in which their salary/pension is paid, benefit from a reduction of the fees charged on the current account as well as favorable interest rates on savings accounts, savings certificates, investment funds and loans.

126 122 bpost annual report 2012 bpost s net liability for employee post-employment benefits comprises the following: AS AT 31 DECEMBER IN MILLION EUR Present value of total obligations (82.7) (75.3) (80.1) Fair value of plan assets Present value of net obligations for unfunded plan (82.7) (75.3) (80.1) Present value of net obligations (82.7) (75.3) (80.1) Unrecognized actuarial (gains)/losses Net liability (68.7) (68.1) (52.4) Employee benefits amounts in the statement of financial position Liabilities (68.7) (68.1) (52.4) Net liability (68.7) (68.1) (52.4) The changes in the present value of the obligations are as follows: IN MILLION EUR Present value at 1 January (75.3) (80.1) (73.4) Service cost (0.9) (1.1) (1.0) Interest cost (3.3) (3.5) (3.5) Past service (cost)/gain 2.2 (0.0) 0.0 Actuarial gains (12.9) 1.5 (10.0) Benefits paid Defined benefit obligation at 31 December (82.7) (75.3) (80.1) The expense recognized in the income statement is presented hereafter: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Service cost (0.9) (1.1) (1.0) Interest cost (3.3) (3.5) (3.5) Past service (cost)/gain 2.2 (0.0) 0.0 Actuarial gains and (losses) (6.1) (19.0) (11.5) of which reported as financial of which reported as operating (6.1) (19.0) (11.5) Net expense (8.1) (23.6) (16.0) The impact on payroll costs and financial costs is presented hereafter: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Payroll costs (4.8) (20.1) (12.5) Financial cost (3.3) (3.5) (3.5) Net expense (8.1) (23.6) (16.0)

127 financial report 123 Long-term employee benefits Long-term employee benefits include accumulated compensated absences, pension saving days and part-time benefits. Accumulated Compensated Absences Civil servants are entitled to 21 sick-days per year. During these 21 days and if they have received the appropriate note from a doctor, they receive 100% of their salary. If any given year, a civil servant is absent less than 21 days, the balance of the un-used sickness days is carried over to the following years up to a maximum of 63 days as from April 2012 instead of 300 days previously. Employees who are ill for more than 21 days during a year will first use up the year s allotment and then use the days carried over from previous years as per their individual account. During this period, they will receive their full salary. Once the allotment of the year and the days carried over are used up, they receive reduced payments. Both the full salary paid under the sick days scheme and the reduced payments beyond that are costs incurred by bpost. There have been no modifications to the calculation methodology comparatively to The valuation is based on the future projected payments / cash outflows. The cash outflows are calculated for the totality of the population considered, based on a certain consumption pattern, derived from the statistics over the 12 months of The individual notional accounts are projected for the future and decreased by the actual number of days of illness. The annual payment is the number of days used (and limited by the number of days in the savings account) multiplied by the difference between the projected salary (increased with social charges) at 100% and the reduced payments. The relevant withdrawal and mortality rates have been applied together with the discount rate applicable to the duration of the benefit. The Collective Labor Agreements for the years and the CLA negotiated in March 2012 have triggered, respectively in 2010 and 2012, the elimination of a number of sick-days for some specific civil servants in exchange for the payment of a compensation. Pension saving days Civil servants have the possibility to convert the unused sick days above the 63 days in their notional account (see above Accumulated Compensated Absences benefit) in pension saving days (7 sick days per 1 pension saving day) and to convert each year a maximum of 3 days of extra-legal holidays. Contractual employees with a permanent contract are entitled to a maximum of 2 pension saving days per year and have the possibility to convert each year a maximum of 3 days of extra-legal holidays. The pension saving days are accumulated year over year and can be used as from the age of 50. The methodology of valuation is based on the same approach as the benefit Accumulated Compensated Absences. The valuation is based on the future projected payments / cash outflows. These are calculated for the totality of the population considered, based on a certain consumption pattern, derived from the statistics over the 12 months of 2012, as provided by the human resource department. The individual pension saving days accounts are projected per person and decreased by the actual number of used pension saving days. The annual payment is the number of pension saving days used multiplied by the projected daily salary (increased with social charges, holiday pay, end of year premium, management and integration premium). The relevant withdrawal and mortality rates have been applied together with the discount rate applicable to the duration of the benefit.

128 124 bpost annual report 2012 Part-time regime (50+) Under the Collective Labor Agreements covering respectively the years , and 2011, statutory employees, aged between 50 and 59, are entitled to enter into a system of partial (50%) career interruption. bpost makes contributions equal to 7.5% of the gross annual salary for a period of a maximum of 48 months. The Framework Agreement of 20 December 2012 approved a new plan of specific partial (50%) career interruption accessible to the distributors aged as from 54 years old and to the other employees aged as from 55 years old. bpost makes contributions equal to 7.5% of the gross annual salary for a period of a maximum of 72 months for the distributors agents and 48 months for the other beneficiaries of the plan. bpost s net liability for employee long-term benefits comprises the following: AS AT 31 DECEMBER IN MILLION EUR Present value of total obligations (124.8) (158.0) (166.9) Fair value of plan assets Present value of net obligations for unfunded plan (124.8) (158.0) (166.9) Present value of net obligations (124.8) (158.0) (166.9) Unrecognized actuarial (gains)/losses Net liability (124.8) (158.0) (166.9) Employee benefits amounts in the statement of financial position Liabilities (124.8) (158.0) (166.9) Net liability (124.8) (158.0) (166.9) The changes in the present value of the obligations are as follows: IN MILLION EUR Present value at 1 January (158.0) (166.9) (183.1) Service cost (28.0) (11.1) (25.4) Interest cost (5.1) (5.6) (6.9) Past service (cost)/gain Effect of part settlement Actuarial (costs)/ gains (4.1) 0.4 (5.4) Benefits paid Defined benefit obligation at 31 December (124.8) (158.0) (166.9) The expense recognized in the income statement is presented hereafter: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Service cost (28.0) (11.1) (25.4) Interest cost (5.1) (5.6) (6.9) Past service (cost)/gain Effect of part settlement Actuarial gains and (losses) (4.1) 0.4 (5.4) of which reported as financial (9.6) 1.2 (3.3) of which reported as operating 5.5 (0.8) (2.1) Net expense (16.1) (16.3) (16.5)

129 financial report 125 The impact on payroll costs and financial costs is presented hereafter: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Payroll costs (1.4) (11.9) (6.3) Financial cost (14.7) (4.4) (10.2) Net expense (16.1) (16.3) (16.5) Termination benefits Early Retirement scheme At the end of 2012, the following previous early-retirement plans are included in this benefit: the plan covered by the Collective Labor Agreement for 2011 accessible to the civil servants meeting certain age and service organization conditions as at 31/12/2012 at the latest; and, a new plan accessible only in 2011 to the civil servants of one specific department subject to age and seniority conditions as described in the Joint Committee Convention of 6 October In these early-retirement schemes, bpost continues to pay to the beneficiaries a portion (75%) of their salary at departure and until they reach retirement age. Furthermore, the early-retirement period is treated as a service period. The Framework Agreement of 1 July 2012 approved a new early-retirement plan accessible to the civil servants meeting certain age, seniority and service organization conditions as at 31 December 2013 at the latest. bpost continues to pay to the beneficiaries a portion (between 60% and 75% depending on the duration of the earlyretirement) of their salary at departure and until they reach retirement age. Furthermore, the early-retirement period is treated as a service period. The following plans are still in the 2011 figures but have terminated in 2012: The impact of the plan of the Collective Labor Agreement The social plan negotiated in December 2011, available as from April 2012 until December 2012, destined to the workers of a specific support department in re-engineering. The employee benefit related to the early retirement schemes arises because of the fact that the employment is terminated before the normal retirement and the fact that it is the employee s decision to accept the offer made by bpost in exchange. bpost s net liability for termination benefits comprises the following: AS AT 31 DECEMBER IN MILLION EUR Present value of total obligations (28.8) (38.8) (42.3) Fair value of plan assets Present value of net obligations for unfunded plan (28.8) (38.8) (42.3) Present value of net obligations (28.8) (38.8) (42.3) Unrecognized actuarial (gains)/losses Net liability (28.8) (38.8) (42.3) Employee benefits amounts in the statement of financial position Liabilities (28.8) (38.8) (42.3) Net liability (28.8) (38.8) (42.3)

130 126 bpost annual report 2012 The changes in the present value of the obligations are as follows: IN MILLION EUR Present value at 1 January (38.8) (42.3) (29.9) Termination expenses (14.0) (7.3) (0.4) Termination costs of CLA (27.3) Interest cost (0.6) (0.8) (0.4) Past service (cost)/gain Actuarial (costs)/gains 4.2 (3.0) (0.6) Benefits paid Defined benefit obligation at 31 December (28.8) (38.8) (42.3) The expense recognized in the income statement is presented hereafter: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Termination expenses (14.0) (7.3) (0.4) Termination costs of CLA (27.3) Interest cost (0.6) (0.8) (0.4) Past service (cost)/gain Actuarial gains and (losses) 4.2 (3.0) (0.6) of which reported as financial (0.1) (0.1) 0.1 of which reported as operating 4.4 (3.0) (0.7) Net expense (10.4) (11.1) (28.7) The impact on payroll costs and financial costs is presented hereafter: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Payroll costs (9.6) (10.3) (28.4) Financial cost (0.7) (0.9) (0.3) Net expense (10.4) (11.1) (28.7) Other long-term benefits Workers Compensation Accident Plan Until 1 October 2000, bpost was self-insured for injuries on the workplace and on the way to the workplace. As a result, all compensations to workers for accidents which occurred before 1 October 2000 are incurred and financed by bpost itself. Since 1 October 2000, bpost has contracted insurance policies to cover the risk.

131 financial report 127 bpost s net liability for other long-term employee benefits comprises the following: AS AT 31 DECEMBER IN MILLION EUR Present value of total obligations (141.8) (115.0) (117.2) Fair value of plan assets Present value of net obligations for unfunded plan (141.8) (115.0) (117.2) Present value of net obligations (141.8) (115.0) (117.2) Unrecognized actuarial (gains)/losses Net liability (141.8) (115.0) (117.2) Employee benefits amounts in the statement of financial position Liabilities (141.8) (115.0) (117.2) Net liability (141.8) (115.0) (117.2) The changes in the present value of the obligations are as follows: IN MILLION EUR Present value at 1 January (115.0) (117.2) (113.9) Service cost (1.9) (0.9) 0.0 Interest cost (5.6) (5.5) (5.9) Past service (cost)/gain Actuarial gains (27.0) 1.0 (5.2) Benefits paid Defined benefit obligation at 31 December (141.8) (115.0) (117.2) The expense recognized in the income statement is presented hereafter: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Service cost (1.9) (0.9) 0.0 Interest cost (5.6) (5.5) (5.9) Past service (cost)/gain Actuarial gains and (losses) (27.0) 1.0 (5.1) of which reported as financial (28.7) 2.3 (6.9) of which reported as operating 1.7 (1.4) 1.7 Net expense (34.5) (5.5) (11.1) The impact on payroll costs and financial costs is presented hereafter: FOR THE YEAR ENDED 31 DECEMBER IN MILLION EUR Payroll costs (0.1) (2.3) 1.7 Financial cost (34.4) (3.1) (12.8) Net expense (34.5) (5.5) (11.1)

132 128 bpost annual report Share-based payments In 2006, the Board of Directors of bpost approved the creation of an Employee Stock Option Plan ( ESOP ) for the Management. Under this plan, bpost has granted in 2006, 2007 and 2008 to some members of the management options to purchase shares in the company. Once granted, the options vest one-third per year over a period of three years. The fair value of the option was expensed over the vesting period. In accordance with IFRS 2, the fair value of the options was determined using the Binomial Option Pricing Model. In 2012, a last exercise window has been opened and 1,367 options were exercised during the year. At 31 December 2012, all outstanding options having been exercised or having lapsed, the plan ESOP is fully terminated and there is no more liability relating to the share-based payments (2011: 4.6 million EUR). This resulted in a profit of 4.1 million EUR in the 2012 income statement (2011: 1.3 million EUR). At 31 December 2011, Alteris NV-SA (subsidiary of bpost) held 2,589 shares of bpost, which were considered as Treasury Shares in the bpost equity. In 2012, PIE has exercised its call option and has repurchased these 2,589 shares of bpost to Alteris NV-SA. All share-based employee remunerations were accounted following the cash-settled methodology. There were no modifications to the terms of the share-based payments plan during The total number of outstanding options is as follows: IN NUMBER Options outstanding at 1 January 1, , ,688.0 Options granted during the year Options exercised during the year (1,367.0) (2,240.0) - Options forfeited during the year (22.0) (50.0) - Options out due to bad leavers - - (9.0) Options outstanding at 31 December - 1, , Number of persons at 1 January IN OUT (58.0) (16.0) (2.0) Number of persons at 31 December The fair value of the granted options and the assumptions used in applying the Binomial Option pricing model are as follows: FOR THE YEAR ENDED 31 DECEMBER EUR Fair value of options granted NA NA NA Exercise price 4, , ,062.0 Expected volatility NA 39.6% 40.5% Expected option life (in years) NA NA NA Risk-free interest rate NA 0.6% 1.1%

133 financial report 129 All share options have the same exercise price per granting; there are no ranges of exercise prices within a given granting. There are no more outstanding options at the end of Trade and other payables AS AT 31 DECEMBER IN MILLION EUR Trade payables (0.0) Other payables Non-current trade and other payables AS AT 31 DECEMBER IN MILLION EUR Trade payables Payroll and social security payables Tax payable other than income tax Other payables Current trade and other payables The carrying amounts are considered to be a reasonable approximation of the fair value. The other payables included in current trade and other payable include the following items: AS AT 31 DECEMBER IN MILLION EUR Advance payments on orders Advance received from State Cash guarantees received Accruals Deferred income Deposits received from third parties Other payables Current - Other payables

134 130 bpost annual report Provisions IN MILLION EUR LITIGA- TION SGEI RELATED LITIGA- TION ENVIRON- MENT ONEROUS CON- TRACTS RESTRUCTU- RING & OTHER TOTAL Balance at 1 January Additional provisions recognized Provisions used (0.2) - (0.0) (0.7) (3.8) (4.7) Provisions reversed (16.4) - (0.1) (2.1) (0.6) (19.2) Balance at 31 December Non current balance at end of year Current balance at end of year Balance at 1 January Additional provisions recognized Provisions used (2.6) - (0.3) (0.9) (0.8) (4.6) Provisions reversed (16.5) (0.9) (0.2) (17.5) Balance at 31 December Non current balance at end of year Current balance at end of year Balance at 1 January Additional provisions recognized Provisions used (34.2) (299.0) (0.5) (0.6) (0.8) (335.2) Provisions reversed (33.2) (8.8) (0.1) (0.1) (42.1) Other movements (22.7) 0.0 Balance at 31 December Non current balance at end of year Current balance at end of year The provision for litigation amounts to 45.6 million EUR. It represents the expected financial outflow relating to 184 different litigations or potential litigations between bpost and third parties. None of the individual provisions is material in itself. The period anticipated for the cash outflows pertaining thereto is dependent on developments in the length of the underlying proceedings for which the timing remains uncertain. The reversal in 2012 amounts to 33.2 million EUR and is mainly due to a reversal of a pending litigation provision for 22.7 million EUR recorded in the past to cover a risk of litigation relating to off-balance sheet transactions conducted prior to As the matter was definitively resolved in the course of 2012, the provision was no longer necessary and was reversed. This reversal is considered to be a non-recurring item. Non-recurring items represent significant income or expense items that due to their non-recurring character are excluded from internal reporting and performance analyses. A non-recurring item is deemed to be significant if it amounts to 20 million EUR or more. Reversals of provisions, whose addition had been considered as non-recurring, are also considered as non-recurring. Reversals from the provision for litigation of 9.6 million EUR and 9.3 million EUR were recorded respectively in 2011 and 2010 as some payroll-related risks were definitively resolved. The reversals were considered as non recurring as the addition to the provision had also been reported as non-recurring.

135 financial report 131 The amount of the provision for SGEI related litigation in 2011 is mainly explained by the decision of the European Commission. An amount of 299 million EUR was provisioned. This provision was used in 2012 as the recovery amount was paid to the Belgian State. A provision of million EUR was created in 2012, for the risk related to a possible over-compensation of the 2011 and 2012 periods. It is expected that the SGEI related litigation will be settled in Both amounts are considered as non-recurring. The provision related to environment issues covers among others the soil sanitation of land. The reduction in 2012 is explained by the sale of two specific sites. The provision on onerous contracts concerns the best estimate of the costs relating to the closing of mail and retail offices. The majority of these settlements are expected within the next 5 years Contingent liabilities and contingent assets At year-end 2012 the Company is not aware of any contingent assets and liabilities Rights and commitments Guarantees received At 31 December 2012, bpost benefits from bank guarantees in a sum of 39.8 million EUR, issued by banks on behalf of bpost s customers (2011: 39.0 million EUR). These guarantees can be called in and paid against in the event of nonpayment or bankruptcy. They therefore offer bpost financial certainty during the period of contractual relations with the customer. Goods for resale on consignment At 31 December 2012, merchandise representing a sales value of 1.3 million EUR had been consigned by partners for the purpose of sale through the postal network. Guarantees given bpost acts as guarantor (1.7 million EUR guarantee) in the framework of the DoMyMove collaboration agreement between bpost, Belgacom and Electrabel. bpost has an agreement with Belfius, ING and KBC, according to which they agree to provide for up to 32.6 million EUR in guarantees for bpost upon simple request. Funds of the State bpost settles and liquidates the financial transactions of government institutions (taxes, VAT, etc.) on behalf of the State. The funds of the State constitute transactions on behalf of and are not included in the statement of financial position.

136 132 bpost annual report Related party transactions A. Consolidated companies A list of subsidiaries and equity-accounted companies, together with a brief description of their business activities, is provided in Note B. Relations with the shareholders The direct shareholders of bpost are the Belgian State (24.14%), Federale Participatie- en Investeringsmaatschapij NV-Société Fédérale de Participation et d Investissement SA (25.87%), which itself is also held by the Belgian State, Post Invest Europe ( PIE ) Sarl (49.99%), where 100% are indirectly held by CVC Funds and 2 shares (0.01%) owned by current bpost employees further exercise under the ESOP plan. The Belgian State a) Management Contract bpost provides public services (services of general economic interest) to the Belgian State. The Management Contract entered into between bpost and the Belgian State, in effect since 24 September 2005, stipulates the rules and conditions for carrying out the tasks that bpost assumes in execution of its public and the financial intervention of the Belgian State. The Management Contract covers a period of five years as from the date of its entry into force and was set to expire on 23 September Pursuant to article 5, 3, second paragraph, of the 1991 Law, the 4th Management Contract was automatically prolonged pending the entry into force of a new Management Contract. This prolongation was published in the Belgian State Gazette of 23 September 2010 and shall continue to apply until approval of the 5th Management Contract by the European Commission. Upon said approval of the 5th Management Contract by the European Commission, the term of the 5th Management Contract shall apply as from 1 January 2013 until 31 December The 4th Management Contract defines the following public services, without this list being exhaustive: Postal services, including: - collecting, sorting, transporting and distributing national and international mail. - distributing newspapers, printed periodicals and addressed and non-addressed electoral printed documents. Financial services, including among others: - recovering receipts on behalf of third parties; - receiving deposits of cash on current account, effecting payments by cheque and wire transfers on such accounts, receiving deposits and effecting payments on behalf of bpost or other financial institutions; - issuance of postal orders, home payment of retirement and survivors pensions and disabled persons allowances; - the payment of attendance fees at elections; - the printing, sale, reimbursement, replacement and exchange of fishing licenses; - guaranteeing the opening of an account without cash facility and offering a minimum service. Other services including among others: - the social role of the postmen; - appropriate information to the public on request by the competent authority; and - cooperation of bpost in the distribution of voting packages and ballot papers. The Management Contract sets down the principles for invoicing the Belgian State. The Belgian State s intervention covers the difference between the actual cost price to bpost and the price invoiced to the user of the public services.

137 financial report 133 C. Relations with bpost bank bpost bank is an associate of bpost (with BNP Paribas Fortis as other shareholder), which engages in business as a credit institution. Its banking and insurance products are offered via the network of post offices. Framework agreement On 28 February 1995, De Post-La Poste (now bpost) and Generale Bank-Générale de Banque (now BNP Paribas Fortis) entered into a framework agreement for the purpose of setting up a partnership for the distribution of banking products. The provisions of the framework agreement have been re-negotiated several times. bpost bank pays bpost a commission determined in accordance with market conditions for the distribution of banking and insurance products and for the performance of certain back-office activities. The commission amounted to million EUR in 2012 (2011: million EUR). Working capital bpost bank has placed 9.0 million EUR at the disposal of bpost without guarantee or payment of interest by bpost. This sum will remain available to bpost throughout the term of the framework agreement. It is intended to constitute the working capital enabling bpost to conduct business on behalf of bpost bank. Insurance contract An insurance distribution contract has been concluded between bpost, bpost bank, AG Insurance (formerly Fortis Insurance), Agallis and Fortis Banque. This agreement has been amended in 2010, with effect as of January1, 2010 to reflect the corporate reorganization of the Fortis group (AG Insurance being now independent from Fortis Bank), a new commission scheme and a renewal of the exclusivity clause. The parties concerned have agreed to offer and market insurance products of AG Insurance via bpost bank using the distribution network of bpost. In effect, up to and including the accounting year 2014, the contract provides for an access fee, commission on all the insurance products sold by bpost and additional commissions if the sales figures laid down are achieved Group companies The business activities of the main subsidiaries can be described as follows: Euro-Sprinters offers 24/7 flexible distribution solutions and related services for goods up to 24 tons. Deltamedia distributes newspapers in Belgium. exbo provides services such as document management and digitization of incoming mail to customers Speos Belgium provides a multi-channel platform for the outsourcing of transactional documents, such as bills, bank statements and pay slips. Services includes the document generation, the printing (black and white or full color) and the enclosing, the electronic distribution ( , zoomit, webservices), and the archiving. Speos also offers backup and peak solutions for companies having their own print shop. Furthermore Speos offers dedicated end-to-end solutions (e.g. European License Plate). Until 2012, Certipost offered solutions to manage document flows and digital identities. In 2013, the document exchange services will be transferred to Basware. Certipost will further develop its activities around document security and digital certification. Certipost also supplies the digital certificates for the Belgian electronic identity card (eid). Mail Services Incorporated (MSI) is a US-based mail and parcel delivery service company which has three processing centers located in North America: one located in Virginia near Washington DC, one located in Chicago, IL and one located in Toronto, Canada. MSI s primary customer base includes e-commerce companies and businesses which send parcels, bulk amounts of mail, postcards, or publications to individuals residing primarily outside the U.S. borders. MSI also has a small amount of domestic (i.e. within the U.S.) business as well.

138 134 bpost annual report 2012 Citipost Asia, now rebranded as bpost Asia, is headquartered in Hong Kong and has a subsidiary in Singapore. The company provides with a full range of delivery and logistics solutions covering cross-border mail and parcels and e-commerce fulfillment. Its current customers are spread across the banking, insurance, asset management, publishing and printing sectors. Landmark Global Inc. based in the USA and Landmark Trade Services Ltd based in Canada are companies providing with cross-border shipping and logistics services to enable US companies to ship their products internationally, primarily to Canada. The primary services provided are door to door pickup and delivery of parcels, pick and pack fulfillment, duty and tax processing, and ground transportation. They also provide mail and print services, customs brokerage and payment solutions. bpost International (UK) Limited is a UK based mail, parcel and transport company providing transport services to the Postal wholesale market in the UK. Based near to Heathrow airport, bpost UK is customs bonded enabling to offer customs clearance services and x-ray security screening services. bpost International UK acts as an inbound and outbound gateway for other bpost entities around the world. bpost International Logistics is a company established in Beijing (China) in 2012 started as a sales representation office of bpost. The company offers a full range of transport and distribution logistic services to the Chinese e-tailers and consolidators in the business customers segment for export of their Parcels and Mail to European and other global buyers. Name Share of voting rights in % terms Country of incorporation VAT no. bpost bank NV-bpost banque SA 50% 50% Belgium BE Name Share of voting rights in % terms Country of incorporation VAT no. Alteris NV-SA (formerly Laterio NV-SA) 100% 100% Belgium BE BPI NV-SA 100% 100% Belgium BE Certipost NV-SA 100% 100% Belgium BE Deltamedia NV-SA 100% 100% Belgium BE Euro-Sprinters NV-SA 100% 100% Belgium BE exbo Services International NV-SA 100% 100% Belgium BE Mail Services INC 80% 60% USA Ontario INC 100% 100% Canada Speos Belgium NV-SA 100% 100% Belgium BE Certipost BV (**) 100% Netherlands N/A Secumail NV-SA (*) 100% 75% Belgium BE bpost International (UK) LTD (formerly bpost Asia (Holdings) LTD) 100% 100% UK bpost Hong Kong LTD 100% 100% Hong Kong bpost Singapore Pte. LTD 100% 100% Singapore bpost International Logistics (Beijing) Co., LTD 100% China Landmark Global, INC 51% USA Landmark Trade Services, LTD 51% Canada * In 2012 Speos Belgium NV-SA acquired the remaining Secumail NV-SA shares. Secumail NV-SA was subsequently merged into Speos Belgium NV-SA per 31 December 2012 ** Certipost BV was liquidated in March 2012

139 financial report 135 bpost NV-SA 50% BPOST BANK NV/ BPOST BANQUE SA * 100% BPI NV SA 100% bpost INTERNATIONAL UK LTD 100% bpost HONG KONG LTD 100% bpost SINGAPORE PTE. LTD 100% bpost INTERNATIONAL LOGISTICS CO LTD 100% SPEOS BELGIUM NV SA 99.97% 99.99% EXBO SERVICES INTERNATIONAL NV SA ALTERIS NV SA 0.03% 0.01% (*) Equity method 99.99% 99.99% DELTAMEDIA NV SA EURO SPRINTERS NV SA 0.01% 0.01% 80% MAIL SERVICES INC ONTARIO INC 100% CERTIPOST NV SA 51% LANDMARK GLOBAL, INC 51% LANDMARK TRADE SERVICES, LTD

140 136 bpost annual report Events after the statement of financial position date On 7 March 2013, the 5th Management Contract between the Belgian State and the Company was notified to the European Commission and was approved by the European Commission on 2 May The 5th Management Contract sets forth the terms and conditions pursuant to which bpost must fulfill certain SGEIs for the period from 1 January 2013 to 31 December The 5th Management Contract also provides certain additional terms and conditions relating to the performance by bpost of the USO. The 5th Management Contract is expected to be approved by Royal Decree during the first half of Once approved, it will be effective as of 1 January 2013, and will replace the 4th Management Contract dated 2 December On 20 March 2013, bpost bank completed a capital increase in the amount of 100 million EUR. bpost and BNPP Fortis contributed to this capital increase for 37.5 million EUR each. BNPP Fortis paid an additional amount of 25 million EUR as issue premium. bpost s shareholding in bpost bank remains unchanged at 50% after the capital increase. On 25 March 2013, the Company, the Belgian State, SFPI/FPIM and Post Invest Europe S.à.r.l. entered into Addendum III to the Shareholders Agreement. Pursuant to Addendum III, the parties have agreed to, among other things, certain provisions related to the governance of the Company, the exit of the shareholders as well as a capital reduction and a hardship clause for the benefit of the Company. On 25 March 2013, an extraordinary shareholders meeting of the Company approved (i) the share capital reduction of million EUR through return of capital to the shareholders of the Company prior to closing of the Offering and (ii) a reduction in the legal reserve in the amount of 21.3 million EUR through the transfer to available reserves to facilitate the payment of the exceptional dividend of 53.5 million EUR from available reserves and retained earnings to such shareholders following the approval from the European Commission of the 5th Management Contract. It is expected that the amount of capital decrease will be paid out to the shareholders of the Company and a special shareholders meeting of the Company will declare the exceptional dividend of 53.5 million EUR to those shareholders on June 10, Pursuant to Addendum III, bpost also agreed to withdraw the appeal made on 17 September 2012 related to the European Commission s decision of 25 January 2012 that found that bpost has received incompatible State aid of million EUR and ordered recovery. The shareholders meeting in May 2013 will approve a stock split of 1/488 which will result in a share capital composed of 200,000,944 shares. The current number of shares amounts to 409,838 shares.

141 report of the Joint Auditors 137 report of the Joint Auditors to the General Meeting of shareholders of bpost SA de droit public / bpost NV van publiek recht on the consolidated financial statements for the year ended 31 December 2012 In accordance with legal requirements, we report to you on the performance of our audit mandate of Joint Auditors. This report contains our opinion on the consolidated financial statements as well as the required additional comments and information. Unqualified opinion on the consolidated financial statements We have audited the consolidated financial statements of bpost SA de droit public / bpost NV van publiek recht and its subsidiaries (collectively referred to as «the Group») for the year ended 31 December 2012, prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. These consolidated financial statements comprise the consolidated statement of financial position as at 31 December 2012, and the consolidated income statement, statement of changes in equity and cash flow for the year then ended, as well as the summary of significant accounting policies and other explanatory notes. The consolidated statement of financial position shows total assets of 2,228.1 million and the consolidated income statement shows a profit for the year, attributable to the Group, of 173,3 million. Responsibility of the Board of Directors for the preparation and fair presentation of the consolidated financial statements The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Responsibility of the Joint Auditors Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with legal requirements and the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. In accordance with these standards, we have performed procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we have considered internal control relevant to the Group s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group s internal control. We have evaluated the appropriateness of accounting policies used, the reasonableness of significant

142 138 bpost annual report 2012 accounting estimates made by the Group and the presentation of the consolidated financial statements, taken as a whole. Finally, we have obtained from the Board of Directors and the Group s officials the explanations and information necessary for executing our audit procedures. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the consolidated financial statements for the year ended 31 December 2012 give a true and fair view of the Group s financial position as at 31 December 2012 and of the results of its operations and its cash flows in accordance with IFRS as adopted for use by the European Union, and with the legal and regulatory requirements applicable in Belgium. Additional comments The preparation and the assessment of the information that should be included in the annual report on the consolidated financial statements are the responsibility of the Board of Directors. As part of our assignment, it is our responsibility to verify the compliance with certain statutory and regulatory obligations. On this basis, we make the following additional comment, which does not modify the scope of our opinion on the consolidated financial statements: The annual report on the consolidated financial statements deals with the information required by law and is consistent with the consolidated financial statements. We are, however, unable to comment on the description of the principal risks and uncertainties which the entities included in the consolidation are facing, and on their situation, their foreseeable evolution or the significant influence of certain facts on their future development. We can nevertheless confirm that the matters disclosed do not present any obvious inconsistencies with the information that we became aware of during the performance of our mandate. Brussels, 27 May 2013 The Joint Auditors Ernst & Young Bedrijfsrevisoren BCVBA Represented by PVMD Bedrijfsrevisoren BCVBA Represented by Eric Golenvaux Partner Lieven Delva Partner

143 GRI table 139 GRI table: Identification of reported parameters Reporting status Pages/Remarks 1. Strategy and Analysis 1.1 Statement of the CEO Fully Message to our stakeholders p Key impacts, risks and opportunities Fully Financial statements p.73 Social responsibility p Organizational profile 2.1 Name of the organization Fully Financial statements p Primary brands products and/or services Fully Financial statements p.73 Mail & Retail Solutions p.28 Parcels & International p Operational structure Fully Financial statements p.73 bpost at a glance p Location of organization s headquarters Fully Financial statements p Number of countries where the organization operates Fully Financial statements p Nature of ownership and legal form Fully Financial statements p Markets Fully Financial statements p.73 Mail &Retail Solutions p.28 Parcels & International p Scale of reporting organization Fully Financial statements pp.98, Significant changes during the reporting period regarding Fully Financial statements pp.98, size, structure, or ownership 2.10 Awards Fully No significant awards received in Report parameters 3.1 Reporting period Fully 1/1/2012 to 12/31/ Date of most recent previous report Fully June 27th 2012 (annual report 2011) 3.3 Reporting cycle Fully Annual 3.4 Contact point Fully Contacts p Process for defining report content Partially Social responsibility at bpost Relations with our stakeholders p.49 Today bpost identifies materiality based on the impact of its activity on environment, its people and on society. Materiality and the topics are prioritized and validated by the CSR Committee 3.6 Boundary of the report Fully The scope of the report is following the financial consolidation. Any exception to this rule is mentioned at the indicator level 3.7 Any specific limitations on the scope of boundary of the report Fully The scope of the environmental data is limited to subsidiaries under operational control of bpost 3.8 Basis for reporting on joint ventures, subsidiaries Fully Financial statements pp.98, Data measurement techniques and the bases of calculation Fully See quantitative GRI indicators referred in the text 3.10 Explanation of the effect of any re-statements of information Fully No changes occurred during the reporting period 3.11 Significant changes in the scope, boundary or measurement Fully No significant changes from previous report methods used in the report 3.12 GRI table Fully GRI table p.139

144 140 bpost annual report Policy and current practice with regard to seeking external assurance for the report. Fully Corporate governance - p Governance, Commitments and Engagement 4.1 Governance structure Fully Corporate governance p Indicate whether the Chair of the highest governance body Fully Corporate governance p.63 is also an executive officer 4.3 Number and gender of members of the highest governance body that are independent and/or non-executive members Fully Corporate governance p.63 Statutes of the Company Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body Fully Corporate governance p.63 Our employees p.52 Social responsibility at bpost Relations with our stakeholders p Linkage between compensation for members of the highest Fully Corporate governance p.63 governance body, senior managers, and executives and the organization s performance 4.6 Processes in place for the highest governance body to Fully Corporate governance p.63 ensure conflicts of interest are avoided 4.7 Process for determining the composition, qualifications, and Fully Corporate governance p.63 expertise of the members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity 4.8 Internally developed statements of mission or values, codes of conduct Fully bpost at a glance p.1 Our employees p Procedures for overseeing the organization s identification Fully Corporate governance p.63 and management of performance 4.10 Processes for evaluating the highest governance body s own Fully Corporate governance p.63 performance 4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization Fully Social responsibility at bpost p Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses Fully Social responsibility at bpost p.48 Environment p.57 Mail & Retail Solutions (customer charter) p.32 Fully Social responsibility at bpost p.48 Society p Memberships in associations and/or national/international advocacy organizations 4.14 List of stakeholder groups Fully Social responsibility at bpost Relations with our stakeholders p Basis for identification and selection of stakeholders with Fully Social responsibility at bpost Relations whom to engage with our stakeholders p Approaches to stakeholder engagement Fully Social responsibility at bpost Relations with our stakeholders p Key topics and concerns that have been raised through Fully Social responsibility at bpost Relations stakeholder engagement with our stakeholders p.49 Performance indicators Economic Performance Indicators EC Disclosure on management approach Financial statements p.73 EC1 Direct economic value Fully Financial review p.8 Financial statements p.73 Society (community investment) p.50 Note : bpost has no legal obligation to respond to norm IAS 14 EC2 Risk & opportunities due to Climate Change Fully Carbon Disclosure Project - report 2012 EC4 Significant financial assistance received from government Fully Postal environment - p.18 Society Providing public services p.50 4th Management Contract Environmental Performance Indicators EN Disclosure on management approach Environment p.57 EN1 Materials used by weight or volume Partially Environment p.62 Monitoring for ISO certified sites without BPI & Stamps EN3 Direct energy consumption Fully Environment p.59, 60 EN4 Indirect energy consumption Fully Environment p.60 EN5 Energy saved due to conservation and efficiency Fully Environment p.57 improvements EN7 Initiatives to reduce indirect energy consumption Fully Environment p.57 EN16 Total direct and indirect greenhouse gas emissions Fully Environment p.60

145 GRI table 141 EN18 Initiatives to reduce greenhouse gas emissions Fully Environment p.57 EN22 Total weight of waste by type and disposal method Fully Environment p.58 EN26 Initiatives to mitigate environmental impacts of products and services Fully Environment p. 57 Social Performance Indicators LA Disclosure on management approach Our employees p.52 LA1 Total workforce by employment type, employment contract, Fully Our employees p.56 and region LA2 Employee turnover Fully Our employees p.56 LA4 Percentage of salaried employees covered by collective Fully Our employees p.55 bargaining agreements LA5 Minimum notice period(s) regarding operational changes Fully Our employees p.54 Principles of negotiation and dialogue are set in union status. Reorganization files have to be transmitted to union representatives within 10 working days before staff representatives consultation LA10 Average hours of training per year per employee by gender, Partially Our employees p.53 and by employee category LA11 Programs for skills management and lifelong learning Fully Our employees p.52 LA13 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity. Fully Corporate governance p.63 Our employees p.54 Human Rights Performance Indicators HR Disclosure on management approach Social responsibility at bpost p.48 HR6 Child labor Fully Environment Influencing our suppliers at the source p.57 HR7 Forced or compulsory labor Fully Environment Influencing our suppliers at the source p.57 Society Performance Indicators SO Disclosure on management approach Social responsibility at bpost society p.48, 50 SO1 Local community engagement, impact assessments, and development programs Fully Society p.50 Note : bpost has not developed assessment processes Product Responsibility Performance Indicators PR Disclosure on management approach Objectives + loyalty p.25 PR5 Practices related to customer satisfaction Fully Mail & Retail Solutions (Customer Charter) p.32 Mail Service Operations (earning the loyalty of our customers) p.43 Logistics and Transport Indicators LT2 Composition of the fleet Fully Environment p.60 LT8 Environmental impact of buildings Fully Environment p.57

146 142 bpost annual report 2012