QUADIENT - 2019 Universal Registration Document

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FINANCIAL STATEMENTS Consolidated financial statements

NOTE 2

ACCOUNTING PRINCIPLES

2-1: Accounting standards applied

approach. The assets right-of-use has therefore been estimated since the starting date of the lease. Quadient applied the exemptions allowed by IFRS 16, in particular to not recognize contracts that cover a period of less than twelve months and leases for which the underlying asset is of a low value. Nature and features of the contracts For Quadient, the contracts within the scope of IFRS 16 are mainly real estate leases and car rentals. Key assumptions adopted The application of IFRS 16 to lease contracts on intangible assets is an option that the Group chooses not to pursue. In order to assess the residual duration for real estate leases, the Group has made an analysis of its sites, to consider renewals reasonably certain to be exercised. This duration is in general nine years concerning the french contracts. The Group called upon the services of an external company to determine the discount rates to be applied on leases, reflecting the geographical area and the remaining life of the lease. Impacts of the first application of IFRS 16 The impacts of the application of IFRS 16 as of 1 st February 2019 are the following: Recognition of assets right-of-use for a net amount of ● 81.3 million euros; Recognition of a lease obligation for an amount of ● 91.4 million euros, including 71.0 million euros for long term leases, corresponding to the future minimum payments due to the lessor at 1 st February 2019 over the remaining life of the lease; Cancellation of liabilities related to the recognition of ● leases on a straight-line basis for (4.4) million euros; Recognition, under the equity, of an impact on group ● reserves, without restatement of the comparative period, for (5.7) million euros.

The consolidated financial statements comply with the international accounting standards (IFRS: International Financial Reporting Standards) issued by the IASB (International Accounting Standards Board). The IFRS applicable as at 31 January 2020 as approved by the European Union are available on the European Commission website. STANDARDS, AMENDMENTS AND INTERPRETATION ADOPTED BY THE EUROPEAN UNION THAT ARE MANDATORY FOR FINANCIAL YEARS BEGINNING ON OR AFTER 1 JANUARY 2019: IFRS 16: Leases; ● IFRIC 23: Uncertainty over income tax treatments; ● Amendments to IAS 19: Plan amendment, curtailment or ● settlement; Amendments to IFRS 9: Prepayment features with ● negative compensation; Amendment to IAS 28: long-term interests in associates ● and joint-ventures. These three amendments do not have significant impact on the Group's financial statements as of 31 January 2020. IFRS 16 – Leases is applicable for annual reporting periods beginning on or after 1 st January 2019. This standard replaces IAS 17 – Leases and three interpretations. The standard requires the lessees to recognize a right-of-use asset and a lease obligation, without differentiating between operating leases and finance leases. FIRST APPLICATION OF IFRS 16

Method and exemptions adopted

Quadient applies IFRS 16 on lease contracts starting from 1 st February 2019, using the simplified retrospective

31 January 2019 Transition to IFRS 16

1 February 2019

Assets right-of-use

-

81.3

81.3

Non-current assets

1,910.2

-

1,910.2

Current assets

914.9

-

914.9

Assets held for sale

7.8

-

7.8

TOTAL ASSETS

2,832.9

81.3

2,914.2

Equity

1,247.4

(5.7)

1,241.7

Non-current lease obligations

-

71.0

71.0

Other non-current liabilities

852.1

-

852.1

Non current liabilities

852.1

71.0

923.1

Current lease obligations

-

20.4

20.4

Other current liabilities

727.7

(4.4)

723.3

Current liabilities

727.7

16.0

743.7

Liabilities held for sale

5.7

-

5.7

TOTAL LIABILITIES

2,832.9

81.3

2,914.2

132

UNIVERSAL REGISTRATION DOCUMENT 2019