QUADIENT - 2019 Universal Registration Document

FINANCIAL STATEMENTS Consolidated financial statements

4-4: Non-current financial assets

4-4-1: ACCOUNTING PRINCIPLES

Non current financial assets are initially recognized either at their acquisition cost including transaction costs or at the fair value of the assets used for payment. Following initial recognition, assets classified as “Investments in associated companies” or “Non consolidated shares” are measured at fair value on the closing date.

Gains and losses on investments in associated companies are recognized under shareholders’ equity. An impairment is booked on non consolidated shares once the loss exceeds 40 % of the book value during a period of eighteen consecutive months.

4-4-2: DETAIL OF OTHER NON-CURRENT FINANCIAL ASSETS

31 January 2020

31 January 2019

Deposits, loans and guarantees

4.7

4.4

Pension plan net asset

43.0

37.2

TOTAL

47.7

41.6

At 31 January 2020, the deposits, loans and guarantees include an escrow account for 1.3 million euros related to the sale of Quadient Data USA and a guarantee deposit for 1.4 million euros related to the liquidity contract (1.0 million euros at 31 January 2019). The Group has a pension plan in the United Kingdom that shows a surplus of 43.0 million euros (36.2 million pounds sterling) at 31 January 2020 compared with 37.2 million

euros (32.6 million pounds sterling) at 31 January 2019. The change in the pension plan’s net assets is mainly related to actuarial differences. The tax rate applicable for the cash refund of this asset in the United Kingdom will be 35 % . This tax effect is presented in the consolidated financial statements under deferred tax liabilities.

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4-5: Impairment test

4-5-1: IMPAIRMENT TEST METHOD

Impairment tests compare the recoverable amount of a non-current asset with its net carrying amount. If the asset’s carrying amount is higher than its recoverable amount, it is written down to its recoverable amount. The recoverable amount of an asset or group of assets is the higher of its fair value less disposal costs and its value in use. Fair value less disposal costs is determined using available information to establish the best estimate of the disposal price net of the costs necessary to carry out the sale in an arm’s lengh transaction between knowledgeable, willing parties. Value in use corresponds to the present value of the future cash flows expected to be derived from an asset or group of assets, taking into accounts its residual value. Goodwill Goodwill is tested for impairment at least once a year and whenever there is any evidence of impairment. Goodwill is tested for impairment at the level of the

Cash Generated Units (CGU) or group of CGUs defined by the Group. A CGU is a business unit generating independent cash flows. Given the fact that having a reliable basis to determine the fair value less reliable costs of an asset or a group of assets is rare, unless otherwise indicated, the Group uses the value in use to measure the recoverable amount of an asset or group of assets. The value in use of each CGU or group of CGUs is determined as follows: the Group projects future cash flows based on ● financial projections over five years. Industrial margins and net assets are reallocated to the countries where the equipment in question is installed and leasing margins and net assets are reallocated to the countries where the signatories of finance lease contracts are located. Costs for support incurred (holding, IT, human ressources...) are reallocated to the Group’s CGU or group of CGUs on the basis of their revenue;

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UNIVERSAL REGISTRATION DOCUMENT 2019