QUADIENT - 2019 Universal Registration Document

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FINANCIAL STATEMENTS Consolidated financial statements

Other tangible and intangible fixed assets Other tangible and intangible fixed assets are tested for impairment only if evidence of an impairment is noted. A loss of value related to any other asset except goodwill can be reversed if there is any evidence that a loss of value previously recognized is likely to no longer exist or to have diminished. If this is the case, the book value of the asset is raised to the level of its recoverable amount. The increased book value following reversal of a loss of value cannot exceed the book value that would have been determined, net of depreciation, if no loss of value had been recognized on the asset in previous years. After recognition of a reversal of loss of value, the depreciation charge is adjusted for future periods so that the revised book value of the asset minus its possible residual value is spread systematically over the remaining useful life of the asset.

beyond this explicit time frame, the terminal value is ● calculated by applying a perpetuity growth rate to the latest cash flow; the cash flows are then discounted. The discounting ● rate, applied in the light of the geographical area, is the weighted average cost of capital for which the tax rate has been restated. Goodwill impairment is recognized under operating expenses. Such impairment is not reversible.

4-5-2: GOODWILL IMPAIRMENT TEST

Goodwill is tested for impairment based on value in use. The goodwill of Temando has been fully depreciated since 31 January 2019. For the main cash-generating units or group of CGUs, the following assumptions were used :

NORAM

PP DACH-IT

FRBNL UK-IE

AO *

1.5 % 2.3 % 0.3 % 9.8 % 13.3 %

>10.0 % >10.0 %

3.8 % 4.3 % 0.7 % 6.2 % 8.8 %

(0.8) %

(1.4) % 0.6 % ->10.0 %

Average five-year EBITDA growth

1.0 % 0.4 % 6.2 % 8.8 %

3.2 % 0.5 % 6.2 % 7.6 %

2.0 % -6.2 % 0.0 % -2.0 % 5.5 % -6.2 %

Average five-year revenue growth

2.0 % 9.8 % 13.3 %

Average growth rate to perpetuity

Discount rate after tax (WACC)

Discount rate before tax 7.1 % -8.9 % * The Additional Operations (AO) group several CGU or groups of CGUs, excluding CGU or groups of CGUs that have been subjected to impairment.

Impairment test of the goodwill As part of the "Back to growth" strategy, the Group has followed and reviewed the different elements reported within the additional operations portfolio. On those bases, the Group lead to the conclusion of a lack of potential for growth or synergies of some additional activities with the Group's strategic solutions. Within the additional operations, Australia and Nordics countries have in particular an important graphics activity regarded as non-strategic by Quadient.

Those elements have led the Group to decide at the end of 2019 to stop its investments in these activities in decline which are so continued as they stand. Projections made by the Group on those bases for the purposes of the impairment lead to the depreciation of the goodwill recognized for Australia, Nordic countries and shipping software business in France for a total amount of 70.4million euros.

Sensitivity Sensitivity tests have been performed on the different

growth rate and (iii) the weighted average cost of capital assumptions used for the goodwill impairment test: (i) the to determine at which rates the valuation of goodwill EBITDA average growth rate over 5 years (ii) the infinite becomes equal to the value of the discounted cash flow.

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UNIVERSAL REGISTRATION DOCUMENT 2019