QUADIENT - 2019 Universal Registration Document

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FINANCIAL STATEMENTS Consolidated financial statements

10-3-3: CHANGES IN OBLIGATIONS

Group pension liabilities were as follows over the last five years:

2019

2018

2017

2016

2015

Obligation – present value

214.0

189.9

202.2

210.1

193.8

Fair value of assets

232.0

204.9

213.8

215.0

207.5

Plan (surplus)/deficit

(18.0)

(15.0)

(11.6)

(4.9)

(13.7)

Actuarial gains/(losses): On liabilities

21.2

(4.3)

1.2

(31.7)

18.0

On assets

(22.5)

1.4

(4.4)

27.4

(7.8)

The discount rates used are based on the yields on bonds issued by high quality companies (AA) or, where the market is not liquid, on government bonds with the same maturity as the calculations and the same currency (reference: Iboxx). These references are compliant with the requirements of IAS 19 and are the same as those used in previous years. The effective return on the Group assets plan in 2019 is a gain of 2.3 % compared with 2.2 % in 2018. Assumptions such as medical expenses of retired employees are not included in this plan. In terms of salary, only the last salaries at the time the plan was frozen are

taken into account, without revaluation (only the annuity is revaluated). Actuarial differences are systematically recognized in shareholders’ equity and reported under the consolidated statement of comprehensive income. The cumulative actuarial difference shows a loss of 5.3 million euros as at 31 January 2020 compared with a loss of 4.0 million euros as at 31 January 2019. The expense related to the French subsidiaries’ defined contribution pension plans amounted to 0.3 million euros in 2019 compared with 0.2 million euros in 2018.

10-4: Share-based payments

10-4-1: ACCOUNTING PRINCIPLES

Group employees, including top management, may receive remuneration based on shares. They will ultimately receive equity instruments in return for services rendered. The fair value is determined by an outside consultant using an appropriate valuation method. The cost of equity-settled transactions with employees is measured at the fair value of the instruments awarded at the vesting date. The cost is recognized over the period in which the performance terms are met and/or the services are rendered, with the balancing entry being an equivalent increase in equity.

The cumulative expense recognized for such transactions at the end of each period until the rights acquisition date reflects the run-off of this acquisition period and the Group’s best estimate at that date of the number of instruments to be acquired. The awarding of these instruments is subject to the beneficiary being on the Company’s payroll at the delivery date of the options or free shares and for some of the plans, to the achievement of performance targets. It is not possible to settle these options or these free shares in cash.

10-4-2: STOCK OPTION PLANS

No more stock options have been granted since January 2012. Arrangements relating to plans still in force are described in previous Quadient registration documents.

Options have been valued based on the Bjerksund & Stensland (2002) model to which the non-transferability value is added as calculated by the difference between the Bjerksund & Stensland model and the Black, Scholes & Merton (1973) model for options with a duration equivalent to the non-transferability period.

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UNIVERSAL REGISTRATION DOCUMENT 2019