QUADIENT - 2019 Universal Registration Document

FINANCIAL STATEMENTS Consolidated financial statements

This Company has the technical and human resources to monitor interest rate and exchange rate trends every day and alert the Group treasurer in light of the strategy in place. However, no guarantee can be given regarding the Group’s ability to hedge effectively against market risks. Exchange rate risk Natural hedge Quadient enjoys a natural hedge on its current operating margin and its net income. Based on the 2020 budget, the breakdown of sales and costs in United States dollars is as follows: sales 43.4 % , cost of sales 52.0 % , operating costs 37.7 % , and interest expenses 34.6 % . A 5 % decrease in the euro/United States dollar exchange rate from the budget rate of 1.15 would have the following impacts on the Group’s income statement: sales (23.6) million euros, current operating income (4.1) million euros and net income (2.2) million euros. Based on the 2020 budget, the breakdown of sales and costs in pounds sterling is as follows: sales 7.9 % , cost of sales 8.2 % , operating costs 9.7 % . A 5 % decrease in the euro/pound sterling exchange rate from the budget rate of 0.90 would have the following impacts on the Group’s income statement: sales (4.3) million euros, current operating income (0.5) million euros and net income (0.4) million euros.

The other currencies are not a major concern for the Group. None of them, taken individually, represents more than 5 % of total sales. Beyond the natural hedge, no guarantee can however be given regarding the Group’s ability to hedge exchange rate risk effectively. Risk management policy Quadient has a policy of centralizing its foreign currency risk, enabling it to monitor the Group’s overall exchange rate risk exposure and to gain full control over the market instruments used in hedging operations. For each consolidated position managed, a hedging strategy is set up at the same time as the reference exchange rate to be defended is set. The hedging strategy involves a combination of firm or optional hedging instruments, along with open positions protected by stop losses. These stop losses are predetermined exchange rates that trigger hedging transactions when they are hit. As a result, through the use of mathematical models, the hedging strategy enables a reference exchange rate to be defended from the start for the entire position in the event of adverse exchange rate fluctuations. Year-end position The tables below represent Quadient’s positions at 31 January 2020 regarding exchange rate hedging for commercial activities.

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2019 FINANCIAL YEAR – BALANCE SHEET HEDGING: HEDGING POSITIONS COVERING FINANCIAL ASSETS OR ❚ LIABILITIES ON QUADIENT'S BALANCE SHEET AT 31 JANUARY 2020 AND EXPECTED TO BE REALIZED NO LATER THAN APRIL 2020

Notional value

USD GBP

CAD NOK JPY

SEK CHF DKK CZK SGD AUD PLN

Financial assets

46.4 9.1

2.1

9.6 392.4 9.4 7.0 12.3 22.4 1.0 6.0 0.1

Financial liabilities

14.8 7.7 0.8 2.5 338.3 2.7 9.9 4.1

55.6 0.9

1.7

0.1

Net exposure before hedging

31.6

1.4 1.3 7.1

54.1

6.7 (2.9)

8.2 (33.2)

0.1

4.3

-

Hedging

(26.2) (0.2)

(0.1) (0.8) (195.9)

-

-

2.2

- (0.9)

(2.1)

1.2

NET EXPOSURE AFTER HEDGING

5.4

1.2

1.2 6.3 (141.8)

6.7 (2.9)

10.4 (33.2) (0.8)

2.2

1.2

2020 BUDGET: HEDGING POSITIONS COVERING ANTICIPATED FINANCIAL ASSETS AND LIABILITIES IN ❚ FINANCIAL YEAR 2020 EXPECTED TO BE REALIZED NO LATER THAN APRIL 2021

Notional value

USD GBP CAD NOK JPY

SEK CHF DKK CZK SGD AUD PLN

Projected financial assets Projected financial liabilities Net exposure before hedging

196.3 33.7 22.5 48.4 1,940.5 79.4 68.3 47.0 43.6 5.9 29.6 1.4

134.9 33.1

17.5 3.8 1,222.2 9.5 54.1

10.1

745.5 7.5

1.8 2.0

61.4 0.6 5.0 44.6 718.3 69.9 14.2 36.9 (701.9)

(1.6)

27.8 (0.6)

Hedging

(19.5)

- (2.2) (6.5) (530.0) (16.0) (5.8) (11.0) 278.8

- (6.0)

-

NET EXPOSURE AFTER HEDGING

41.9 0.6 2.8 38.1

188.3 53.9 8.4 25.9 (423.1)

(1.6)

21.8 (0.6)

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UNIVERSAL REGISTRATION DOCUMENT 2019