QUADIENT - 2019 Universal Registration Document

FINANCIAL STATEMENTS Consolidated financial statements

TAX POSITION NOTE 13

13-1: Accounting principles

In accordance with IAS 12, Quadient uses a balance sheet approach to account for deferred taxes. This consists of calculating the deferred tax on temporary differences, which are the difference between the tax base of an asset or liability and its book value on the balance sheet. Quadient also applies the variable carry-forward method. Deferred taxes are valued at the tax rate, either in force or coming into force, which is expected to be applied for the year in which the asset is realized or the liability settled. Due and deferred tax assets and liabilities are offset for a given tax authority where there is a legally enforceable right to offset.

The book value of deferred tax assets is revised at each accounting date and reduced if it is unlikely that adequate taxable profits will be available to make use of the benefit of all or part of the deferred tax asset. Unrecognized deferred tax assets are valued at each accounting date and are recognized if it is probable that future profits will make them recoverable. The Group’s French companies use the tax consolidation system. The same applies to the Group’s subsidiaries in each of the countries in which they are registered.

13-2: Main tax rates

The rates used in the main countries to calculate current and deferred tax at 31 January 2020 are as follows:

6

Current tax

Deferred tax

34.3 % 19.0 % 25.0 % 26.1 % 33.0 %

34.3 % -25.8 %

France

19.0 % 25.0 % 26.1 % 33.0 %

United Kingdom

Netherlands

United States

Germany

13-3: Tax proof

The reconciliation between the theoretical tax charge and the actual tax charge is as follows:

31 January 2020

31 January 2019

Net income of consolidated companies before income tax

36.8

128.5

34.3 %

34.3 %

Tax rate for the consolidating company

Theoretical expense

12.6

44.1

Permanent differences

4.7

(1.0)

Income tax rate differences

(12.5)

(20.6)

Tax on dividends (a)

-

(4.5)

ODIRNANE

(3.1)

(3.1)

Prior year tax adjustment

0.5

0.9

Other exceptional items (b)

19.2

21.0

TOTAL INCOME TAX

21.4

36.8

EFFECTIVE TAX RATE 28.7 % As of 31 January 2019, proceeds of 4.5 million euros represented the payment of the default interest related to the abolition of (a) the tax on dividends. For the financial year 2019, exceptional items are mainly composed of permanent differences related to the impairments of (b) goodwill. In 2018, the exceptional items were composed, amoung other things, of (i) the re-evaluation of the French deferred tax, related to the change in the corporate tax rate, of (ii) the provision for tax exposure related to the on-going dispute with the Netherlands (MAP) and of (iii) permanent differences due to goodwill impairment. 58.2 %

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UNIVERSAL REGISTRATION DOCUMENT 2019