QUADIENT - 2019 Universal Registration Document

FINANCIAL STATEMENTS Neopost S.A. statements of financial position

13-1: Liquidity risk

The Group’s cash requirement and the debt servicing account form a significant proportion of its cash flow. The Group believes that its cash flow (defined in the consolidated cash flow statement) will enable it to service its debt, given the current level of business. However, this ability will depend on the Group’s future performance, which is partly related to the economic cycle, which the Group cannot control. No guarantee can therefore be

given regarding the Group’s ability to cover its financial needs. With the exception of the bond issue - Neopost S.A. 2.50 % , the bond issue - Neopost S.A. 2.25 % and ODIRNANE which are not subject to any covenant, the various debts (private placements, Schuldschein and revolving credit facilities) are subject to financial covenants. Failure to comply with these covenants may lead to early repayment of the debt. Quadient complies with all covenants at 31 January 2020. Neopost S.A. uses the services of an independent consultancy based in Paris. This company assists Quadient in the Group’s exchange rate risk hedging policy and values its portfolios, thus ensuring continuity of methodology and providing an opinion independent of any financial institution. Neopost S.A., as the centralizing Company, grants foreign exchange contracts at guaranteed exchange rates to subsidiaries exposed to exchange rate risks, and reverses the resulting positions in the market.

13-2: Exchange rate risk hedging

RISK MANAGEMENT POLICY

The Group has a policy of centralizing its exchange risk, enabling the Group to monitor its overall exchange rate risk exposure and to gain full control over the market instruments used in hedging operations. For each consolidated position that is managed, the Group implements a hedging strategy at the same time as it sets the reference exchange rate to be defended. The hedging strategy involves a combination of definite or optional forward currency purchases or sales, along with open positions protected by stop losses. These stop losses are predetermined exchange rates that trigger 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 show Neopost S.A.’s year-end hedging positions and commitments to its subsidiaries.

6

2019 FINANCIAL YEAR – ASSETS AND LIABILITIES HEDGING: HEDGING POSITIONS COVERING FINANCIAL ❚ ASSETS OR LIABILITIES ON NEOPOST S.A.’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

10.1

1.2

0.4

1.7

25.8

1.7

1.9

1.0 0.4

0.1

1.9 0.0

Foreign exchange contract assets

36.3

7.9

1.7

7.9 366.6

7.7

5.1

11.3 22.0 0.9

4.1

0.1

Total assets exposure

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

3.5

0.3

0.1

0.1

3.8 0.5

1.5

1.3 0.8 0.2

0.2

-

Foreign exchange contract liabilities

11.3

7.4 0.7

2.4 334.5

2.2

8.4 2.8 54.8 0.7

1.5

0.1

Total liabilities exposure

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

217

UNIVERSAL REGISTRATION DOCUMENT 2019