QUADIENT - 2019 Universal Registration Document

CORPORATE OVERVIEW Strategy

1.2.3

CAPITAL ALLOCATION

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Quadient’s growth ambitions will partly rely on its ability to execute some bolt-on acquisitions that will be designed to accelerate the Company’s transformation and expand its franchise within its major offers. Strict discipline and stringent financial criteria will be applied to the selection of M&A opportunities. Quadient will consider targets with high growth rate and a firm view to achieving a Return on Capital Employed (1) covering its cost of capital by the end of the third year, post year of closing. Respect for the capital allocation discipline in connection with portfolio rotation will be ensured by a team dedicated that will support operational teams throughout the investment or divestment process.

Quadient is setting an envelope dedicated to bolt-on acquisitions amounting to 100 million euros, net of divestments, on average per year over the 2019-2022 period. In addition, Quadient aims to spend on average 100 million euros per year in capital expenditure which would be mostly allocated to Major Operations.

1.2.4

SHAREHOLDER RETURN POLICY

To achieve these goals, Quadient needs to gain flexibility in its capital allocation. This implies adapting its shareholder policy. The company has therefore decided to set its annual pay-out ratio at a minimum of 20 % of the Group attributable net income with the minimum annual dividend set at an absolute floor of 0.50 euro per share. The dividend will be paid in cash and in one instalment.

In addition, Quadient commits to returning to shareholders at the end of the 2019-2022 plan the potentially unused share of its net 400 million euros M&A targeted envelope.

1.2.5

MID-TERM GUIDANCE

Over the 2019-2022 “Back to Growth” strategic plan, Quadient aims to achieve: a mid-single digit sales CAGR at constant exchange ● rates; a high-single digit current EBIT (2) CAGR at constant ● exchange rates; a rebalancing of its business portfolio leading Mail ● Related Solutions to represent less than 50 % of sales by 2022; be in a position to achieve low single digit organic sales ● growth in a sustainable way, by no later than the end of the plan.

During the period 2019-2022, Quadient will keep an annual free cash-flow conversion (3) of over 50 % . At the end of March 2020, in an economic context disrupted by the COVID-19 pandemic, Quadient decided to suspend the indication given up to 2022 as part of the Back to Growth plan, presented below. The reader is invited to refer to Quadient Investor relations website at the following address https://invest.quadient.com/ for the latest updates published by the Company.

(1) ROCE calculated as current EBIT post tax/Enterprise value acquired. (2) Current EBIT = Current operating income before acquisition-related expenses. (3) Cash flow conversion = cash flow after capital expenditure/current EBIT

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UNIVERSAL REGISTRATION DOCUMENT 2019