QUADIENT - 2020 Universal Registration Document

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FINANCIAL STATEMENTS Consolidated financial statements

European manufacturing sites have been affected to various degrees from a strong decline in activity for some to a several months closing for others. This crisis is considered as an indicator of impairment as at 31 January 2021. A goodwill impairment test has been

performed (see note 4–5). In accordance with the regulator recommandations, all impacts in relation with this health crisis have been booked in the current operating income.

NOTE 2

ACCOUNTING PRINCIPLES

Accounting standards applied

Foreign currency payables

2-1:

2-3:

and receivables

The consolidated financial statements comply with the international accounting standards (IFRS: International Financial reporting Standards) issued by the IASB (International Accounting Standards Board). The IFRS applicable as at 31 January 2021 as approved by the European Union are available on the European Commission website. Standards, amendments and interpretation adopted by the European Union that are mandatory for financial years beginning on or after 1 January 2020: amendment to IFRS 3: Definition of a business; ● amendments to IAS 1 and IAS 8: Definition of material; ● amendments to IAS 39, IFRS 7 and IFRS 9 regarding ● pre-replacement issues in the context of the IBOR reform. Standards, amendments and interpretations published by the IASB but not yet adopted by the European Union: amendments to IFRS 16. ● In order to prepare this financial information, Quadient has made estimates and used assumptions that may affect the amounts presented under assets and liabilities, as well as the amounts presented under income and expenses for the year. The main material estimates and assumptions made when preparing the financial statements relate in particular to retirement benefit obligations, deferred taxes, goodwill, some provisions and the useful life of fixed assets. These estimates and assessments are reviewed regularly on the basis of actual experience and various other factors considered reasonable, which form the basis of the measurement of book value for assets and liabilities. Actual outcomes might differ substantially from these estimates if different assumptions or conditions are applied. Use of estimates 2-2:

Transactions in foreign currencies are recorded at the exchange rate in force on the date of the transaction. All assets and liabilities denominated in foreign currencies are translated at the year-end exchange rate in force at closing. The resulting gains and losses are recognized in the income statement, with the exception of variances on loans or borrowings which form part of the net investment in a foreign entity. These are booked directly under shareholders’ equity until divestment.

Translation of financial statements 2-4: denominated in foreign currencies

The operating currency for each of the Group’s entities is the currency of the economic environment in which that entity operates. Financial statements of subsidiaries operating outside France, which are presented in local currencies, are translated into euros – the currency used in the Group’s financial statements – at the year-end exchange rate. Income statement and cash flow statement are translated at the average exchange rate over the period. The resulting translation variance is recognized in the translation adjustment reserve under shareholders’ equity.

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UNIVERSAL REGISTRATION DOCUMENT 2020