QUADIENT // 2021 Universal Registration Document

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FINANCIAL STATEMENTS Consolidated financial statements

NOTE 2

ACCOUNTING PRINCIPLES

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.

Accounting standards applied

2-1:

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 of 31 January 2022 as approved by the European Union are available on the European Commission website. The Group has taken into account the impact of the ● IFRIC agenda decision issued in April 2021 when measuring employee benefit obligations. This decision relates to attributing benefits to periods of service and the caps on such benefits. The impact as of 31 January 2022 represents a 1.9 million decrease in this commitment, recognized within Group reserves. This impact is not material for the Group. Since 1 February 2021, the Group has applied the ● phase 2 of the amendments to IFRS 9 (Financial Instruments) and IFRS 7 (Financial Instruments: Disclosures) in connection with the reform of benchmark interest rates. The purpose of these amendments is to clarify what constitutes a change in the contractual rate and to introduce targeted adjustments to allow hedge accounting to be maintained. This reform will result in the replacement of the EONIA and IBOR rates as of 1 January 2022 and affects or will affect certain financial instruments and hedging transactions of the Group. The main indices used by the Group and affected by the reform are Euribor and USD Libor. The inventory of the contracts concerned and their analysis are in progress. As of 31 January 2022, Quadient has not recorded any changes in the IBOR indices for its financial instruments. Information on the Group's index-linked borrowings and hedging derivatives is provided in note 11.2.

Foreign currency payables

2-3:

and receivables

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, except for 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.

Use of estimates

2-2:

In order to prepare this financial information, Quadient has made estimates and used assumptions that may affect the

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UNIVERSAL REGISTRATION DOCUMENT 2021