QUADIENT // 2021 Universal Registration Document

FINANCIAL STATEMENTS Consolidated financial statements

NOTE 5

OPERATING DATA

Sales

5-1:

5-1-1: ACCOUNTING PRINCIPLES

In accordance with IFRS 15, sales are measured at the fair value of the consideration received, net of any trade discount and volume rebates and excluding any VAT or other taxes. Sales are recognized at the date on which the Group fulfils the performance obligations attached to the contract. Lease of mailroom equipment The Quadient Group rents equipment to its customers in France, the United States and Canada under leases in which the Group does not transfer the control of the assets. Leases are generally for periods of one to five years. As the performance obligations are not separated, the lease and corresponding maintenance costs are normally billed in advance, the lease component for the period ended is recorded in sales. The balance is shown in deferred income. Equipment sales Equipment sales are mainly recognized when the goods are shipped. This reflects the transfer of control between the buyer and the seller of major risks and benefits inherent to the ownership of the item because: the lead times between shipping, delivery and ● installation are very short; the products are most often installed directly by the ● customer; the return rate after shipping is very low. ● Finance leases Quadient has leasing subsidiaries in Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Sweden, Switzerland, the United Kingdom and the United States. These subsidiaries provide leasing services exclusively to Quadient customers that relate solely to Quadient products. When a customer of a Quadient distribution company chooses to finance the acquisition of equipment via a leasing company, the Group recognizes an equipment sale and records as an asset an amount equal to the net present value of the lease payments receivable over the term of the financing. Financial income is then recognized in sales on the basis of interest actually received over the term of the financing. Refinancing costs are recorded as financial expenses. The accounting treatment for the lease financing activity of these companies is justified by the fact that the Group transfers to its customers the control of the assets in question. This accounting treatment has not been called into question with the application of IFRS 16.

As a supplement to this finance lease activity, Quadient offers financing solutions on franking in the United States and in the United Kingdom. Maintenance contracts The Group companies may be required to carry out, among other things, preventive maintenance work and repairs on its products. These operations are conducted under maintenance contracts and are invoiced to customers at the start of the contract. Revenue relating to leases and maintenance are presented under deferred income and recognized as sales on a pro rata basis, reflecting the degree of progress of the service provision. Software and associated services The Group derives revenues from the following sources: software license sales; ● pay-per-click software or solutions right of use; ● maintenance (help desk services and rights to future ● product enhancements); software implementation and support services. ● The Group begins to recognize revenue once the arrangements are signed and as long as all the following conditions are met: the Group has signed a contract with a customer; ● the software or service has been delivered or made ● available; license fees are fixed and there are no uncertainties ● on the completion of the contract; revenue collection is probable. ● Software license sales Software license revenue comprises all amounts invoiced related to the right to use the software, either through an initial license or through the purchase of additional modules or user rights. This kind of license transfers a right of use of intellectual property as it stands at the time of the license grant. The revenue is thus recognized when the performance obligations are satisfied which means the source code is provided. In the pay-per-click mode, the revenue is recognized on actual consumption. The customer benefits from a combined offer with access to the license, potential updates imposed on the customer and maintenance. These performance obligations are not separated and the revenue is recognized on a straight-line basis as services are being delivered throughout the contract duration. At the end of the contract, the customer no longer has access to the solution.

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UNIVERSAL REGISTRATION DOCUMENT 2021