QUADIENT // 2021 Universal Registration Document

3 MANAGEMENT REPORT

Review of Quadient’s financial position and results in 2021

3.1.6

RESEARCH AND DEVELOPMENT EFFORT

Research and development expenses amounted to in 2021 compared to 30.3 million euros in 2020. The main 51.8 million euros in 2021 compared to 54.9 million euros in focus of research and development is on developing future 2020, representing 5.1 and 5.3 of 2021 and 2020 sales offers in digital communications and parcel lockers. The respectively. The expenses presented in the income Group continues to dedicate a part of its research and statement do not reflect the whole effort as a part of the development effort to the future generations of franking amount of R&D expenses is capitalized: 37.4 million euros machines and folders-inserters.

3.1.7

CURRENT OPERATING INCOME (1)

2021

2020

Major Operations

Additional Operations

Total Group

Major Operations

Additional Operations

Total Group

(In million euros)

Revenue

942.4

81.9 1,024.3

919.3

110.1

1,029.4

Current operating income before acquisition-related expenses

146.8 151.6 (a) Including Parcel Pending’s earn-out reversal for an amount of 6.5 million euros. Excluding this earn-out reversal, the (a) current operating incomes before acquisition-related expenses of Major Operations and of the Group amounted 146.2 million euros and 145.1 million euros respectively. (0.0) 146.8 152.7 (a) (1.1)

Gross margin was 72.7 in 2021 compared to 72.2 in 2020, despite higher freight costs. Gross margin benefited from higher activity, a more favourable revenue mix effect in Intelligent Communication Automation SaaS solution as well as from a tight control over costs of sales. Innovation expenses relate to the development of new projects for the Intelligent Communication Automation activity. Total innovation expenses amounted to 3.3 million euros in 2021 compared to 9.1 million euros in 2020. Current operating income before acquisition-related expenses stood at 146.8 million euros in 2021 compared to 151.6 million euros in 2020, which included a one-off earn-out reversal of 6.5 million euros related to Parcel Pending’s acquisition. This is mainly reflecting the organic growth in revenue, the improved gross margin, the sustained profitability of the installed base and active management of operating expenses, in particular savings in G&A expenses resulting from further simplification and integration of the organization as well as a reduction of the Group’s real estate footprint. In the meantime, as Quadient continues to invest in its three solutions, planned increased spending in go-to-market and R&D weighed on the profitability, so did the dilutive impact of recently acquired and fast-growing businesses dedicated to financial process automation (YayPay and Beanworks). In addition, the continuous shift in revenue model towards SaaS subscription (as opposed to perpetual licenses) is also impacting the mix in operating income. Current operating margin before acquisition-related expenses stood at 14.3 of sales in 2021 compared to 14.7 in 2020. Acquisition-related expenses stood at 11.8 million euros in 2021 compared to 19.5 million euros in 2020, mainly due to lower M&A activity. Current operating income stood at 135.0 million euros in 2021 compared to 132.1 million euros in 2020.

OPERATING INCOME 3.1.8 Optimization and other operating expenses stood at 19.3 million euros in 2021 compared to 36.2 million euros in 2020, The improvement reflects the progresses already made by the Group in its repositioning and a signal that the phase II of the "Back to Growth" strategy is well under way. Operating income stood at 115.7 million euros in 2021 compared to 95.9 million euros in 2020. 3.1.9 The net cost of debt stood at 24.5 million euros in 2021 compared to 32.7 million euros in 2020. Active debt management, including the early repayment of 85.0 million dollars USPP in September 2020 and the early repayment of 163.2 million euros bond in March 2021, has led to this significant reduction in the net cost of debt for the year. The Group recorded a gain of 16.7 million euros related to currency and other financial items in 2021 compared to 1.1 million euros in 2020. This was helped by the 20.0million euros increase in the fair value of its investments in the X’Ange 2 and Partech Entrepreneurs private equity funds. As a result, net financial result was a loss of (7.8) million euros in 2021 compared to a loss of (31.6) million euros in 2020. FINANCIAL INCOME

(1) Current operating income before acquisition-related expenses.

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UNIVERSAL REGISTRATION DOCUMENT 2021