Quadient S A : 2020 Universal Registration Document - PDF version

Contents

Message from the Chairman	2
Three questions for the Chief Executive Officer	3
Profile & activities	4
"Back to Growth" strategy	6
Business model	8
Quadient, a responsible company	10
A largely independant Board of Directors	12
An international management team	13
Financial performance	14
Investor relations	15
1
CORPORATE OVERVIEW	17
1.1	Activities	18
1.2	Strategy	22
1.3	Organizational structure	24
2
CORPORATE GOVERNANCE
REPORT	27
2.1	Board of Directors	28
2.2	Committees	41
2.3	Management team	45
2.4	Remuneration of managers and directors	47
2.5	Related-party agreements	68

2.6 Summary table of the Extraordinary General Meeting delegations to the Board

of Directors

68

2.7 Information that could have an impact in the event of a takeover bid

or exchange offer

69

2.8 Practical information for attending

the General Meeting

69

2.9 Statutory Auditors' report on related

party agreements

70

3

MANAGEMENT REPORT

71

3.1 Review of Quadient's financial position

	and results in 2020	72
3.2	Ownership structure	81
3.3	Information on trends and outlook	83

4

RISK FACTORS AND INTERNAL
CONTROL	85
4.1	Risk factors	86
4.2	Insurance	95

4.3 Internal control and internal audit

procedures

96

5

NON-FINANCIAL PERFORMANCE

STATEMENT101

5.1 Social, societal, and environmental

information

102

5.2 Independent third party's report on
consolidated non-financial statement
presented in the management report	133

6

FINANCIAL STATEMENTS	137
6.1	Consolidated financial statements	138
6.2	Statutory auditors' report on
	the consolidated financial statements	205
6.3	Analysis of Quadient S.A.'s annual results	210
6.4	Quadient S.A. statements of financial
	position	214
6.5	Statutory auditors' report on the financial
	statements	244

7

INFORMATION ON THE COMPANY
AND ITS SHARE CAPITAL	249
7.1	Quadient S.A. share capital	250
7.2	Quadient shares	253
8
ADDITIONAL INFORMATION	255
8.1	General information	256
8.2	Recent events	257

8.3 Officer responsible for the universal

registration document and Auditors	259
8.4 Statements by officer	260

8.5 Fees paid to the statutory auditors

	and members of their networks	260
8.6	Information policy	261
8.7	Concordance tables	262

UNIVERSAL

REGISTRATION 2020

DOCUMENT

The universal registration document was filed on 17 May 2021 with the French financial markets authority as the competent authority in accordance with Regulation (EU) 2017/1129, without prior approval pursuant to Article 9 of said regulation. The universal registration document may be used for the purposes of a public offering of financial securities or the admission of financial securities to trading on a regulated market if it is accompanied by a simplified prospectus and, where applicable, a summary and all the amendments made to the universal registration document. The entirety thus constituted is approved by the French financial markets authority in accordance with Regulation (EU) 2017/1129.

This is a translation into English of the universal registration document of the Company issued in French and it is available on the website of the Company (https://invest.quadient.com/en-US).

Pursuant to article 19 of regulation (EU) 2017/1129, the following information is included in this universal registration document by reference:

• the consolidated financial statements, annual accounts and statutory auditors' reports may be found on pages 123 to 233 of the universal registration document for the year ending 31 January 2020 filed with the AMF on 4 May 2020 under number D.20-0444 and available on the website of the Company (https://resources.quadient.com/m/3dd6ae99bf0095a8/ original/2019-Universal-Registration-Document-.pdf) ;
• the consolidated financial statements, annual accounts and statutory auditors' reports may be found on pages 109 to 209 of the registration document for the year ending 31 January 2019 filed with the AMF on 29 April 2019 under number D.19-0433 and available on the website of the Company (https://resources.quadient.com/m/b2d76ae92ccf580d/) ;
• the management reports for 31 January 2020 and 31 January 2019 may be found on pages 67 to 78 and 55 to 63 of registration documents D. 20-0444 and D. 19-0433.

UNIVERSAL REGISTRATION DOCUMENT 2020

QUADIENT IN BRIEF

MESSAGE FROM THE CHAIRMAN

DIDIER LAMOUCHE

CHAIRMAN OF THE BOARD

"AFTER THE SUCCESSFUL

COMPLETION OF THE FIRST PHASE OF THE TRANSFORMATION, THE BOARD HAS FULL CONFIDENCE IN THE SUCCESS OF THE SECOND PHASE OF THE BACK

TO GROWTH PLAN."

To the Shareholders,

The health crisis suddenly interrupted a series of seven consecutive quarters of organic revenue growth. From the very start of the pandemic, every effort was immediately made to protect our employees while ensuring business continuity. In this dramatic and unprecedented context, the Board of Directors promoted and recognized the outstanding agility demonstrated by the Company in order to mitigate the financial impact from the crisis as much as possible. Beyond the resilience of the business, Quadient maintained strong profitability through cost control, generated strong free cash flow and preserved its solid financial position.

In parallel, Quadient continued to invest in the future and implement its Back to Growth strategic plan. The Board supported a number of initiatives aimed at continuing the transformation of the Company and taking full advantage of the acceleration of the shift to digital and booming e-commerce: divestments, acquisition of two North American FinTechs, implementation of new distribution partnerships and further development of the parcel locker business.

The first phase of the plan enabled to conduct an in-depth transformation of the organisation, refocus the business portfolio and implement a number of synergies. However, half-way through this plan, it was necessary to review our ma jor orientations and take into account the effects from COVID-19.

To this end, the Board supervised the preparation of the second phase of Back to Growth. After reviewing the various options available to us, we set a bold new target for the next three years, with the aim of creating sustainable value for Shareholders. In keeping with our deleveraging objectives and maintaining our dividend policy, we will allocate excess cash between organic investments, acquisition opportunities and share buybacks.

By becoming a signatory of the United Nations Global Compact, Quadient also confirmed its CSR commitments. As a responsible company, the Board is very proud of the recognition granted to the Company by non-financial rating agencies, with the renewal of the "Prime" status by ISS ESG, the "Gold" medal awarded by EcoVadis or its sixth place in the overall ranking of Gaïa Research.

Lastly, the Board is very pleased with the closer dialogue engaged with our shareholders, especially during the "Governance" roadshow organized at the end of the year: this increased communication, which is ever more necessary in this turbulent time, enabled us to explain the relevance of our strategic choices and address topics representing major areas of concern for some of our shareholders. After the successful completion of the first phase of the transformation, the Board has full confidence in the success of the second phase of the Back to Growth plan.

Didier LAMOUCHE

• UNIVERSAL REGISTRATION DOCUMENT 2020

QUADIENT IN BRIEF

THREE QUESTIONS

TO THE CHIEFEXECUTIVE OFFICER

GEOFFREY GODET

CHIEF EXECUTIVE OFFICER

"OUR OBJECTIVES ARE NOW EXCLUSIVELY BASED ON ORGANIC GROWTH, WHICH MARKS

A SIGNIFICANT SHIFT IN OUR DEVELOPMENT STRATEGY."

How did Quadient make it through the crisis this year?

Our revenue proved relatively resilient. At a little over €1 billion, it recorded a 7.3% organic decline in 2020. The high proportion of recurring revenues enabled us to mitigate the decrease in hardware and license sales. We also saw a strong rebound as soon as the economy started to recover: after a decline of around 13% in the first half of the year, our sales fell by only 2% in the second half, with even better profitability compared to the second half of 2019. Strict cost optimization measures enabled us to save €46 million in operating expenses and record a high EBITDA margin of almost 24% in 2020. We posted current EBIT of more than €150 million and net income of €40 million. We generated free cash flow of €167 million, allowing us to further reduce our debt and end the year with a strong liquidity position. In parallel, we maintained our investment efforts, particularly in R&D, and preserved our workforce, especially sales teams, in order to be ready for the recovery in 2021.

What is the outcome of the first phase of your Back to Growth plan?

We have profoundly changed and streamlined our organization. From a holding company comprising around fifteen independent units, we have become a unified Company, now focused on three strategic activities. Alongside our traditional mail-related business -which is in structural decline but where we are still gaining market share and generating significant cash flows-, we have expanded into two fast-growing activities which represented 27% of our sales in 2020 compared to 18% only two years before. Our relevant

and recognized software offer enables us to support our customers in the digitization, automation and personalisation of their communications. A portfolio that is now complemented by the acquisitions of YayPay and Beanworks, two FinTechs that enable us to offer solutions for managing invoicing flows. In addition, our parcel locker business benefits from booming e-commerce and provides a compelling last mile delivery solution. These two growth engines also generated strong commercial, R&D, back office and supply chain synergies with our mail-related business, of around €100 million in 2020.

What are your goals for the second phase of Back to Growth?

Our objectives are now exclusively based on an organic growth trajectory, which marks a significant shift in our development strategy. We have now reached a point where the increased weight of our growth engines will enable us to more than offset the decline in our mail- related business while improving our profitability. The health crisis has accelerated the need for SaaS and Cloud software solutions for intelligent communication automation. And we aim to double the number of our parcel lockers installed worldwide within three years. Over the 2021-2023 period, we target average organic revenue growth of at least 3% per year, and at least mid-single digit organic growth in current EBIT. To achieve this, we are going to step up our R&D investments and accelerate the launch of new products. Also, with a highly cash generative business, we should be able to continue deleveraging the Company while maintaining our dividend policy.

UNIVERSAL REGISTRATION DOCUMENT 2020

3