Contents

ProfileSequana is a major player in the paper industry, boastingtop-ranking positions in each of its businesses:• No. 1 in Europe and No. 3 worldwide in B2B distribution of paperand packaging products with Antalis;• No. 1 producer of creative and technical papers with Arjowiggins.Sequana’s strategy is focused on strengthening its market positionsin order to create value for all of its shareholders. The Group’s goalsare to refocus on distribution over the long term and to participate inthe consolidation of the paper industry in order to carve out leadingpositions for its industrial businesses on their markets.With over 11,000 employees in 45 countries, Sequana serves corporateclients and printers across the globe.A global paper group committed to sustainable development, Sequanadelivered sales of €3.9 billion in 2012.€3.9billion in salesin 20121.9million tonnesof paper distributedby Antalis1million tonnesof paper producedby Arjowiggins

Sequana in brief100% 100%B2B distributionProductionA worldwide player in the paper sector, Sequana is first and foremost a specialised distributor, an activity which generatestwo-thirds of its sales. With over 11,000 employees in more than 45 countries, Sequana serves corporate clients and printersacross the globe.Sales (1) (s millions)Sales fell 2.3%(down 2.3% for Antalisand 3.2% for Arjowiggins),or 4.3% at constant exchange rates(down 3.9% for Antalisand 5.4% for Arjowiggins).(1) After deducting intersegment sales(see Note 29 to the consolidated financial statements).(2) See preliminary remarks on page 4.4,016 3,944 3,852EBITDA (1) (s millions)EBITDA slipped 0.8%(down 17.1% for Antalisbut up 29.2% for Arjowiggins)and represented 3.5% of sales.206 135 1342010 2011 20122010 2011 2012(1) See preliminary remarks on page 4.pro forma (2) pro forma (1)BusinessesAntalis: No. 1 in Europe and No. 3 worldwide in B2B distributionof paper and packaging products2012 key figures€2.7 billion in salesOver 6,000 employees in 44 countriesMore than 135,000 customers worldwide108 distribution centres across the globe1.9 million tonnes of paper distributedArjowiggins: No. 1 producer of creativeand technical papers worldwide2012 key figures€1.4 billion in salesOver 5,000 employees22 production and converting facilities1 million tonnes of paper producedMore than 50 recognised brands(Conqueror, Curious Collection, Satimat green, etc.)StrategyIn 2012, Sequana accelerated the deployment of its transformationprogramme by stepping up Antalis’ development in the packagingdistribution sector and continuing to enhance Arjowiggins’ productionmodel.Share informationat 31 December 2012Listed on Eurolist of NYSE Euronext (Segment B)Indices: CAC Small® and CAC Mid & Small® –Eligible for the “long-only” deferred settlement service (SRD)Ticker symbol: SEQ – ISIN code: FR0011352590Par value per share: €9.000.43%Treasuryshares36.91%Free float20.09%FSI18.74%Exor SA10.22%13.61%Allianz DLMD (incl. Pascal Lebard 0.26%)

Chapter 1PRESENTATION OF THE GROUPPreliminary remarks 4Presentation of Sequana 4Market position 5Paper production 5Paper sales 5Group strengths 6Diversified portfolio of brands 6Competitive edge and barriers to entry 6Strong presence in high value-added segments 7Strong focus on cash flow generation 7Experienced management team 8Group strategy 8Consolidating the Group’s leading positions 8Continuing to improve operating performance and cash flow 9Prioritising product innovation and customer service 9Playing a part in market consolidation 92012 Group results 10A sharply deteriorated economic environment 10Continued deployment of strategic plan 10Key figures 11Group timeline 142012 highlights 16Recent developments and outlook 17Financial data for the first quarter of 2013 17Share performanceand ownership structure 19Share information 19Share ownership and corporate actions 19Share performance 20Dividend per share 21Regular dialogue with investors 21Management of share accounts 21Presentation of business activities 22Antalis 22Arjowiggins 30~Sequana | 2012 Document de référence (English version) | 3

1Presentation of the groupPresentation of SequanaPreliminary remarksKey figures are based on the following definitions:■■Sales: sales figures reported for subsidiaries, calculated beforeeliminating intercompany transactions.■■EBITDA: recurring operating income before depreciation andamortisation and changes in provisions.■■Recurring operating income: operating income before “Otheroperating income and expenses”.■■Recurring net income: recurring operating income after netfinancial income (expense) and income tax on recurring operatingincome.■■Capital employed: sum of net fixed assets and working capitalrequirements.■■ROCE (Return on Capital Employed): recurring operatingincome/capital employed.■■Cash flow from operating activities: algebraic sum of EBITDA,changes in working capital requirements and investmentexpenditure net of disposals.Information provided in this document on the role of Groupcompanies and divisions or their business segments, market shareor competitive positions, is derived from the companies’ ownresearch.Changes in amounts and in margin percentages are rounded outto one decimal place.The Group’s holding companies comprise Sequana and its whollyownedsubsidiaries that are not heads of operating sub-groupsor which do not own any companies that carry out commercialactivities.The 2010 “Management pro forma” or “pro forma” data have beenadjusted to take into account the sale of Antalis’ Office Suppliesbusiness and Arjowiggins’ Decor and Abrasive businesses in 2011to allow for meaningful comparison with data for 2011 and 2012.Presentation of SequanaSequana is an international paper group engaged chiefly in the distribution of paper and packaging products, and is the Europeanleader in this sector in terms of sales. Sequana is also one of the largest producers of specialty and creative papers. Through Antalis(distribution) and Arjowiggins (production), the Group has operations in five continents and more than 45 countries, and employs over11,000 people. In 2012, it distributed and produced around 1.9 million and 1 million tonnes of paper, respectively.Treasury shares DLMD Exor S.A. FSI Allianz Free float0.43% 13.61% 18.74% 20.09% 10.22% 36.91%100% 100%(1)See the scope of consolidationon page 159 et seq.B2B distribution (1) Production (1)■■Antalis represents the distribution side of the Group’s businessand is the leading distributor of paper in Europe. In 20 of the28 European countries where Antalis has operations, it has amarket share of over 20%. The company is also one of the foremostglobal distributors with top-ranking positions in SouthAfrica, South America and Asia-Pacific. Antalis distributes awide range of print and office paper, packaging products andvisual communication materials to more than 135,000 customers.Thanks to its network of around 100 distribution centres,Antalis can offer customers the highest standard of service atcompetitive prices.30%ArjowigginsBreakdown of sales by business70%Antalis4 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1■■Arjowiggins represents the production side of the business andenjoys a unique position owing to its strategic focus on the productionof technical and creative papers, a segment in whichit is among the leading players worldwide. Arjowiggins is theworld’s leading producer of premium fine papers in terms ofsales and is No. 1 worldwide in banknote paper and tracingpaper in terms of volumes. It is also the largest producer ofrecycled graphic paper integrated in recycled pulp in termsof volumes, holding a No. 1 position in eco-friendly/recycledpaper in Europe (excluding lightweight coated papers – LWC).Distribution accounts for two-thirds of Sequana’s sales and productionfor one-third.6%ArjowigginsCoated US4%ArjowigginsCreative Papers9%ArjowigginsSecurityBreakdown of sales by business segment11%ArjowigginsGraphic48%AntalisPrintMarket position11%AntalisVisualCommunication& Packaging11%AntalisOfficeThe value chain in Sequana’s paper business essentially comprisestwo main stages.Paper productionThe main ingredient used to manufacture paper is virgin or recycledpulp. Most producers of standard graphic paper also manufacturevirgin pulp, which enables them to meet part or all oftheir pulp requirements. Producers of specialty papers are generallynot integrated producers and purchase pulp from specialisedpulp manufacturers. Sequana is not an integrated producerof virgin pulp. However, it is the largest integrated producer of100%-recycled pulp. Banknote papers made from cotton derivatives(combers and linters) have a different value chain.Papers produced by the Group range from standard coated papersproduced in large volumes to specialty papers produced at lowervolumes but sold at higher prices.Paper salesMost of the paper produced by Sequana is sold by distributorslike Antalis.Graphic and premium fine papers are mainly sold to distributorsoffering a wide range of products and services to major companies,printers and advertising agencies and, to a lesser extent,directly to end customers (direct sales).Specialty papers other than eco-friendly and premium fine papersare mainly sold to converters which use them to produce othertypes of paper or to distributors which sell them to manufacturersof finished goods.The table below shows Sequana’s position within the paper industry value chain.Raw materialsPulp productionPaperproductionDistribution/ConvertingPrintingEnd usersWaste papersuppliersRecycled pulpproducersSpeciality paper(including recycled)Manufacturersof finished goodsEnd users(all segments)Wood supplierVirgin pulpproducerGraphicpaperPaperdistributorsPrintersCompaniesCompaniesPublishersDirectAdvertisingagenciesSequana’s business segmentsSequana | 2012 Document de référence (English version) | 5

1Presentation of the groupPresentation of SequanaGroup strengthsDiversified portfolio of high-quality brandswith leading market positionsThe Group is engaged in a variety of businesses, most of whichboast leading positions on their respective markets.Antalis is Europe’s leading distributor of paper and among thebiggest distributors worldwide. It has an extensive customerbase of more than 135,000 printers and companies. Antalis hasstrengthened its presence in the fast-growing Packaging andVisual Communication businesses (16% of sales in 2012), whilestepping up its growth push outside Europe (South Africa, SouthAmerica and Asia-Pacific). Antalis’ global reach and balancedgeographic spread in Europe allow it to diversify its customerportfolio and capitalise on the higher-than-average growth potentialof emerging markets. Antalis’ profitability over the past fewyears has been rooted in its wide array of products and services,broad geographical presence, strong relationships with its customersand suppliers and a highly effective distribution network.Arjowiggins enjoys leading positions on certain niche markets(No. 1 worldwide for premium fine papers, banknote paper andtracing paper). It is also the largest producer of recycled graphicpaper integrated in 100%-recycled pulp, holding a No. 1 positionin eco-friendly/recycled paper in Europe (excluding LWC). Thisbroad line-up of highly specialised businesses represents severalniche markets with their own customers, applications and marketdynamics. This helps to limit the cyclical impact of Arjowiggins’businesses. Arjowiggins enjoys top-ranking positions on marketsfor high value-added products, where prices are significantlyhigher than for standard graphic paper. This allows it to generatehigher margins and reduce its sensitivity to fluctuations in inputcosts, especially pulp. Arjowiggins’ broad geographic spread alsoenables it to capitalise on growth in emerging markets, and particularlySouth America and Asia.Strong competitive edge and barriers to entryAntalis and Arjowiggins operate chiefly in highly concentratedmarkets where size (in terms of the depth of products and serviceson offer, capacity for innovation, scale of the distribution networkand production/storage capacity) can be major factors in forginga competitive edge.Antalis enjoys leading positions in most countries in which it hasoperations and has set up customer-focused solutions includingCustomer Relationship Management (CRM) tools and e-commerceapplications. Potential entrants into Antalis’ markets arefaced with significant barriers to entry, since market position,logistics network efficiency and the ability to attract new customersare key to profitability. The fragmented nature of the customerbase also makes it hard to capture new customers and marketshare on a long-term basis.Arjowiggins has a strong presence on niche markets where innovation,customer relations, brand recognition (more than 50 recognisedbrands among key market players) and product qualitycreate significant barriers to entry. The size of these niche marketsalong with the highly specialised expertise they require andthe nature of the paper manufacturing process also help stave offcompetition from major players. Arjowiggins’ growth strategyhinges on innovation and on anticipating the needs of clients andend customers. Each division has its own R&D department witha proven capacity for innovation and these units have received asteady stream of accolades over the past few years.6 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Strong, growing presence on high value-addedsegments (packaging, visual communication,eco-friendly and specialty papers)Antalis and Arjowiggins have operated in fast-growing, highvalue-added market segments for many years.In 2012, Antalis generated 16% of its sales in the fragmented,high-growth markets of Packaging and Visual Communicationwhere it has operated over the past few years and enjoys top-rankingpositions. Antalis’ development on the Packaging distributionmarket was achieved through a combination of organic growthand acquisitions (Brangs & Heinrich in Germany in 2004; DekkerPackaging BV in Benelux in 2006). In 2012, Antalis stepped upits development in this sector with three acquisitions in Europe (inGermany, the UK and the Czech Republic) and one acquisition inLatin America (Chile). The Company is currently No. 2 in Europeon this segment, offering a broad range of standard and bespokeproducts and solutions to a wide variety of customers. Antalis’increasing foothold on the Visual Communication market wasachieved thanks to both organic growth and an enriched productand service offering through its acquisitions of Map and Axeliumin 2007. In late 2010, the Group acquired Macron, a Germandistributor of large-format digital printing equipment and othermedia. Antalis is currently among the market leaders, offering awide range of bespoke products and services to customers such assilkscreen printers, specialists in poster displays and signage, andPOS advertisers and resellers.Antalis intends to consolidate its positions in the Packaging andVisual Communication markets through organic growth andselective acquisitions. It will also continue to capitalise on therobust growth of its higher-margin international businesses.Arjowiggins has long enjoyed top-ranking positions in severalniche markets for high value-added products. ArjowigginsSecurity is the world’s leading producer of banknote paper, a fieldin which it has over two centuries of experience. ArjowigginsCreative Papers is the world’s No. 1 producer of premium finepapers including such recognised brands as Conqueror, CuriousCollection and Keaykolour. It is also the leading producer of castingand tracing paper. Arjowiggins Graphic has a unique positionin the market for recycled graphic papers (excluding LWC) and isEurope’s No. 1 player. The acquisition in 2008 of the Greenfieldplant – the leading producer of extra-white recycled pulp – hasgiven the Company a real edge in the drive to develop a uniquepremium offering in this market. Arjowiggins intends to expandits range of environmentally-friendly recycled products by tappinginto the segment’s strong potential for growth (the penetration ratefor recycled products is still low in these segments) and leveragingits price positioning. The company also intends to consolidate itspositions in other specialty markets through ongoing innovationand a customer-focused strategy. Specialty papers (1) accounted forover 70% of Arjowiggins’ sales in 2012.Strong focus on cash flow generationSequana has proved its capacity for maximising cash flow generationin its most mature markets (e.g., office and print paper,Antalis’ core business). This has enabled it to carve out strong marketpositions and to limit its investment outlay. Over the past fewyears, these segments have generated a steady stream of cash flow.Sequana operates in an industry which is more sensitive than othersectors to the economic and financial climate and since 2011 theGroup’s results have been hit by the slump in volumes and strongdownward pressure on selling prices. The Group’s priorities goingforward are to continue unlocking performance gains while maximisingcash flow generation and steadily reducing financialleverage.(1) Group specialty sales include products sold by the Security, Creative Papersand Graphic divisions (excluding sales of standard coated and uncoated papers).Sequana | 2012 Document de référence (English version) | 7

1Presentation of the groupPresentation of SequanaExperienced management teamSequana’s management team has a perfect understanding of theGroup’s businesses and proven expertise in the field. It is alsoexperienced in managing industry cycles. Consistent with itsfocus on value creation, in 2007 management began to realignthe business as a pure paper player by reorganising its activities.Non-core businesses were sold off and a new growth push targetedhigh value-added segments. Profitability and cash flowgeneration became priorities amid tough market conditions. Allmembers of the Group’s Executive Committee have been withSequana for at least five years and boast over ten years’ experienceon average in the paper industry.Thanks to the new-look management structure and the newExecutive Committee set up in 2009 comprising senior executivesfrom Sequana, Arjowiggins and Antalis, the Group hasbeen able to ensure swift implementation of its operating decisionsbacked by strong central departments (strategy, HR, legalaffairs, finance and investment), and decentralised decision-makingin the marketing and production field.The Group’s performance is measured based on profitability andcash flow. Investment decisions are taken applying strict returnon-investmentcriteria. This strategy helped the Group to reactdecisively to address the deterioration in the markets as from2008. By increasing selling prices and consistently reducing costs,selling off non-core businesses, improving productivity and carefullymanaging cash flow, Sequana has been able to safeguard itsmargins and its cash flow generation. Nevertheless, the slumpin volumes and strong downward pressure on selling prices tooktheir toll on the Group’s operating performance in 2011 and 2012.Group management has successfully integrated both large companiessuch as Map and Greenfield as well as smaller-sizedfirms like Brangs & Heinrich, Dekker Packaging, Axelium andMacron. The Group’s experience makes it ideally placed to identifyand successfully integrate future acquisitions, particularly distributorsof products and solutions in the Visual Communicationand Packaging businesses.Group strategyThe Group’s strategy consists chiefly of acquiring and leveragingits top-ranking positions on specific markets to create value by:■■focusing on distribution and stepping up its developmenton fast-growing markets (such as Packaging and VisualCommunication) and outside Europe; and■■playing a role in the increasing consolidation of the productionmarket with the aim of creating market leaders, to consolidateArjowiggins’ foremost positions in niche segments, while graduallydivesting non-core businesses.The concrete aims of the Group’s strategy are described in moredetail below.Protect and consolidate the Group’stop-ranking positions in selected strategic marketsThe Group enjoys top-ranking positions as a distributor of paperand packaging products (Antalis) and as a niche player on variousproduction markets (Arjowiggins). Organic growth and acquisition-ledexpansion aimed at protecting and consolidating its marketpositions is vital to the Group’s strategy. Sequana intends toleverage its scale in order to continue enhancing its innovationcapabilities, enriching its range of products and services, improvingcustomer service and maximising value creation.On the production side of the business, Sequana enjoys leadingpositions on a number of niche markets, including eco-friendlypapers. Its strengths allow it to continue growing its customerbase and developing new product applications, and more generallyto pursue its business development by capitalising on its key differentiatingfactors, notably innovation, customer service excellence,and product quality and reliability. On the distribution sideof the business, Sequana intends to consolidate its leadership byadopting a selective acquisitions policy to reinforce its presence inthe Packaging and Visual Communication segments which currentlyboast higher rates of growth than the paper market.Ongoing growth and consolidation of the Group’s position in themost profitable, value-added segments such as the production ofeco-friendly and specialty papers are key to improving operatingperformance.The July 2012 capital increase provided Sequana with freshresources for continuing to deploy the Group’s strategic planacross the two businesses. A decision was taken to close threeplants in Argentina, Denmark and the UK to enable Arjowigginsto bring production of printing and writing papers back into linewith demand and to optimise management of production facilities.Antalis continued its development in the Packaging distributionsegment. Two new acquisitions in Chile and the CzechRepublic were added to the UK and German acquisitions carriedout in early 2012.8 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Continue to improve operating performanceand maximise cash flow generationIn both of its businesses, the Group strives to protect its margins byincreasing selling prices and boosting profitability. Arjowigginsis a moderate-sized player in the graphic papers segment and thisprevents it from setting prices. In light of the fraught market conditionsprevailing in 2011 and 2012, the Group was unable toimplement planned price increases. These are crucial to Sequana’soverall profitability and remain a priority for management, whointend to continue implementing a strict pricing policy.Over the past few years, Sequana has strengthened commercialties between Antalis and the Arjowiggins’ Graphic and CreativePapers divisions. This has enabled an increasing number of synergiesto be unlocked between these businesses. It has also producedtangible benefits in terms of marketing, business andproduct development and service quality. These initiatives havealso helped optimise Arjowiggins’ industrial capacities and generatedsignificant cost savings by improving the supply chain,reducing delivery lead times and managing working capital moreefficiently (just-in-time inventory management).Amid efforts to accelerate growth and cement positions in themost dynamic and profitable segments of both businesses,Sequana has focused on cutting costs, particularly on its mostmature markets, with the aim of maximising margins and cashflow generation. Arjowiggins constantly strives to match its productioncapacity to market demand and in 2012 it shut down apaper machine in the UK and closed two plants in Denmark andArgentina. These measures provide enhanced capacity managementas well as cutting overheads.Faced with a tough overall sales environment over the past fewyears, the Group has sought to generate cash flows throughthe combination of strict working capital management and thedivestment of non-core assets at both Antalis (Promotional productsand Office supplies) and Arjowiggins (Carbonless paper,Decor paper Asia, Decor and Abrasive papers, and the Moulindu Roy plant) to give it the necessary financial clout to bolster itsleadership in selected businesses and reduce net debt.Continue to prioritise product innovationand customer serviceSequana believes that customer service is vital in creating valueand constantly endeavours to meet the demands and expectationsof its customers across its business spectrum.On the distribution side, the RACE 2012 programme – the planto overhaul Antalis’ sales structure – places customer excellenceat the heart of all business systems. The programme has beenrolled out over the past three years to all of the countries in whichAntalis does business and it was finalised during the year. It aimsto leverage Antalis’ supplier expertise, distribution network andthe breadth of its product and service offering.Arjowiggins continues its innovation drive in all of its divisions,which each have their own R&D department. The Group willcontinue to improve customer relations by promoting new products,developing new applications using its superior technologicalcapability and optimising product quality and reliability.Monitor growth opportunities and play a partin market consolidation through mergers,acquisitions and divestmentsThe Group’s long-term strategy is to refocus on distribution, inparticular through acquisitions in the distribution of visual communicationand packaging products while strengthening its leadingpositions on selected specialty paper production segments.Sequana also intends to play a role in the consolidation of theproduction sector through mergers, acquisitions and disposalsin order to carve out leading positions for businesses on theirrespective markets. This was the logic behind the 2011 sale of theDecor and Abrasive businesses based at its Arches (France) andDettingen (Germany) plants. However, the Group continues toensure that its activities deliver strong operating performancesand that any transactions in which they are involved reflect theirstrategic value.Sequana | 2012 Document de référence (English version) | 9

1Presentation of the groupPresentation of Sequana2012 Group resultsA sharply deteriorated economic environment2012 witnessed a slump in demand for printing and writingpapers in Europe and the US on both the production and distributionsides of the business, particularly in the second-half ofthe year as the economic crisis gathered pace in Europe. Strongdownward pressure on selling prices also prevented the Groupfrom implementing price increases scheduled before the summer.Arjowiggins’ specialty businesses (Security solutions, Medical/Hospital) and Antalis’ non-paper businesses (Packaging andVisual Communications) fared much better despite lower-thanexpectedgrowth.Raw material prices were lower than in the previous period andwaste paper and cotton prices fell quite significantly. Althoughpulp prices were lower than in 2011, they remained at quite highlevels together with prices for energy and chemical products(latex and starch).Sales for the year retreated 2.3% (down 4.3% at constant exchangerates), to €3.9 billion despite a 5% drop in volumes on both thedistribution and production sides of the business. EBITDAcame in at €134 million, down 0.8% year-on-year, and represented3.5% of sales. The positive impact of lower raw materialprices and cost reductions partially offset the negative impactof the sharp decline in volumes and strong pressure on sellingprices. Recurring operating income declined 37.2% for the year to€56 million, compared with €89 million for 2011 (which includeda €25 million gain arising on changes to pension plans with nomaterial impact on EBITDA). The operating margin represented1.4% of sales. Once net non-recurring expenses of €114 millionwere factored in – including €54 million in asset write-downstaken by Arjowiggins (Coated US) and Antalis (the Netherlands,Germany) and €52 million in restructuring costs – the net lossattributable to owners was €119 million.The capital increase of €150 million carried out in July 2012 wasused to bolster equity for Group subsidiaries Antalis (€25 million)and Arjowiggins (€63 million) and to meet the Group’s financingneeds (approximately €15 million), with the remainder used to paydown net debt.The capital increase therefore made it possible to step upAntalis’ development programme with two acquisitions in thePackaging sector (in Chile and the Czech Republic) and enhanceArjowiggins’ production model through the closure of the Dalum(Denmark) and Witcel (Argentina) plants in 2012, and the closureof the Ivybridge plant in the UK currently in progress. Italso allowed consolidated net debt to be reduced by €71 millionto €538 million at 31 December 2012, down from €609 millionat 31 December 2011.Continued deployment of strategic planFaced with the structural decline in demand for printing andwriting papers due to the increasing importance of the Internetand electronic media, Sequana’s strategy is to focus on highgrowthmarkets. The Group aims to consolidate its positions onthe distribution side of the business in the Packaging and VisualCommunication sectors and to focus on geographical segmentswith growth potential. At the same time, Sequana is striving toboost the contribution of specialty products – particularly recycledand eco-friendly papers – as a proportion of the productionbusiness as a whole.With these aims in mind and in order to consolidate its financialstructure, Sequana carried out a capital increase of €150 millionin July 2012 with preferential subscription rights for existingshareholders.This transaction gave fresh impetus to the Group’s strategic planby allowing Arjowiggins to enhance its production model and bystepping up Antalis’ development in the packaging distributionsector.The Graphic division closed the Dalum (Denmark) and Witcel(Argentina) plants in the second-half of 2012 and the Ivybridgeplant in the UK is scheduled to close in the first quarter of 2014.These measures have reduced the Group’s production capacity by126,000 tonnes, i.e., approximately 10% of its total capacity, andthey will bring in annual net savings of €17 million from 2013.Sequana continued its development in packaging distributionwhich – together with visual communications – represents a majorgrowth driver for Antalis. After the acquisitions carried out inearly 2012 in Germany (Pack 2000) and the UK (Ambassador),Antalis acquired two further companies in Chile (Abitek) and theCzech Republic (Branopac). These four entities were acquired fora total enterprise value of €43 million and they added €53 millionin sales to Antalis’ Packaging business in 2012.These acquisitions have taken Antalis to No. 1 in Germany andNo. 2 in the UK and Chile. The Group had no previous presencein the Chilean distribution sector and this acquisition provides itwith a solid platform for developing throughout Latin Americawhere the potential for growth is considerably greater than theaverage potential in more mature economies.10 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Key figuresCondensed analytical income statement(€ millions, except per share amounts) 2012 20112010managementpro forma Change 2012/2011Sales 3,852 3,944 4,016 -2.3%EBITDA (*) 134 135 206 -0.8%Operating margin 3.5% 3.4% 5.1% +0.1 pointsRecurring operating income 56 89 (1) 135 -37.2%Operating margin 1.4% 2.3% 3.4% -0.9 pointsRecurring net income (loss) (**) (5) 30 51 –Recurring diluted earnings (loss) per share (0.26) 2.41 1.01 –Non-recurring items (***) (114) (108) - –Net income (loss) attributable to owners (119) (77) 32 –Diluted earnings (loss) per share (5.85) (6.18) 0.64 –Weighted average shares outstanding, after dilution (2) 20,405,216 12,473,881 50,480,341 –(1) Including gains of €25 million (Arjowiggins: €17 million, Antalis: €8 million) arising on changes to pension plans, mainly in the UK. Adjusted for these items,recurring operating income amounted to €64 million instead of €89 million and the operating margin came in at 1.6% instead of 2.3%.(2) For 2012 and 2011, these figures reflect the corporation actions carried out in 2012.(*) Reconciliation of EBITDA(€ millions) 2012 20112010managementpro formaRecurring operating income (1) 56 89 135Less depreciation and amortisation (1) (66) (68) (68)Less movements in provisions (1) (12) 22 (3)EBITDA 134 135 206(1) See chapter 4 – Consolidated income statement.(**) Reconciliation of recurring net income(€ millions) 2012 20112010managementpro formaRecurring operating income (1) 56 89 135Net financial income (loss) (1) (51) (41) (50)Less Legg Mason and Permal shares – – (1)Income tax on recurring operating income (10) (19) (33)Non-controlling interests – 1 –RECURRING NET INCOME (LOSS) (5) 30 51(1) See chapter 4 – Consolidated income statement.(***) Reconciliation of non-recurring items(€ millions) 2012 2011 2010Other operating income and expenses (1) (124) (92) (30)Legg Mason and Permal shares – – 1Income tax on non-recurring items 10 (16) –Net income (loss) from discontinued operations (1) – – –NON-RECURRING ITEMS (114) (108) (29)(1) See chapter 4 – Consolidated income statement.Sequana | 2012 Document de référence (English version) | 11

1Presentation of the groupPresentation of SequanaSales (€ millions)4,016 3,944 3,85217%Rest of the worldBreakdown of sales by geographic area (3)13%France2010 2011 2012pro forma (1)Sales were down by 2.3%.45%Europe(excl. Franceand the UK)Sequana earns 87% of its sales outside France.(3) See chapter 4 – Notes 29e and 29f.18%UK7%USRecurring operating income (€ millions)135EBITDA (€ millions)2068956135 1342010 2011 (2) 2012pro forma (1)Recurring operating income fell €33 million and represented1.4% of sales.(2) Including gains of €25 million (Arjowiggins: €17 million, Antalis: €8 million) arisingon changes to pension plans, mainly in the UK. Adjusted for these items, recurringoperating income amounted to €64 million instead of €89 million and the operatingmargin came in at 1.6% instead of 2.3%.2010 2011 2012pro forma (1)EBITDA slipped by 0.8% (down 17.1% for Antalis and up 29.2% forArjowiggins) and represented 3.5% of sales.Net income (loss) attributable to owners (€ millions)Shareholders’ equity (€ millions)32201020112012814669 654(77)(119)Sequana reported a net loss attributable to owners of €119 million,due mainly to writedowns taken against assets for €54 million andrestructuring costs totalling €52 million.2010 2011 2012(1) See preliminary remarks on page 4.12 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Net debt (€ millions)6746095382010 2011 2012(€ millions) 2012 2011CONSOLIDATED NET DEBT AT 31 DECEMBER 2011 (609) (674)EBITDA 134 135Change in working capital requirements 42 47CAPEX (56) (70)Net financial charges (49) (39)Income taxes paid (19) (21)Restructuring costs (59) (48)Disposals/acquisitions (47) 26Dividends – (20)Cash flow from discontinued operations – 70Capital increase 146 –Foreign exchange losses (4) (6)Other items (17) (9)CONSOLIDATED NET DEBT AT 31 DECEMBER 2012 (538) (609)Antalis: e18mArjowiggins: e24mAntalis: e21mArjowiggins: e36mPackaging businessSale of OfficeSupplies businessSale of Decorand Abrasives businessAverage headcount by geographic area17%Rest of the world26%France34%Europe(excl. Franceand UK)16%UK7%USSequana | 2012 Document de référence (English version) | 13

1Presentation of the groupPresentation of SequanaGroup timeline1991Creation of Someal (later known as Worms & Cie) by Ifil in orderto manage its French investments (Saint-Louis, Worms & Cie,Danone group, Accor).1997Successful joint takeover bid launched by Someal and AGF forWorms & Cie in response to the hostile takeover bid launched bythe Pinault group. AGF and certain individual shareholders contributetheir shares in Worms & Cie to Someal.1998Merger of Worms & Cie into the Group. Change of corporatename and listing on the Premier Marché (monthly settlement) ofthe Paris stock exchange (Bourse).1999■■Public takeover bid for Arjomari Prioux followed by a mandatorywithdrawal procedure (OPA-RO). Merger of ArjomariPrioux into the Group, providing the latter with direct controlover Arjo Wiggins Appleton.■■Restructuring of Arjo Wiggins Appleton (AWA).2000■■Acquisition of 15% of the voting rights of SGS.■■Sale of Saint-Louis Sucre to Financière Franklin Roosevelt,46.9% owned by Worms & Cie, 51.1% by Belgian (Albert Frèregroup) and Luxembourg investors (represented by Inveparco),and 2% by management.■■Launch of a cash bid by the Group to increase its stake in AWAfrom 40% to 100%. Its offer is subsequently approved by AWA’sshareholders and its shares delisted from the London StockExchange.2001■■Completion of the sale by AWA of its 40% stake in thePortuguese company Soporcel and sale of Appleton Papers Inc.to an entity set up by the employees of this subsidiary.■■Sale by Inveparco and the Group in late 2001 of their respective51.1% and 46.9% stakes in Financière Franklin Roosevelt,the parent company of Saint-Louis Sucre, to RaffinerieTirlemontoise, a subsidiary of the Südzucker AG group.2002■■Elimination of AWA’s registered office and transformation ofArjowiggins and Antalis International (the former operatingdivisions of AWA) into sole shareholder simplified joint stockcompanies and fully operational Group subsidiaries.■■Successive increases in the Group’s stake in SGS, to 21.6% at31 December 2002 and 23% at the beginning of 2003.■■Simplified public offer by Worms & Cie for 9.84% of its ownstock (representing 11,500,000 shares at a price of €21 pershare), followed by cancellation of the shares acquired and acorresponding reduction in capital.2003■■Start of an industrial link-up between Arjowiggins andCarbonless to take advantage of the synergies offered by the twobusinesses and optimise management of production facilities.■■Continuation of the Antalis turnaround plan.■■Expansion of Permal Group following the restructuring processinitiated in 2002.■■Acquisition of additional shares in SGS, bringing Worms &Cie’s stake to 23.77%.■■Sale of Danone shares, generating post-tax capital gains of€75 million.2004■■Implementation of the link-up between Arjowiggins andCarbonless from an operational and legal perspective.■■Sale of Accor shares, generating post-tax capital gains of€21.6 million.■■Reorganisation of Permal Group.2005■■Change in the legal form of Worms & Cie to a joint stockcorporation with a board of directors, and change in name toSequana Capital.■■Sale of 70.5% of Permal Group to Legg Mason for a totalamount of USD 718 million, plus an earn-out payment contingenton Permal’s future performance. Sequana Capital retainsa 6.36% stake in Permal, which it agrees to sell to Legg Masonin 2007 and 2009.■■Change in management team at Arjowiggins. Provisions arebooked for exceptional items for a pre-tax amount of €197 million,including €191 million in additional provisions and writedownsof fixed assets.2006■ ■ Change in shareholding structure: unwinding of the shareholderagreement between the Worms, Barnaud, Meynial andTaittinger families in March, which raises the free float from12.4% to 27.44% of the share capital.14 | Sequana | 2012 Document de référence (English version)

Share performance and ownership structurePresentation of the groupPresentation of Sequana 1Share informationThe par value of each Sequana share is €9.Stock market listingSequana shares were first floated on the Premier Marché of theParis stock market on 25 May 1998, and have been listed since21 February 2005 on the Eurolist market of NYSE Euronext Paris.They are presently part of Segment B. On 24 December 2012,the shares were transferred to the “long-only” segment of thedeferred settlement service (SRD).No commitments of any nature were made at the time of theflotation.Stock market codesSince 30 June 2003, all securities traded on the Paris spot marketshave been identified by their International SecuritiesIdentification Number (ISIN) code. Sequana’s ISIN code isFR0011352590 and its ticker symbol is SEQ.SEQ.PA is the code used by Reuters and SEQ.FP the code usedby Bloomberg.Sequana’s shares have been listed on the CAC Small®, CAC Mid& Small® and CAC All- Tradable® indices since 21 March 2011.Share ownership and corporate actions (1)Capital increaseFor the purpose of accelerating the Group’s development plan andstrengthening its financial structure, Sequana carried out a capitalincrease of €150 million in 2012 with preferential subscriptionrights for existing shareholders.The subscription period ran from 14 to 27 June 2012. The issuewas taken up by the Group’s main historical shareholders as wellas by FSI which became a shareholder of Sequana for the firsttime, committed to the Group’s long-term development.This operation resulted in the creation of 100,037,488 new sharesand following its completion, FSI, Exor SA, DLMD, Allianzgroup and Pascal Lebard owned 20.09%, 18.74%, 13.35%,10.22% and 0.26%, respectively, of Sequana’s share capital.Shareholder agreementAs part of the capital increase, FSI entered into a shareholders’agreement – which does not constitute an agreement to act inconcert – with Exor SA, DLMD, Pascal Lebard and Allianzgroup as well as with BNP Paribas Arbitrage and Royal Bankof Scotland group. BNP Paribas Arbitrage and Royal Bank ofScotland group are parties to the agreement due to pledges thatthey hold on the Sequana shares owned by DLMD pursuant toan agreement to restructure DLMD’s debt entered into in 2010.At the same time, Exor SA, DLMD and Pascal Lebard terminatedthe shareholder agreement to act in concert signed on6 July 2007 and renewed on 21 July 2010.Reverse stock splitOn 15 November 2012, Sequana carried out a reverse stocksplit of its shares based on the exchange of one new Sequanashare with a par value of €9 for six old Sequana shares with apar value of €1.50 each. This operation will last two years to14 November 2014 and its purpose is to reduce the volatility ofthe Sequana share price.Pre-reverse split shares were transferred to the NYSE Euronextdelisted securities compartment on 15 November 2012 underISIN code FR0000063364 (ticker symbol SEQNR) where theymay be traded until 14 May 2013. After this period ends, shareholdersmay trade pre-reverse split shares over the counter (OTC)until 14 November 2014.After 15 November 2014, new unclaimed Sequana shares correspondingto old (pre-reverse split) shares will be sold on NYSEEuronext. The proceeds from the sale will be placed in an escrowaccount opened at a credit institution and may be claimed byshareholders or their beneficiaries during a ten-year period. Oncethis period has expired, the sums will be placed with Caisse desDépôts and may be claimed by shareholders or their beneficiariesin accordance with the applicable laws and regulations and withthe statute of limitations concerning the period after which thefunds shall be paid to the French State.(1) See Chapter 5, page 187.36.91%Free float10.22%AllianzOwnership structure at 31 December 20120.43%Treasury shares20.09%FSI18.74%Exor SA13.61%DLMD(incl. Pascal Lebard 0.26%)Sequana | 2012 Document de référence (English version) | 19

1Presentation of the groupPresentation of SequanaShare performanceShare data over the last three years2012 2011 2010Number of shares at 31 December 25,009,372 49,545,002 49,545,002Dividend (in €) – (1) – 0.40Share price (in €) (2)High 14.25 12.95(from 1 Jan. to 14 Nov.) 6.70(from 15 Nov. to 31 Dec.) 10.75Low 2.76 6.83(from 1 Jan. to 14 Nov.) 1.12(from 15 Nov. to 31 Dec.) 5.97Closing 8.24 4.29 11.65Market capitalisation (in € millions) at 31 December 206 213 577(1) Decision subject to shareholder approval at the Annual General Meeting of 27 June 2013.(2) On 15 November 2012, Sequana carried out a reverse stock split of its shares based on the exchange of one new Sequana share with a par value of €9 for six old Sequanashares with a par value of €1.50, leading to a similar adjustment in the quoted share price.Share performance between 1 January 2012 and 31 March 2013The table below presents Sequana’s share performance and trading volume over the past 15 months (source: NYSE Euronext Paris):Average price (1)(in €)High(in €)Low(in €)Average daily tradingvolume(number of shares)Average marketcapitalisation (2)(in € millions)January 2012 4.68 5.99 3.85 316,177 232February 5.98 6.70 5.38 267,076 296March 5.46 6.25 4.72 237,416 271April 3.82 4.84 3.11 206,804 189May 3.38 3.85 2.96 173,469 169June 2.36 3.48 1.58 575,392 118July (from 1 July to 8 July) 1.66 1.78 1.54 956,846 83July (from 9 July to 31 July) 1.49 1.61 1.34 895,290 224August 1.60 1.73 1.47 774,301 240September 1.65 1.89 1.51 922,302 248October 1.50 1.68 1.12 1,014,505 225November (from 1 Nov. to 14 Nov.) (3) 1.20 1.28 1.15 718,135 180November (from 15 Nov. to 30 Nov.) (3) 8.20 10.75 5.97 612,085 205December 8.49 9.24 8.12 121,800 212January 2013 9.16 9.63 8.28 108,021 229February 8.48 9.14 7.66 61,337 212March 7.64 8.20 6.23 70,621 191(1) Arithmetic average of closing prices.(2) Based on 49,545,002 shares making up the share capital between 1 January 2012 and 29 April 2012; 50,018,744 shares making up the share capital between30 April 2012 and 8 July 2012; 150,056,232 shares making up the share capital between 9 July 2012 and 14 November 2012; and 25,009,372 shares making upthe share capital after 15 November 2012.(3) On 15 November 2012, Sequana carried out a reverse stock split of its shares based on the exchange of one new Sequana share with a par value of €9 for six old Sequanashares with a par value of €1.50, leading to a similar adjustment in the quoted share price.20 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Dividend per shareDividends paid by the Company over the past five yearsYearNet dividend2008 –2009 €0.352010 €0.402011 –2012 (1) – (1)(1) Decision subject to shareholder approval at the Annual General Meeting of 27 June 2013.Dividend payout policySequana’s dividend policy is chiefly based on the Group’s earningscapacity, financial position, the ability of its operating subsidiariesto pay out dividends, and any other factors that theBoard deems relevant.In connection with its new refinancing agreement finalised inApril 2012, Sequana agreed with its financial partners not to payany dividends in 2012 or 2013 and to limit any dividend payoutin 2014.Sequana reported a net loss attributable to owners of €119 millionfor 2012, due mainly to writedowns taken against assets on thebooks of Arjowiggins and Antalis in an amount of €54 millionand restructuring costs for the production and distribution businessestotalling €52 million.At its meeting of 26 March 2013, Sequana’s Board of Directorsdecided that it would appropriate the net loss to retained earningsand would recommend not paying any dividends inrespect of 2012 at the Annual General Meeting to be held on27 June 2013 to approve the financial statements for the yearended 31 December 2012.Market capitalisation at 31 December 2012(e millions)577213 2062010 2011 2012Regular dialogue with investorsSequana provides the market with quarterly updates on its results(sales by business and condensed consolidated income statement)and its strategic focuses, and publishes full or condensed financialstatements twice a year.All of this information can be consulted on its website in Frenchand English. The website may be used to consult the share pricein real time and obtain the latest press releases, analyst presentationsand so on. An e-mail alert service informs all interestedparties of the latest news releases.A financial notice is published in the French media in connectionwith the Group’s annual and half-yearly earnings announcements.Sequana organises information meetings that coincide with thepublication of annual and interim earnings. Senior managementmeets regularly with investors in Europe and also takes part in conferencesorganised for small and mid-caps. Sequana participated intwo such meetings in 2012 in Paris, as well as in around a dozenmeetings with investors as part of the Group’s capital increase.Further information on the Sequana share can be obtained fromthe communications and investor relations department:■■by mail, addressed to: Sequana, 8, rue de Seine,92517 Boulogne Cedex, France■■on the Group’s website: www.sequana.com■■by e-mail: contact@sequana.com■■by telephone: +33 (0)1 58 04 22 80Management of share accountsSequana’s Articles of Association require that shares be heldin fully registered or administered registered form or as bearershares in order to facilitate trading in the Company’s shares.BNP Paribas Securities Services manages Sequana’s share accounts.BNP Paribas Securities ServicesInvestor Relations9, rue du Débarcadère93500 Pantin, FranceTel: +33 (0)8 26 109 119Sequana | 2012 Document de référence (English version) | 21

1Presentation of the groupPresentation of SequanaPresentation of business activitiesAntalisNo. 1 in Europe and No. 3 worldwide in B2B distribution of paper and packaging productsFour business segments Leading positions Broad range of clients 2012 key figuresPRINTCoated and uncoated papers,specialty and creative papers,envelopes, graphic supplies.OFFICEPaper and envelopes, consumables.VISUAL COMMUNICATIONPaper, board and plastics.PACKAGINGConsumables, machines and additionalservices for the protection of all goods(industry, printers, companies).Geographic reachNo. 1 in the Baltic States, Czech Republic,Finland, France, Ireland, Norway, Poland,South Africa, Switzerland.No. 2 in Austria, Belgium, Denmark,Netherlands, Romania, Slovakia, Spain,Sweden, UK.More than 135,000 customersaround the world:■■printers, publishers;■■companies and government agencies;■■professionals specialisedin signage systems;■■industrial firms.Europe Americas Asia/Pacific AfricaAustria, Belgium, Bulgaria, Czech Republic,Denmark, Estonia, Finland, France,Germany, Hungary, Ireland, Italy, Latvia,Lithuania, Luxembourg, Netherlands,Norway, Poland, Portugal, Romania,Russia, Slovakia, Slovenia, Spain,Sweden, Switzerland, Turkey, UK.ProfileArgentina, Bolivia, Brazil, Chile,Colombia, Mexico, Peru.Europe’s leading B2B distributor of paper and packaging productsand No. 3 worldwide, Antalis offers a broad array of productsand services to more than 135,000 business customers in its fourmarket segments.Due to the diversity of its customers, Antalis can significantlyreduce its sensitivity to changes in its customer base. Activein markets only marginally affected by seasonal fluctuations,Antalis usually reports slightly weaker sales figures in Augustand December.Selling prices vary depending on the category of product, quantity,service offering, country, customer segment, purchasingprices, competitive environment and special offers. In general, acatalogue listing selling prices is available in each country and isused as a basis for specific discounts and net prices, which alsodepend on the factors mentioned above. Antalis actively monitorsits pricing policy with dedicated pricing managers and pricingtools embedded in the Enterprise Resource Planning (ERP) andCustomer Relationship Management (CRM) systems. Sales andpayment terms and conditions are closely monitored by teamsspecialising in receivables management in order to optimise cashrecovery and minimise bad debt risk.Australia, China, Hong Kong, Japan,Malaysia, Singapore, Thailand.108 distribution centres12,000 deliveries every day in Europe1.9 million tonnes of paper distributedOver 6,000 employees in 44 countries€2.7 billion in salesBotswana, South Africa.Antalis’ operations span five continents and 44 countries. Itsmain markets are Western and Eastern Europe, where it respectivelygenerated 75% and 14% of its sales in 2012. Antalis also hasoperations outside Europe, in South Africa, South America andAsia-Pacific. The contribution of these regions to the company’stotal sales is increasing.In 2012, Antalis had around 6,000 employees, 80% of whomwere based in Europe.20%Rest of the world17%Eastern EuropeAverage headcount by geographic area10%France18%UK35%Western Europe(excl. France and UK)22 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Antalis’ business segmentsThe paper and communication media distribution market isfiercely competitive and has become far more concentrated inEurope over the past ten years. It currently represents around13.5 million tonnes of paper. Direct sales by producers to customersaccounts for around one-third of the market. The othertwo-thirds are served by distributors, with the top five playersenjoying a market share of almost 80%.Competition on the markets for print and office papers hasintensified over the past few years. As well as companies whosebusinesses are exclusively similar to its own (PaperlinX, Igepa,Papyrus), Antalis also competes directly with paper producerswho are also distributors (Torraspapel) and with office supplydealers (Lyreco, Office Depot, Staples). Excess capacity in thepaper sector and a tough economic climate in recent years haveprompted certain paper manufacturers to increase their directsales in certain product categories, sometimes at the expense ofsales via specialist distributors like Antalis.Breakdown of sales by business segment16%Office10%PackagingAntalis operates in four segments:6%VisualCommunication68%PrintPrintAntalis is a leader in the print market and is recognised as havingthe highest quality and most extensive range of products onthe market. Printers, graphic designers, publishers and advertisingagencies can choose from a huge variety of premium coatedand uncoated papers, creative papers and envelopes as well as specialtyproducts such as carbonless and self-adhesive papers.In 2012, Antalis’ share of the European print market was around20% in volume terms. Its main competitors in this segment arePaperlinX, Papyrus and Igepa. Demand in the print market isdriven by expenditure on printed advertising and corporate communications.However, the market has to come to terms withthe growing use of electronic media and a volume downturn inEurope. In contrast, the print market in Asia and South Americaremains bullish.In 2012, Antalis’ Print business generated €1,846 million insales, or 68% of the company’s total sales.OfficeAntalis distributes a comprehensive array of reams (for photocopiersand printers) to large corporations, government organisationsand resellers (central purchasing bodies, procurement centres andretailers) along with envelopes suitable for the very latest inkjet,laser jet and digital printing techniques.In 2012, Antalis’ share of the European office paper market wasaround 25% in volume terms. Its main competitors in this segmentare Lyreco, Office Depot, Xerox and Papyrus. Demand foroffice paper depends on the consumption of paper for photocopiers,inkjet and laser jet printers, and for printed documents ande-mails.In 2012, Antalis’ Office business generated €440 million in sales,or 16% of the company’s total sales.PackagingPackaging distribution is a fast-growing, high value-added segment,and the market remains very fragmented. Thanks to itsstrong European presence, Antalis is one of the market leaders.The customer base comprises major industrial groups in sectorssuch as the car industry and electronics, as well as SMEs andprinters. Antalis provides these customers with consumables,machines, and additional services and solutions for protectinggoods in transit and in storage in accordance with their specificcharacteristics and needs. Its product offering includes standardpackaging products like kraft paper, bubble wrap, cardboardboxes, strapping and packaging machines, as well as bespokelogistics and technical solutions, especially for the export marketand protection against corrosion for industrial goods.In 2012, Antalis’ share of the packaging market was around5% in value terms and the company was ranked No. 2 in Europe.Its main competitors are Raja, Nefab, Ratioform and SCAPackaging. This market is currently undergoing consolidation.Growth in the packaging market mainly depends on GDP trendsand national and international trade.In 2012, Antalis’ Packaging business generated €261 million insales, or 10% of the company’s total sales.Visual CommunicationThe Visual Communication business targets graphic art specialistsconducting promotional, advertising or information campaigns.Antalis supplies these specialists with board, plastics andpaper for point-of-sale (POS) advertising displays, signage, storewindow and car displays and banners. The products are adaptedto different printing techniques including screen, UV offset anddigital/large format printing (LFP).In 2012, Antalis’ share of this fragmented market was around6% in value terms. Antalis is one of the leading distributors ofsignage systems and POS advertising in Europe. Its main competitorsin this segment are Spandex, Vink, ThyssenKrupp,PaperlinX and Igepa. Demand on this market is steadily growingand moves in line with the needs of the advertising, signage, selfadhesivesand POS advertising sectors.In 2012, Antalis’ Visual Communication business generated€148 million in sales, or 6% of the company’s total sales.Sequana | 2012 Document de référence (English version) | 23

1Presentation of the groupPresentation of SequanaAntalis – Key strengthsA global playerAntalis is one of the few paper distributors to enjoy a truly globalreach, with operations spanning 44 countries across Europe,South America, South Africa and Asia-Pacific.Balanced European coverageAntalis consolidated its position as European market leader byacquiring Map in late 2007. It now has operations in 28 countriesand has a market share of over 20% in 20 of them. This criticalmass allows it to optimise its supply chain and strengthen partnershipswith key suppliers. This broad geographical base alsoallows the company to spread risk more effectively.Antalis has operations in 17 countries across Western Europe,and enjoys a strong presence in the UK, France, Germanyand Switzerland, all of which contribute significantly to sales.Boasting a market share of almost 20% in volume terms in 2012,Antalis is the leading distributor of paper and packaging productsin the region. In 2012, Antalis generated €2,027 million in salesin Western Europe, (75% of its total sales), and €52 million inEBITDA (63% of its total EBITDA).In Eastern Europe, Antalis has operations in 11 countries includingthe Czech Republic, Poland, Romania, Turkey and the BalticStates. Antalis is the leading distributor of paper and packagingproducts in volume terms in the region with a market share ofaround 28% in 2012. During the year, the company generated€374 million in sales (14% of its total sales) and €15 million inEBITDA (18% of its total EBITDA) in Eastern Europe.Growth drivers outside EuropeOutside Europe, Antalis has a strong foothold in South Africa,South America and Asia-Pacific. It has operations in seven countriesacross Asia and a further seven across South America. It isalso present in South Africa and Botswana, and exports to severalAfrican countries.Under the sales agreement in place with xpedx, the leading paperand packaging distributor in North America, Antalis is now ableto better serve its customers in the North American and Mexicanmarkets.In 2012, Antalis generated €294 million in sales outside Europe(11% of its total sales), €15 million in recurring operating income(26% of its total recurring operating income) and €16 million inEBITDA (19% of total EBITDA).Strong local presenceIn spite of its international profile, Antalis also enjoys a stronglocal presence. This is essential for meeting customer needs anddeveloping lasting commercial ties. Its local presence is underpinnedby a hands-on sales approach adapted to the specificcharacteristics and profile of each customer, which enables itto offer tailored solutions and efficient customer relationshipmanagement.Antalis’ sales teams are generally organised into three maincategories:■■a field salesforce, in charge of visiting customers in given areas;■■telesales staff, responsible for telephone marketing operationsfor a specific customer segment; and■■in-house sales teams (known as sales advisors), providing supportto field sales teams, making outgoing calls, processingorders and managing certain administrative tasks.Under the company-wide RACE 2012 programme, Antalis’ salesorganisation was rethought in order to provide more added valueto customers. Field sales teams now deal exclusively with majoraccounts, while telesales staff handle smaller customers. This newlooksales organisation is accompanied by increased specialisationof the sales teams’ expertise, tighter coordination between the differentsales channels and the continued roll-out of CRM tools.Efficient data and CRM toolsIn customer relationship management, Antalis makes significant,ongoing investments to upgrade its IT systems, a key factor drivinggrowth and opportunities for development.The aims of its IT strategy are to:■■standardise and harmonise order processing, customer invoicing,raw material purchasing, inventory management, productioncontrol, delivery management and financial oversight usingERP tools within all entities. The number of programmes wasreduced from 16 in 2007 to 7 at the end of 2011 and will bereduced to 4 by the end of 2015;■■focus on sales, marketing and customer initiatives by rollingout CRM tools across the globe (30 countries were covered atthe end of 2012), develop new electronic services and ensurethat IT plays a part in programmes and initiatives aimed atimproving customer service quality;■■roll out e-commerce solutions for its customers and suppliers inorder to improve efficiency and customer service, in particularby developing an e-commerce platform (see page 29);■ ■ unlock cost synergies using a central IT platform (a singledata centre was created out of the three existing centres inMarch 2012, leading to a 30% reduction in IT infrastructurecosts for Antalis) and a supplier/customer message process;24 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1■■improve data reliability, develop a catalogue of products andservices and set up a reporting system based on key performanceindicators (creation of a single centralised product catalogueas part of a master data management solution).These initiatives aim to improve reliability, security and implementationlead times. They also provide the flexibility and responsivenessrequired to offer value-added services to customers.High-performance supply chainThe organisation of Antalis’ logistics operations, coupled withmajor storage capacity, allow it to deliver to customers within 24hours and even offer same-day service in most large cities. Serviceexcellence is rooted in its highly effective distribution and transportnetwork.Distribution networkTwo paper distribution models are used:■■the “stock” model, which represents around two-thirds ofAntalis’ paper sales, where the distributor purchases its inventoriesfrom manufacturers and stocks them in warehouses.These inventories are then transported and delivered to customersto satisfy orders;■■the “indent” model, which represents around one-third ofAntalis’ paper sales, where goods are shipped directly fromproduction sites to end customers.Antalis has an extensive distribution network with around100 distribution centres worldwide, including some 80 in Europewhich are used to meet its customers’ “stock” requirements. Itdoes this through two additional distribution centre levels:■■national distribution centres located close to capital cities,which stock most of the products distributed by Antalis; and■■an extensive network of smaller regional distribution centreslocated near customers’ own sites. These centres offer fast deliverytimes but do not stock all of Antalis’ products, carrying inparticular products with high turnover rates.Surface areas for distribution centres can be up to 42,000 sq.m.(e.g., Melun Sénart in France).Antalis’ distribution network makes over 12,000 deliveries perday on average, which not only enables it to serve a huge numberof customers across Europe but also to offer a high level ofservice at competitive prices. Thanks to the broad geographicalreach of its warehousing network and an efficient, well-managedsupply chain, Antalis is able to provide its customers with a costeffective and efficient next-day delivery (same-day service in mostlarge cities). Antalis strives to continually improve its distributionefficiency by consolidating its ERP tools and optimising its warehousingnetwork.Antalis further leverages its assets to offer its customers a comprehensivearray of logistics services, which range from endto-endservice using just-in-time management to optimise thesupply chain and deliver goods in accordance with consumptionpatterns, to the storage of customers’ goods and the delivery ofthese goods to the customers’ own clients.TransportAntalis manages its transport network either internally or usingoutside firms in order to improve customer service while maintaininga tight rein on upstream and downstream transportationcosts.In its upstream transport operations, products are directly deliveredto national or regional distribution centres by Antalis’ suppliers.Except for the UK and Germany, the transportation ofproducts to Antalis’ customers is subcontracted throughoutEurope. Outside Europe, products are generally routed to regionaldistribution centres or cross docks by international carriers.Partnerships with key suppliersTo optimise its purchasing terms and conditions, purchases aremade with a limited number of key suppliers, all of which areglobal paper and board manufacturers. Antalis’ biggest suppliersare in the print and office markets, and represent around 80% ofits purchases. Dealing with a limited number of strategic suppliers,for which Antalis is a key customer in their relevant productlines, provides Antalis with stronger bargaining power throughvolume pricing. Antalis is also able to offer a consistently highquality of service through a broader product offering and therebyincrease its operating efficiency and profitability. In general,Antalis negotiates annual discounts with its key suppliers basedon volume targets.Its ten biggest suppliers for print and office paper accounted forover 80% of its purchases in 2012. No individual supplier representsmore than 20% of purchases. However, in the Packagingand Visual Communication businesses (not based on volumes),Antalis continues to have a fairly broad supplier portfolio,although its purchases are made with an ever fewer number ofsuppliers across all segments.To capitalise fully on Arjowiggins’ technical and industrialexpertise across Antalis’ distribution network, commercial tiesbetween the Group’s two activities have grown stronger in creativepapers as well as in the recycled and coated paper segment.This allows the Group to generate synergies in terms of sales andthe supply chain, making it easier to adapt its products to the constantlychanging demands of the market. In 2012, Arjowigginsaccounted for around 11% of purchases made by Antalis.Sequana | 2012 Document de référence (English version) | 25

1Presentation of the groupPresentation of SequanaAntalis – Results and strategy2012 highlights■■Acceleration of Packaging business growth in Europe andLatin America.■■Further expansion in fast-growing markets (Visual Communication,digital printing).■■Finalisation of the RACE 2012 (Results Acceleration throughCustomer Excellence) programme.Resilient operating performance despitetough market conditionsAntalis had to contend with a very tough market environment in2012 which saw a 5% drop in printing and writing paper volumesin Europe and strong downward pressure on selling prices. All marketsegments were affected by the decline in demand, with coatedand office paper volumes down 6% and 3%, respectively. There weresignificant disparities from one country to the next, with Spain andPortugal hard hit by the economic crisis and reporting a 15% slump inthe market compared to 2011, whereas France and the UK held firm,down just 6% and 5%, respectively, year-on-year. Despite the toughconditions, Antalis managed to maintain its market share.Business in non-paper segments (Visual Communication andPackaging) fared better, although growth was slower than expecteddue to the impact of the European economic crisis on these markets.The Packaging business was boosted by acquisitions made early in theyear in the UK (Ambassador) and Germany (Pack 2000), as well as inthe second half in Chile (Abitek) and the Czech Republic (Branopac)for a total enterprise value of €43 million. These companies added€53 million to Packaging sales in 2012.Despite the impact of the European crisis on markets outside theregion, business held firm in Asia and South America.Antalis’ sales were €2,695 million, down 2.3% year-on-year, or3.9% at constant exchange rates, reflecting the two-fold impact of adecline in volumes and strong downward pressure on selling pricesfor printing and writing papers in Europe.EBITDA came in at €83 million, down 17.1% on 2011, due mainly tofalling volumes, but partially offset by an enhanced product mix anda further reduction in overheads, particularly in the area of logistics.EBITDA margin was relatively stable, at 3.1% of sales (down 0.5 percentagepoints). However, Antalis still managed to keep its grossmargin steady thanks to the increasing contribution of Packaging andVisual Communication businesses.Recurring operating income was €57 million, a decline of 31.5% on2011, representing an operating margin of 2.1%.Key figures(€ millions) 2012 20112010managementpro formaSales 2,695 2,759 2,799EBITDA 83 101 110Recurring operating income 57 83 (1) 85Operating margin 2.1% 3.0% 3.0%Cash flow from operating activities 83 89 99Capital employed at 31 December 604 604 635 (2)Recurring operating income/Capital employed (ROCE) 9.3% 13.7% 13.8% (2)Net debt at 31 December 245 226 262 (2)(1) Including gains of €8 million arising on changes to pension funds in Europe. Adjusted for these items, recurring operating income amounted to €75 million insteadof €83 million and operating margin came in at 2.7% instead of 3.0%.(2) 2010 published data.Changes in cash flows(€ millions) at 31 December 2012 20112010managementpro formaEBITDA 83 101 110Change in working capital requirements 18 11 7CAPEX (19) (25) (19)Disposals of non-current assets 1 2 1CASH FLOW FROM OPERATING ACTIVITIES 83 89 99Net debt 245 226 26226 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Breakdown of sales by geographic areaBreakdown of EBITDA by geographic area11%Rest of the world13%France19%Rest of the world14%Eastern Europe21%UK41%Western Europe(excl. France and UK)18%Eastern Europe63%Western EuropeKey figures – Europe(€ millions) 2012 20112010managementpro formaSales 2,401 2,471 2,517EBITDA 67 84 92Recurring operating income 42 67 (1) 69Operating margin 1.7% 2.7% 2.7%(1) Including gains of €8 million arising on changes to pension plans in Europe. Adjusted for these items, recurring operating income amounted to €59 million insteadof €67 million and operating margin came in at 2.4% instead of 2.7%.Key figures Asia – South America and South Africa(€ millions) 2012 20112010managementpro formaSales 294 288 281EBITDA 16 17 17Recurring operating income 15 16 16Operating margin 4.9% 5.4% 5.8%Sequana | 2012 Document de référence (English version) | 27

Presentation of the groupPresentation of Sequana 1Services are an important source of profitability for Antalis andrepresent an area in which the company can carve out a competitiveedge. Services also help customers develop their businesses.Antalis leverages its expertise in this segment to implement bestpractices in all of its national markets. Following France’s pioneeringexample, all of the company’s European markets have setup a catalogue allowing customers to choose the desired level ofservice in line with their needs and budget. The company’s aim isto improve its service on an ongoing basis. Antalis’ e-commerceplatform was given a makeover in 2012 and a new version of theplatform will be launched in early 2013.Easier, faster and content-rich, the new, more user-friendly platformprovides clearer information about the company’s paper, packagingand visual communication offering and allows users to runsearches based on customer profile (printer, designer, chief reprographer,etc.). It includes dedicated content and advice for each lineof business. Product searches have also been made easier with anentry for each brand or application alongside the online catalogue.Antalis has carved out a leading position on the digital printingmarket with its “D2B” (digital to business) initiative designed toshow customers the potential of this market. It helps customersget to know the digital sector better and highlight the opportunitiesfor growth generated by new marketing practices (crossmedia, web-to-print, etc.). Launched in France in late 2011, thisprogramme is currently being rolled out across all of the company’sEuropean markets. Several events were organised in 2012in the UK, the Netherlands and Belgium, attracting more than2,000 visitors. Following on from these events, a number of opendays were held in France directly at printers’ premises, in partnershipwith major digital web press manufacturers.Finalisation of the RACE 2012 programmeThe RACE 2012 business transformation programme waslaunched by Antalis in 2010 with the aim of delivering excellenceto customers by:■■improving operating efficiency using sophisticated CRM tools;■■better understanding customers’ potential and/or their futureneeds;■■optimising sales processes.The new-look sales model rolled out across the Group is based ondetailed customer segmentation and a reallocation of sales forceseither to field sales teams dealing with major customers or to telesalesmanagers handling smaller customers. This has helpedincrease customer contact and improve customer service, as wellas freeing up more time for business development.The programme – rolled out over a three-year period to all of thecountries in which Antalis is present – ended in 2012. Each countryis now responsible for managing the programme on an operationallevel. Performance is tracked monthly, using key indicatorssuch as the percentage of telesales over total sales, or the numberof calls per day and per person assigned to business development.To bolster and develop sales teams, Antalis set up a SalesAcademy which has trained over 2,500 people in Europe overthe past three years. As part of its ongoing pursuit of excellence,Antalis set up a knowledge and performance management systemat the end of 2012. This talent-management tool, known aseXcellence, is designed to enhance skills through training (particularlye-learning) and to manage performance and developmentreview.15%France16%EasternEuropeBreakdown of sales by geographic area24%UKRest of the world – Key events in 201245%Western Europe(excl. France and UK)Asia-PacificIn 2012, Antalis Asia Pacific continued to develop its ecofriendlyrange of graphic and fine papers and also continued itspush into digital printing. Vigorous growth in recycled papers inAsia-Pacific and particularly Australia – where they were successfullylaunched over a year ago – is proof of how the company’scommunication and marketing efforts are beginning to yieldresults. In the premium fine paper market, Antalis Asia Pacificstepped up initiatives promoting all of its product ranges. Theseincluded client seminars, specialised sales teams (backsellers, telesalesstaff) and events featuring well-known designers. AntalisAsia Pacific also further strengthened its positions in the digitalprinting market by forging alliances with major equipmentmanufacturers.RACE 2012 continued to be rolled out across the region, improvingoperating efficiency and delivering better service to customersthrough:■■more detailed knowledge of customer needs owing to the newcustomer segmentation model and the implementation ofCRM tools;■■ongoing integration and development of the supply chain;■■a more rounded sales approach now encompassing telesalesstaff. This approach, initially launched in Thailand, is nowbeing rolled out across the region.South AmericaRACE 2012 continued to be deployed across the continent duringthe year. Telesales staff joined the new-look sales organisationand this began to pay dividends, with growth in telesalesreported in Peru. Online sales are a crucial part of the company’sbid to enhance its sales performance and received a boost in theyear following the launch of an e-commerce platform in Brazil.Antalis continued to expand its offering during the year, launchingnew creative paper ranges in Brazil and Bolivia, and settingup converting facilities for graphic supplies in Chile.Antalis’ acquisition of Abitek in Chile will help it develop itspackaging distribution business across the region.Sequana | 2012 Document de référence (English version) | 29

1Presentation of the groupPresentation of SequanaSouth AfricaIn 2012, Antalis continued to enhance the products on offer inthe country with a new range of visual communication products(Coala) and the eco-friendly 100%-recycled Cocoon Silk andGloss papers certified FSC®. The logistics services business in theregion reported significant growth, as well as Packaging operations,which were launched in February.Antalis took part in various international trade shows, includingSign Africa for professionals in the sign and large format digitalprinting industries and the Drupa print media fair in partnershipwith Kodak.Breakdown of sales by geographic area26%Asia35%SouthAmerica39%SouthAfricaArjowigginsNo. 1 producer of creative and technical papers worldwideGraphic divisionCoated US divisionCreative PapersdivisionProducts Brands Applications 2012 key figuresCoated and uncoated paperfor printing and publishingRecycled pulpSpecialty paper• recycledand eco-friendly paper• paper for specialtyapplications• paper for the medicaland hospital sectorCoated paper for printingand publishingPremium fine paperPaper for specialty applications(tracing and casting paper)Maine, Chromomat, SatimatCyclus, Eural, CocoonPlayper, Sequoia, Maine 1 Face,SecureCard, KaleïdoPropypel, Ethypel,Arjopeel, SterisheetUtopia, AltimaConqueror, Curious Collection,Keaykolour, Opale, Pop’Set,Rives, GuaflexGateway, Multikast, PriplakSecurity division Paper for secure payment Diamone, Bioguard,Bioguard V, Pixel Watermark,CombifluoPublishing, illustrated books,magazine covers, catalogues,dictionariesProductionof eco-friendly paperPublishing, books,corporate communicationsPlaying cards, tissue,labels and flexible packaging,transfer paper, POS advertisingand postersSterile sealingand wrapping solutionsPublishing, illustrated books,magazine covers, catalogues,dictionariesBusiness stationery, corporatecommunications, advertisingand promotion, bookbindingand luxury packagingSpecialty applications(technical drawing, paper usedin the manufacture of syntheticleather in the fashionand automotive industries)Banknotes, cheque books,vouchersSecurity solutions Jetguard, PaperLam Proof-of-identity documentation(ID cards, passports,driving licences)Brand protection solutions Polyart, STES Anti-counterfeit solutions,synthetic paperOver 5,000 employees€1.4 billion in sales22 productionand converting facilities1 million tonnesof paper producedMore than 50 recognised brands30 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Production and converting facilitiesEurope Americas AsiaFrance: Bessé-sur-Braye, Rives, Charavines,Château-Thierry, Crèvecœur, Le Bourray,Neuilly-en-Thelle, Palalda, WizernesUnited Kingdom: Chartham, Clacton,Ivybridge, StoneywoodThe Netherlands: ApeldoornCzech Republic: BrnoItaly: ArzanoSpain: GelidaUnited States: Combined Locks, Charlotte, CharlestonBrazil: SaltoChina: QuzhouProfileThe world’s leading producer of technical and creative papers,Arjowiggins generated €1,419 million in sales in 2012, representing30% of the Group’s total sales.Arjowiggins produces a wide range of high value-added creative andtechnical papers using environmentally-friendly, cutting-edge technology.Its operations and activities are focused mainly on the productionof high value-added specialty paper, where it is a top-ranking playerworldwide. Selling prices for specialty products are far higher thanfor traditional coated and uncoated papers, reflecting the value-addedresulting from the specific technical and technological componentsused. Arjowiggins has a portfolio of over 50 brands, all well known ontheir respective markets (e.g., Conqueror and Rives) for their high qualityand broad product range.Arjowiggins is organised around four divisions (Graphic, Coated US,Creative Papers and Security) and had more than 5,000 employees in2012, of which more than two-thirds were based in Europe.37%Graphic12%Coated USAverage employees by division28%Security23%CreativePapers13%Rest of the worldAverage employees by geographic area13%Europe(excl. France and UK)A global playerWith almost 50% of its sales generated outside Europe, Arjowigginsis a truly global player. In 2012, it had 22 industrial sites in NorthAmerica, Europe, South America and Asia, representing a totalproduction capacity of 1.4 million tonnes. Arjowiggins also operates17 plants (including three non-paper plants producing syntheticor polypropylene substrates) and 30 paper machines ofvarying sizes and capacities. Most of Arjowiggins’ plants have acomprehensive production capacity which includes finishing andconverting capabilities. The facilities are adapted to the use andtype of production at each site. For example, different types ofprinting machines are used at plants producing specialty paper.Arjowiggins also has three sites dedicated to converting certainspecialty papers and two recycled pulp facilities at Greenfield andLe Bourray in France (the pulp production unit at Le Bourray isfully integrated with paper production).12%Rest of the worldBreakdown of sales by geographic area45%France15%UK14%US16%France16%Asia26%Europe(excl. France and UK)10%UK20%USSequana | 2012 Document de référence (English version) | 31

1Presentation of the groupPresentation of SequanaProduction and converting facilitiesDivision Number of sites Europe Americas AsiaGraphic 7Coated US 1Creative Papers 6Security 8FranceBessé-sur-Braye, Château-Thierry,Le Bourray, Palalda, WizernesCzech RepublicBrnoFranceCharavines, Neuilly-en-ThelleUnited KingdomChartham, StoneywoodSpainGelidaFranceCrèvecœur, RivesThe NetherlandsApeldoornItalyArzanoUnited KingdomClacton, IvybridgeUnited StatesCharlestonUnited StatesCombined LocksBrazilSaltoUnited StatesCharlotteChinaQuzhouDiversified sales channels and customersArjowiggins sells primarily to the B2B (Business-to-Business)market and its customer base is fairly concentrated in each ofits segments. Arjowiggins’ customers are paper distributors,converters, printers, corporate customers, government authoritiesand central banks. Arjowiggins sells paper and solutions inFrance, the UK, and the rest of Europe, Asia and North Americathrough three different channels:■■sales to distributors, mainly paper distributors and brokers,which then sell to end users;■■sales to converters and printers; and■■direct sales to end users such as large companies, governmentauthorities and central banks.Strict procurement requirementsThe raw materials used to make Arjowiggins’ products are mostly:■■pulp, waste paper and cotton;■■minerals and chemical products;■■energy and water.The cost of supplies depends on the price of these raw materials.Due to pressure from competitors, the price of Arjowiggins’products is not always correlated with movements in the cost ofraw materials.Pulp, waste paper and cottonPulp is the main raw material required to produce paper. Thereare two types of chemical pulp:■■long-fibre chemical pulp made of spruce or pine and used tomake highly resistant paper;■■short-fibre chemical pulp made of birch, beech or eucalyptus,used to improve the surface properties of the paper.Arjowiggins uses both short- and long-fibre chemical pulpdepending on the requirements of each type of paper. The companyhas long-standing relationships with different suppliers foreach grade of pulp, and the raw material represents the bulk ofits costs. It protects itself against a rise in pulp prices by enteringinto hedging contracts.Arjowiggins also produces recycled pulp using an industrial processin which printing ink is separated from waste paper fibres.This process combines mechanical methods and chemical processesto produce deinked pulp which is then used to manufacturepaper. Arjowiggins purchases waste paper from key strategicsuppliers and from some local collection initiatives.Arjowiggins Security uses cotton fibres to produce banknotepapers which have to meet the highest standards of wear resistanceand durability.32 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Minerals and chemical productsThe main minerals and chemical products used to produce paperand coatings include latex, polymers, carbonates and starch.Arjowiggins buys these minerals and chemical products fromvarious leading producers worldwide. It may enter into long-termcontracts to secure supplies of critical raw materials and ensuresthat it uses diverse supply sources at all times. Arjowiggins keepsan up-to-date database of suppliers across the globe.Energy and waterEnergy is a key component of Arjowiggins’ production process.The cost of gas and electricity is heavily dependent on oil and naturalgas prices, and is also affected by the deregulation of energymarkets, particularly in Europe.Arjowiggins’ energy policy seeks to secure reliable gas and electricitysupplies at an optimum cost by entering into fixed- andvariable-price contracts with local electricity and gas suppliers.Arjowiggins Graphic is a member of the Exeltium consortium inFrance, which has signed a fixed-price electricity supply contractwith EDF.Large quantities of water are required to produce paper. AllArjowiggins’ sites are located close to water and respect local andgovernmental drawing rights. Over the past few years, the companyhas reduced the use of freshwater in its production processesthanks to greater recycling efforts. Most of its installations areequipped with wastewater treatment facilities which dispose ofsuspended solids and help reduce the quantity of oxygen in thewater recovered.Arjowiggins – Key strengthsArjowiggins produces specialty papers and boasts a unique positioningon its market.Predominant focus on specialty productsArjowiggins derives more than 70% of its sales from productswith a high technical component:■■papers for banknotes and official documents, brand protectionand anti-counterfeiting/illicit trading solutions (ArjowigginsSecurity);■■premium fine papers and specialty papers such as tracing orcasting paper (Arjowiggins Creative Papers);■■eco-friendly papers, specialty papers such as playing cards,transfer papers or papers for medical use (Arjowiggins Graphic).Standard coated and uncoated papers sold by the Graphic andCoated US divisions account for the remainder of sales.Selling prices for specialty products are far higher than for traditionalcoated papers, reflecting the value-added resulting fromthe technical and environmental components of these papers. Asthe cost of pulp as a proportion of the total production cost is lessthan for commodity goods, Arjowiggins is less sensitive to fluctuationsin paper pulp prices. This is particularly the case in theSecurity division, where products are chiefly manufactured usingcotton fibres.Given the broad range of its business activities, Arjowiggins hasmany competitors.26%Security17%CreativePapers44%Security33%CreativePapersBreakdown of sales by division17%Coated US42%Green29%Specialty29%CoatedBreakdown of EBITDA by division22%Graphic40%Graphic1%Coated USIntegrated recycled pulp operationsArjowiggins is the largest integrated producer of 100%-recycledpulp thanks to its Greenfield plant (Arjowiggins Graphic).Greenfield produces premium, extra-white FSC®-certified recycledpulp, giving it a major advantage amid growing demand foreco-friendly products.Sequana | 2012 Document de référence (English version) | 33

1Presentation of the groupPresentation of SequanaLeveraging innovation to cement leadershipInnovation is a vital part of the sales strategy pursued byArjowiggins’ divisions, which all have their own research anddevelopment teams.To anticipate and meet consumers’ needs, each R&D departmentworks closely with operational teams in order to develop new,highly innovative products. Partnerships developed with outsideresearch institutes and laboratories help transfer fixed costs outof the Group and provide access to highly specialised resources.Arjowiggins’ divisions put innovation at the centre of their strategy,helping to forge powerful brands and giving them a real edgein their respective markets. These innovation efforts continued in2012, resulting in the launch of various new products includingPowercoat paper for printed electronic applications and DiamoneXtra highly resistant paper used for banknotes.Research and development expenses totalled €12 million in 2012,or 0.8% of sales (2011: €11.7 million).Arjowiggins – Results and strategy2012 highlights■■Production model optimised and capacity adjusted in line withdemand, with the closure of three plants.■■Product innovation efforts stepped up.Improved operating performance2012 witnessed a slump in volumes of printing and writingpapers in Europe, North America and in the creative papers segmentcoupled with strong downward pressure on selling prices.However, specialty businesses remained buoyant, particularlythe security solutions and medical/hospital activities. Sales weredown by 3.2% on 2011 to €1,419 million (down 5.4% at constantexchange rates).Arjowiggins benefited from the drop in raw material prices overthe year. Waste paper prices fell sharply and the price of pulp wasbelow its 2011 levels but remained higher than expected. Cottonprices also fell back to near-2010 levels. The cost of energy andchemical products remained high. The fall in raw material pricesalong with an improved product mix for specialty businesses andcost savings helped Arjowiggins offset the volume downturn.EBITDA came in at €64 million, up 29.2% year-on-year, andrepresented 4.5% of sales.Recurring operating income came in at €14 million compared to€22 million in 2011 (which included a gain of €17 million arisingon pension funds in the UK, with no impact on EBITDA).Operating margin came in 0.5 points lower at 1% of sales.Optimisation of production modelIn the face of structural decline and overcapacity in the marketfor printing and writing papers, Arjowiggins is constantly adaptingits production capacity in line with demand. In August, itclosed a paper machine at its Chartham plant in the UK. Thedeteriorating economic environment during the summer acceleratedthe decline in volumes, and the company decided to shutdown three further plants to optimise efficiency and reduce costs.The Witcel plant in Argentina and Dalum Papir A/S plant inDenmark closed in the second half of 2012. Together with themachine shut down at Chartham, this represents a total capacityof 114,000 tonnes (including 103,000 tonnes for Dalum PapirA/S). Closure of the Ivybridge plant in the UK with a capacityof 14,000 tonnes should be effective in the first quarter of 2014.These measures will reduce Arjowiggins’ total production capacityby around 10%, making it easier to manage and improve plantefficiency and achieve a capacity utilisation rate of above 90%.Thanks to the flexibility of its production facilities, all productranges were able to be transferred to the company’s other sites inFrance, the UK and Brazil.Key figures(€ millions) 2012 20112010managementpro formaSales 1,419 1,465 1,489EBITDA 64 50 112Recurring operating income 14 22 (1) 66Operating margin 1.0% 1.5%Cash flow from operating activities 55 43 45Capital employed 357 472 561 (2)Recurring operating income/Capital employed (ROCE) 3.9% 4.8% 13.6% (2)Net debt 275 313 353 (2)(1) Including gains of €17 million arising on changes to pension plans in the UK (unallocated to divisional operating income). Adjusted for these items, recurring operatingincome amounted to €5 million instead of €22 million and operating margin came in at 0.3% instead of 1.5%.(2) 2010 published data.34 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Changes in cash flows(€ millions) at 31 December 2012 2011EBITDA 64 50Change in working capital requirements 24 32CAPEX (34) (44)Disposals of non-current assets 1 6CASH FLOW FROM OPERATING ACTIVITIES 55 44Net debt 275 313Graphic divisionArjowiggins Graphic produces a wide range of coated anduncoated papers adapted to four-colour printing. These paperscan be white or natural with a glossy, semi-matte or matte finish,and are designed for publishing, advertising and printedcommunications.The division’s eco-friendly offering includes a comprehensive lineupof 100%-recycled papers, FSC®-certified papers, and papersproduced with a mix of FSC®-certified recycled and virgin fibres.The division’s Greenfield plant is a major asset in promoting itseco-friendly offering as the European leader in the production ofrecycled, premium extra-white pulp certified FSC® for graphicapplications.Arjowiggins Graphic also enjoys strong positions in certain nichemarkets for specialty papers such as for playing cards, labels andflexible packaging, transfer paper, posters, displays, point-ofsale(POS) advertising, tissue and fireproof papers. ArjowigginsGraphic boasts top-ranking positions on most of its markets. Itscurrent growth strategy is focused on specialty papers, where ithas launched a host of highly innovative products, for example inthe laminated segment, where FSC®-certified laminated paperis used as an alternative to plastic for gift cards and SIM cards.The division also offers a wide range of sterilised packaging solutionsfor the protection of disposable medical equipment (syringes,catheters, scalpels, compresses, gowns, etc.) as well as sterilisedsealing and wrapping solutions used in operating theatres or to protectreusable medical devices in operating theatres (surgical knives,forceps, etc.). The Propypel, Ethypel, Arjogreen and Sterisheetbrands offer a vast range of sterilised packaging solutions certifiedto the strictest medical standards and featuring high bacterial barriers,controlled permeability and suitable strength.The division has to contend with fierce competition in its numerousmarkets and has carved out a unique position on each of itssegments.Arjowiggins is Europe’s sixth largest producer of coated paper involume terms and the leading producer of recycled graphic papersin Europe (excluding LWC). The division’s main competitors areBurgo, Lecta, Leipa, Lenzing, M-real, Sappi, Steinbeis, StoraEnso and UPM. Demand for graphic papers is linked mainlyto the publishing, magazine, catalogue and illustrated bookssegments.In the healthcare sector, Arjowiggins Healthcare is among theleading producers of sterilised packaging products and papersworldwide in terms of sales. Its main competitors in this sectorare for example Ahlstrom, Billerud and Neenah. Demand in thissector has been driven by increasing demand for healthcare ingeneral, by the growing use of disposable instruments over reusableinstruments, by the development of ready-to-use productsand by stricter health regulations.2012 highlights■■Robust growth in the eco-friendly offering.■■Ongoing innovation in specialty businesses.■■Closure of the Dalum plant in Denmark.2012 results2012 witnessed a slump in volumes for graphic coated papersagainst a backdrop of strong downward pressure on selling prices.The fall in demand for graphic papers accelerated from the summeron, fuelled by the economic crisis in Europe. This preventedArjowiggins from implementing the price increases scheduled forthe second half of the year. In contrast, demand held firm in mostspecialty businesses, and particularly in laminated, medical/hospitaland recycled pulp activities. Sales came in 2.0% lower yearon year, at €569 million.The division benefited from the fall in pulp and waste paper pricesover the year. EBITDA came in at €14 million, up €12 million on2011, and represents 2.5% of sales.Arjowiggins Graphic should see a reduction in its fixed costbase as from 2013 following the closure of the Dalum plant inDenmark at the end of November.Innovative eco-friendly solutionsArjowiggins Graphic’s three-pronged eco-friendly strategy isbased on:■■the use of recycled pulp based on waste recovery, backed bystrong ties with end users and local regional authorities;■■the reduction of its carbon footprint, which helps curb greenhousegas emissions; and■■the use of FSC®-certified virgin pulp.Sequana | 2012 Document de référence (English version) | 35

1Presentation of the groupPresentation of SequanaArjowiggins Graphic currently boasts the market’s largest ecofriendlyoffering, comprising a unique range of white and naturalrecycled papers and eco-friendly papers mixing FSC®-certifiedrecycled and virgin fibres. Sales growth in this segment in 2012confirms companies’ interest in eco-friendly products that fit withtheir sustainable development approach.In 2012, Arjowiggins Graphic continued its innovation efforts,cementing its leadership in recycled and eco-friendly papers. Newoffice and digital printing papers were marketed and sold and anew digital offering developed, due to be launched in 2013. Thiswill be the first recycled full colour coated inkjet paper designedfor direct marketing, publishing and personalised promotionalapplications (texts, images, data). The new product will roundout Arjowiggins Graphic’s range of recycled papers specificallydesigned for digital colour printing and suited to all machinesused by major manufacturers, from printing platforms such asHP Indigo and digital dry-toner web presses to more traditionaloffset presses.Arjowiggins Graphic’s green strategy is highlighted in innovative,award-winning marketing campaigns. The division wasa shortlisted in the “Promotional Campaign of the Year” categoryat the 2012 Pulp & Paper International Awards (PPI) for itsCocoon ads. Cocoon is 100%-recycled paper designed for printers,designers and major companies, and the campaign showcasedthe product’s strong green credentials.Arjowiggins Graphic came top of WWF’s most recent PaperCompany Index, a ranking of 19 paper producers based ontheir overall carbon footprint. It scored 73.86%, the best in the“Graphic paper” category, confirming the division’s leadership inthe use of recycled fibres for these papers.Robust growth of specialty businessesSpecialty businesses reported robust growth in 2012, driven bythe launch of new innovative products.In the laminated segment, sales were buoyed by the successof Sequoia, a laminated paper for gift, loyalty and SIM cardslaunched in 2011. Since it is biodegradable and compostable,Sequoia represents a real alternative to plastic, and in 2012 wasused in new visual communication (POS advertising, displays,etc.) and printing (calendars, brochures, etc.) applications.On the sublimation print market which includes embellishingtextiles and objects (skis, mouse pads, etc.), a new adhesive productfor stretch textiles was launched in 2012 within the Sublimagerange and showcased at two international trade fairs (Fespa andSGIA). The entire Sublimage range is certified FSC® and Oekotex®,which guarantees that it contains no substances harmfulto humans or the environment. These achievements cementArjowiggins Graphic’s position as a leading player on this market.Innovation efforts were also in evidence when the divisionlaunched a new sparkling tissue in its range of Kaleïdo colour tissuesused for tablecloths, mats and napkins. Technical innovationin four-glued ply tissue which was launched in 2011 continuedapace, and the technology was extended to new applications forprinted handkerchiefs and napkins.Business was particularly brisk in the healthcare segment,boosted by the success of Sterimed which was launched in 2011and is used by hospitals for disposable medical instruments andsterilised packaging solutions. Arjowiggins Healthcare continuedwith its innovation efforts in this segment, and at the Medicatrade show in November unveiled the first packaging solutionwith authentication features designed to protect against counterfeitingand illicit trading. An active communications policy(newsletters, attendance at different trade shows) also raised itsprofile among manufacturers of medical instruments. In the hospitalsegment, ArjoGreenTM, the first biodegradable solutionmarketed for sterilised wraps, enjoyed strong demand. As concreteproof of these sustainable development efforts, ArjowigginsHealthcare was certified FSC® in 2012. A new product was alsolaunched in the Sterisheet range: ArjoMarker is a marker thatuses special ink to indicate sterilisation.Further productivity gainsAmid a structural decline in the European market for graphicpapers and the resulting overcapacity in the industry, adjustingplant capacity is a priority for Arjowiggins Graphic. Exacerbatedby the economic crisis in Europe, this situation led the divisionto close its Dalum Papir A/S plant in Denmark at the end ofNovember. Arjowiggins Graphic is therefore sharpening its competitiveedge by better managing capacity to ensure that its plantsoperate efficiently at the lowest possible cost and with a utilisationrate of above 90%.Thanks to the flexibility of its production facilities, all productionat sites shut down (representing 103,000 tonnes) was able tobe transferred to Arjowiggins Graphic’s three plants in France.The division continues to manufacture products for its recycledpaper ranges Cyclus and RePrint Deluxe, enabling clients tocontinue benefiting from the division’s high quality and serviceexcellence.To meet the growing demand for premium recycled pulp bothfrom its own plants and from external customers, ArjowigginsGraphic has undertaken investments to expand the capacityof its Greenfield site in France. Greenfield produces white andextra-white deinked pulp, which is used mainly in premiumwhite recycled paper for the printing and writing industries. Thisinvestment increased the plant’s capacity from 125,000 tonnes to150,000 tonnes at end-2012.In the healthcare segment, an active investment policy has helpedto upgrade plants and equipment, thereby increasing capacity,productivity and efficiency. In the future, the division will thereforebe able to develop high value-added products for the medicaland hospital sector. Work also continued on the two biomassheaters at the Palalda plant in France, and these are expected tocome into service in October 2013. The use of biomass instead offossil fuels will prevent 21,000 tonnes of CO 2being released intothe atmosphere each year.Key figures - Graphic division(€ millions) 2012 2011Sales 569 581EBITDA 14 2Recurring operating income (loss) (6) (20)Operating margin -1.2% -3.5%36 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Coated US divisionAppleton Coated manufactures premium coated papers for thecommercial printing and book publishing industries under theUtopia brand. The division has carved out a strong position inthe educational textbook market supplying many well-knownpublishers. Thanks to its excellent service and high-end offering,the division is a major supplier to many high profile brands inindustries including fashion, automotive and financial services.Demand in these markets is driven largely by advertising expendituresand government spending for education.As a leader in environmental papers, Appleton Coated offersFSC®-certified products made with post-consumer recoveredfibre and products made with green power, all produced at theCombined Locks mill in the United States.Appleton Coated is the fourth largest manufacturer of coatedpapers in volume terms in the United States. Its main competitorsin the US coated paper market are Newpage, Sappi and Verso.2012 highlights■■Stable volume at the top end of the coated product line-up.■■Consolidation of solid leadership position in coated papers forhigh-speed inkjet web technology.■■Expansion of the product line and volume growth of ecofriendlyproducts.■■Strategic partnerships drive growth in specialty and uncoatedvolume.2012 resultsIn 2012, the slow pace of economic recovery and the increasingmigration to electronic communication continued to adverselyaffect the North American paper industry. The especially toughbusiness environment led to fresh capacity reduction measuresand renewed growth in exports: after the 5% slump in volumesfor printing and writing papers in 2011, volumes in the NorthAmerican market fell a further 6% in 2012.Consistent with the overall printing and writing sector, demandfor coated freesheet papers declined about 5% in North America,with more dramatic declines in the textbook publishing segmentdue to US state budget cuts and some migration to the use of electronictextbooks.Full-year sales for the division were down 1.7% at €249 milliondue to falling volumes in both the commercial web printing andpublishing sector where competition is fierce. Growth in specialtycoated and uncoated products help to offset those reductions.EBITDA was at breakeven thanks to the positive impact of lowerpaper pulp prices. EBITDA margin represented 0.4% of sales.Consolidated leadership in digital printingDespite the very tough business environment, Appleton Coatedcontinued to bolster its leading positions in coated papers forhigh-speed inkjet web technology, as reflected in the success ofthe Utopia Book Inkjet range whose sales increased nearly 70%year-on-year.The division also added glossy coated paper developed jointlywith HP to its range of digital printing papers in March 2012.The Utopia Inkjet range now provides customers with a comprehensivedigital offering: matte coated paper (Utopia Book Inkjet)for publishing, matte and glossy paper (Utopia Inkjet Dull &Gloss) for commercial printing, publishing and direct marketing,and uncoated paper (Utopia Uncoated Inkjet). This has enabledAppleton Coated to keep one step ahead of the competition andto position itself as the only North American paper manufactureroffering customers a complete range of papers adapted to digitalprinting technologies for all publishing and direct marketingapplications.Sales remained buoyant in the specialty uncoated paper businesses.Relentless commitment to innovationAppleton Coated was the first US coated paper producer to becertified FSC® and to develop a range of papers manufacturedfrom FSC®-certified virgin or recycled pulp using electricityfrom renewable sources. Its most eco-friendly products continueto show robust growth in 2012.Leveraging its strong market positions, Appleton Coated intendsto continue expanding its eco-friendly product range and to helpcustomers in their quest for environmentally responsible solutions.Appleton Coated was the first producer to offer productsmade with 30% post-consumer recovered fibre and to stock thoseproducts making them readily available in smaller quantities. In2012, the company began production of coated products with60% post-consumer recovered fibre.In addition, many Appleton Coated products bear the green-e®logo which certifies that 100% of the electricity used to producethose products is matched with renewable energy credits (RECS),from certified clean energy sources, mainly wind power, and enablescustomers to benefit from energy credits. Close on 20% ofcoated products sold now bear this logo.Appleton Coated has stepped up the use of biomass energy inplace of coal as part of its strategy to reduce its carbon footprint.In 2012, alternative energy sources represented 30% of totalenergy consumption. Coal has declined from 56% in 2008 to lessthan 25% of total energy in 2012.The division also continued to deploy measures designed toenhance industrial efficiency and reduce costs, particularly logisticsand energy-related costs.Key figures – Coated US division(€ millions) 2012 2011Sales 249 253EBITDA 1 (1)Recurring operating income (loss) (2) (5)Operating margin -0.7% -2.0%Sequana | 2012 Document de référence (English version) | 37

1Presentation of the groupPresentation of SequanaCreative Papers divisionArjowiggins Creative Papers offers an extensive line-up of prestigiousbrands covering a wide variety of applications, includingbusiness stationery and corporate communications (Conqueror,Opale, Inuit), advertising and promotion (Curious Collection,Keaykolour, Rives, Pop’Set, Priplak), bookbinding and luxurypackaging (Guaflex, Curious Collection, Delos), and specialtyapplications (tracing paper for technical drawing, casting paperfor the fashion, furniture and automotive industries), and paperfor printed electronic applications.Arjowiggins Creative Papers helps its customers achieve maximumimpact from their communication campaigns. Innovationis relentless to ensure that customers are offered the products bestadapted to market trends, featuring industry-leading content,texture, feel, tint and finishes.Paper media for corporate communications, advertising and luxurypackaging are usually coloured, with smooth or textured finishesand are generally offset printed. They may also be embossedor gold-tooled.Creative papers are produced using virgin or recycled pulp insix production facilities located in France, the UK, Spain andChina (except for Priplak which uses polypropylene), and are soldthrough specialised distributors or directly to printers or converters.Creative papers are sold at a premium due to their superiorquality and technical properties.Arjowiggins Creative Papers boasts a leading position in mostof its markets. It is the world’s leader in fine paper in terms ofsales, No. 1 in tracing paper and No. 2 in casting paper in termsof volumes.Its main competitors on these markets are Gruppo Cordenons,Fedrigoni SpA, Mohawk Fine Papers Inc, Neenah Paper Inc,Tullis Russel Group Ltd, M-real, Zanders GmbH, James CropperPlc, Ecological Fiber Inc, FiberMark Inc, Schoellershammer,Ming Feng, Favini Srl and Sappi Group.2012 highlights■■Ongoing commercial synergies with Antalis.■■Innovation stepped up and new products launched, particularlyfor printed electronic applications.■■Production capacity reduced following the closure of a machineat the Chartham plant in the UK.2012 results2012 saw a sharp decline in the volumes of fine papers sold anda slowdown in all of the division’s other markets. However, businessin Asia and Latin America continued to grow. Sales for thedivision retreated 12.1% year-on-year, to €237 million.EBITDA came in at €21 million, compared to €25 million in2011, chiefly reflecting the volume downturn and the negativeproduct mix as customers responded to the economic crisisby preferring mid-range papers. EBITDA margin represented8.9% of sales.To continue adapting its production capacity in line with demand,the division closed a paper machine at the Chartham plant in theUK in August.Leveraging innovation to enhance leadershipArjowiggins Creative Papers pressed ahead with its brand makeoverand enhancement strategy in the year, aided by originalcommunication initiatives.Four new shades jointly developed with cutting-edge designerEdelkoort were introduced in the Skin range, reflecting the verylatest trends in fashion and design. The division commissionedwork from two contemporary artists (Kriki, Kado Ueda) and useda multimedia studio in France (Bonsoir Paris) to showcase theseinnovative new papers to creators and designs. The artists’ work,a mask made out of papers from the Skin range, was awarded toprizewinners of the “2nd skin” contest, which was held betweenSeptember 2012 and February 2013. In the field of labels forthe wine and spirits markets, the FSC®-certified ArjowigginsCreative Labels range was enhanced with new self-adhesivelabels sold in reels. Butterfly, a new range of natural papers, waslaunched at the Luxe Pack trade show. This FSC®-certified rangefor use in luxury packaging is suited to screen and offset printingand a 30%-recycled version is also available.Between November 2011 and April 2012, Arjowiggins CreativePapers organised a poster design competition based around theOlympic Games. The aim of the competition was to promoteConqueror, its global premium brand of office paper and paper forcorporate communications. The posters designed for the competitionhad to combine sport and typography and feature the phrase“It’s not what you win, but how you conquer it”. Open to creativeprofessionals from around the world, the competition was a hugeinternational success, resulting in more than 1,700 entries from160 countries. The jury of typographers, bloggers and designerswas chaired by the well-known French typographer Jean FrançoisPorchez, and awarded first prize to an entry from South Africa.The product innovation drive also continued apace in other businesssegments. Seven new designs, including two tailor made forChina, were added to the range of casting papers. In the fieldof synthetic papers for the car and fashion industries, the divisionsuccessfully designed a specific print for the Adidas footballused at UEFA’s Euro 2012 tournament. Non-conventionalapplications for tracing paper were successfully developed in thepress sector, while new industrial applications were introduced toreplace plastic.Further sales synergies were unlocked with Antalis, particularlyin premium offset papers and bookbinding. Working closelyalongside Antalis, the division developed and marketed Glintt,a range of fine metallic papers produced in the Quzhou plant inChina and targeting the Asian markets, in particular China.38 | Sequana | 2012 Document de référence (English version)

Presentation of the groupPresentation of Sequana 1Social and environmental responsibility centralto strategyIn order to cement its position on the market, ArjowigginsCreative Papers continued to rally creative professionals aroundits Blank Sheet Project, a platform for inspiring creative excellenceset up both for designers and for its own employees. Theproject seeks to encourage well-known graphic designers to sharetheir vision of how to further drive creativity and sustainabilityin their profession. It also attempts to galvanise the division’semployees as regards the sustainable development strategy to beadopted for all entities, products and processes.The ground-breaking Powercoat paper for printed electronicapplications launched at the end of 2012 was one of the productsthat emerged from this project. Designed by R&D teams,Powercoat is the first recyclable, biodegradable substrate on themarket offering a real alternative to plastic and delivers outstandingperformance for numerous printed electronics applications.Powercoat also helps reduce production costs when printing radiofrequency identification (RFID) tags by using five to ten timesless ink.The first, designer-focused phase of the Blank Sheet Project endedwith interviewees Renzo Rosso, founder of Diesel, and actorRutger Hauer, being asked to answer the question “How will weleave our mark?”. The second phase of the project has now beenlaunched around the theme “One minute to leave your mark”.Every week, a film posted on the project’s website features wellknownfigures speaking about creative activism, the creative process,and sustainability. Ji Lee, Creative Strategist of Facebook,was the first to explore the theme of creative excellence.For the third year running, Arjowiggins Creative Papers sponsoredthe Blank Sheet Project’s One Young World forum, thistime in Pittsburgh in the US. Students and an employee from thedivision were just some of the participants in this “Davos” eventfor young opinion leaders aged under 25.In 2012, the Creative Papers division forged ahead with its projectto improve productivity and industrial efficiency, particularlyas regards saving energy, reducing waste and curbing carbonemissions. The Charavines site in France has replaced fuel withgas, and the Stoneywood plant in the UK has cut water consumptionby 13% in two years (compared to 2009/2010) and waste byalmost 80% since 2008.Key figures – Creative Papers division(€ millions) 2012 2011Sales 237 269EBITDA 21 25Recurring operating income 6 18Operating margin 2.7% 6.7%Security divisionArjowiggins Security has three main businesses:■■secure payment solutions (banknotes, cheques, vouchers);■■proof-of-identity documentation (ID cards, passports, drivinglicences);■■anti-counterfeit/illicit trading and brand protection solutions.The division produces highly technical products and solutionsused by central banks, national printers, government agenciesand the private sector.Arjowiggins Security is the world’s leading producer of banknotepaper and secure documents in terms of volumes. It has harnessedthis expertise to integrate cutting-edge passive and active technologies,and has become a major player in identity/access controland product authentication and traceability.Through its subsidiary Arjobex, Arjowiggins Security also producesa range of secure and non-secure synthetic papers. Theseproducts are used in labelling and industrial applications andinclude items such as food labels, labels embedded in packagingand road maps. Arjobex is the third leading producer of syntheticpaper for commercial printing and labelling in volume terms.To anticipate customer needs, the business thrives on innovation.Innovation is driven by the division’s R&D centres in France,Italy and Hong Kong, which file about 20 patents each year. Thedivision’s main brands are Diamone, Bioguard, Bioguard V®,Pixel, Combifluo, Paperlam and Polyart.Its main competitors are Louisenthal, De La Rue, Crane (forbanknote paper), Yupo and Nan Ya (for synthetic paper), alongwith Gemalto and Morpho (for other security solutions). Demandon these markets depends heavily on macroeconomic factors andparticularly GDP growth and population growth in emergingcountries.2012 highlights■■Ongoing innovation efforts.■■Significant advances in the field of security solutions.■■Industrial restructuring and closure of the Witcel plant in Argentina.2012 resultsArjowiggins Security reported sales of €364 million in 2012, up0.6% year-on-year. The slowdown in global economic growthadversely impacted the market for banknote papers as the launchor implementation of various competitive tenders was postponed.Sequana | 2012 Document de référence (English version) | 39

1Presentation of the groupPresentation of SequanaDespite this economic context and excess capacity on the market,the banknote business remained upbeat. Security solutions(secure documents, brand protection) continued to perform well.Business in the brand protection segment benefited from the successfulintegration of Signoptic and the development of the traceabilitysolutions on offer. Arjowiggins Security also benefitedfrom the fall in cotton prices back to near-2010 levels. EBITDAcame in 15.8% higher at €28 million, compared to €24 million in2011, and represents 7.7% of sales.To optimise production capacity and reduce costs, ArjowigginsSecurity closed its Witcel plant in Argentina in September. Allproduction was then transferred to the Salto site in Brazil. Theclosure of the Ivybridge plant in the UK is currently in progressand will be completed in the first quarter of 2014.Innovation drives banknote businessInnovation is paramount on all of the division’s markets.Arjowiggins Security relentlessly develops new products and newsecurity technology across its three businesses (banknote paper,secure documents and product authentication and traceability),leveraging its powerful production capacity and the creativeexcellence of its R&D teams to make intelligent substrates (paperand synthetic materials) that can be secured and integrated.In a generally tough banknote market, Arjowiggins Securitycemented its positions by leveraging its technological leadershipand high quality service. The division landed new contracts,including for the commemorative 100-peso banknote featuringEva Perón, Argentina’s former First Lady. The paper used containsa 5mm-wide security thread combining two key technologiesdeveloped by Arjowiggins Security:■■Picture Thread, a high-precision thread that can containimages. The portrait of Eva Perón on the banknote also servesas a security feature;■■Combifluo®, which features a multi fluorescent effect on thefront and back of the security thread.At the Banknote conference held in Washington in December,the division launched a new product, Diamone Xtra, proof of itsunrelenting efforts to upgrade its offering. This highly-resistantpaper with excellent printability triples the life of conventionalbanknotes thanks to superior soil resistance.Further growth in security solutionsArjowiggins Security boasts a comprehensive range of securedocuments combining secure substrates with reading systems(e-gates), allowing it to cement its positions on this fast-growingmarket. The division landed new contracts in the year, for examplein Africa and Asia. It has been chosen by Indonesia for therenewal of its customised system for e-passports and for the supplyof electronic components for its immigration card. It has alsobeen appointed by FIFA as the “official ticket producer” for personalisedtickets for the FIFA Confederations Cup 2013 and the2014 FIFA World Cup TM to be held in Brazil.In brand protection, the division’s acquisition of Signoptic in2011 allows it to bolster its presence in this sector by offering customersadditional anti-counterfeit and brand and consumer protectionsolutions. In late 2011, the Royal Canadian Mint adoptedthis material biometrics technology for all new $1 and $2 coinsissued in 2012. Arjowiggins Security also launched a range ofservices for coding secondary packaging on behalf of its clients,giving them a cost-effective means of accessing this technology.In the synthetic papers segment, innovation efforts continuedas Arjobex launched Polyart Iridescent, a new product for thein-mould labels (IML) market, along with wet-glued self-adhesivelabels and the Polyart Digital range for HP Indigo certifieddigital printing. Capitalising on the strong position enjoyed byArjowiggins Security on this market, Arjobex launched its firstrange of secure labelling solutions.Key figures – Security division(€ millions) 2012 2011Sales 364 362EBITDA 28 24Recurring operating income 16 12Operating margin 4.3% 3.3%40 | Sequana | 2012 Document de référence (English version)

Chapter 2CORPORATE GOVERNANCEBoard of Directors 42Composition of the Board of Directorsand the Board’s committees 42Changes in the composition of the Board of Directors in 2012 42Changes in the composition of the Board’s committees in 2012 43Composition of the Board of Directors recommendedto the Annual General Meeting of 27 June 2013 44Profiles, directorshipsand positions of corporate officers 45Directors and non-voting observers in office 45Directors and non-voting observerswhose term of office expired in 2012 55Directors whose appointment is recommendedto the Annual General Meeting of 27 June 2013 56Organisation and modus operandi of corporatedecision-making bodies 57Organisation of management and oversight powers 57Duties of the Chairman of the Board of Directors 57Duties of the Chief Executive Officer 57Criteria for selecting Board members 57Gender equality 57Director independence 58Duties, rules of conduct and powers of the Board of Directors 59Preparation of the Board’s work, organisation and modus operandi 60Assessment of the Board’s performance 61Missions entrusted to the Board’s committees 61Report on the work of the Board of Directorsand its committees in 2012 and early 2013 62Compensation 65Executive corporate officers 65Compensation 65Stock options 67Share awards 67Non-executive corporate officers 68Amount of attendance fees 68Payment of attendance fees 68Attendance fees and other compensation receivedby non-executive corporate officers 69Executive Committee 70Related-party agreements 70Statutory auditors 72Statutory audit engagements 72~Board meetings and work 62Committee meetings and work 64Executive Committee 65Sequana | 2012 Document de référence (English version) | 41

Corporate governanceBoard of Directors 2At 31 December 2012 and at the date this registration document was filed, the composition of the Board of Directors was as follows:Expiry of term of office AGM called to approvethe financial statements for:Tiberto Ruy Brandolini d’Adda Chairman of the Board of Directors 2013Pascal Lebard Chief Executive Officer 2012Luc Argand Director 2013Jean-Pascal Beaufret Director 2013Odile Desforges Director 2015Laurent Mignon Director 2012Michel Taittinger Director 2012Allianz France represented by Peter Etzenbach Director 2013EXOR SA represented by Pierre Martinet Director 2012Fonds Stratégique d’Investissement (FSI) represented by Bertrand Finet Director 2015Jean-Yves Durance Non-voting observer 2014Eric Lefebvre Non-voting observer 2014Three of the ten directors (or representatives of legal entitieswhich sit on the Board) are non-French. The average age of directorsis 58. Two directors are independent.Two non-voting observers also sit on the Board and wereappointed for a term of three years by the Annual GeneralMeeting of 26 June 2012. In accordance with the Company’sArticles of Association, non-voting observers attend meetings ofthe Board of Directors but only in an advisory capacity. They areeligible for the variable portion of attendance fees (see page 68),based on their attendance rate at Board meetings.Changes in the composition of the Board’scommittees in 2012Following the changes made to the Board of Directors on19 May 2011, and after having heard the recommendations of theNominations and Compensation Committee, the Board madeseveral changes to its committees.Nominations and Compensation CommitteeBetween 19 May 2011 and 19 July 2012, the Nominations andCompensation Committee was composed of four members(including two independent members), appointed for their tenureas directors: Luc Argand (Chairman), Tiberto Ruy Brandolinid’Adda, Pascal Lebard and Michel Taittinger.On 19 July 2012, the Board of Directors appointedMichel Taittinger (Chairman), Odile Desforges and Pascal Lebardas members of the Nominations and Compensation Committee.The Chairman is considered to be independent. The Board alsodecided that Jean-Yves Durance (non-voting observer) would beinvited to attend these meetings.Audit CommitteeBetween 19 May 2011 and 19 July 2012, the Audit Committeewas composed of four members (including one independent member),appointed for their tenure as directors: Exor SA (Chairman),represented by Pierre Martinet, DLMD (until 8 July 2012, thedate of its resignation), Allianz France, and Jean-Pascal Beaufret.On 19 July 2012, the Board of Directors appointedJean‐Pascal Beaufret (Chairman), Exor SA, representedby Pierre Martinet, and Allianz France, represented byPeter Etzenbach, as members of the Audit Committee. TheChairman is considered to be independent. The Board alsodecided that Eric Lefebvre (non-voting observer) would beinvited to attend these meetings.Strategy CommitteeBetween 19 May 2011 and 19 July 2012, the Strategy Committeewas composed of four members (including one independentmember), appointed for their tenure as directors: Tiberto RuyBrandolini d’Adda (Chairman), Luc Argand, Pascal Lebard andLaurent Mignon.On 19 July 2012, the Board of Directors appointed Luc Argand(Chairman), Tiberto Ruy Brandolini d’Adda, Pascal Lebard,Laurent Mignon and FSI, represented by Bertrand Finet, asmembers of the Strategy Committee. The Chairman is consideredto be independent.As discussed at the beginning of this chapter, in 2012 and particularlyduring the second half of the year (when it was no longer acontrolled company), the composition of the Sequana’s Board ofDirectors and the Board’s committees did not comply with certainrecommendations of the AFEP-MEDEF corporate governancecode, due mainly to reasons regarding the Company’s ownershipstructure. However, it should be noted that since the capitalincrease, Sequana is neither a controlled company (since the agreementto act in concert between certain shareholders was terminatedon 4 June 2012) nor a widely-held corporation (62.66% ofthe share capital is held by the four biggest shareholders, with afree float of 36.91%) within the meaning of the AFEP‐MEDEFcode. An analysis of director independence is provided on page 58of this registration document. Although the composition ofSequana’s Board committees did not comply with all of the ruleson independence in 2012, when the committees were reshuffledon 19 July 2012, the Board of Directors took care to ensure thatthe director appointed to chair each of the three committees waschosen from among the independent directors. It also ruled thatwhen a corporate officer was a member of a Board committee, saidofficer would not be involved in any deliberations in his or herregard or concerning the role or positions of the Company’s executivemanagement, and that the officer would abstain from anydecisions directly or indirectly concerning him or her.Sequana | 2012 Document de référence (English version) | 43

2Corporate governanceBoard of DirectorsComposition of the Board of Directorsrecommended to the Annual General Meetingof 27 June 2013The terms of office of Pascal Lebard, Laurent Mignon,Michel Taittinger and Exor SA as directors are due to expire atthe Annual General Meeting of 27 June 2013. In accordance withthe terms of the shareholder agreement signed on 4 June 2012 (seepage 190), Tiberto Ruy Brandolini d’Adda informed Sequanaof his intention to resign as director, as member of the StrategyCommittee and as Chairman of the Board of Directors at the endof said Meeting.In strict compliance with corporate governance rules and inaccordance with the commitment undertaken by the Company atthe time of its July 2012 capital increase, the Board of Directors’meeting of 25 April 2013, acting on the recommendations of theNominations and Compensation Committee, took the decisionsdescribed below:■■After having placed on record the expiry of Pascal Lebard’sterm of office as director, the Board decided to ask shareholdersto reappoint Mr Lebard as director for a period of four years,i.e., until the end of the Annual General Meeting to be calledto approve the 2016 financial statements.■■After having placed on record the expiry of Michel Taittinger’sterm of office as director, the Board decided to ask shareholdersto reappoint Mr Taittinger as director for a period of four years,i.e., until the end of the Annual General Meeting to be calledto approve the 2016 financial statements.■■After having placed on record the expiry of Exor SA’s termof office as director, the Board decided to ask shareholders toappoint Pierre Martinet – previously permanent representativeof Exor SA – as director for a period of three years, i.e., untilthe end of the Annual General Meeting to be called to approvethe 2015 financial statements.■■After having placed on record the expiry of Laurent Mignon’sterm of office as director, the Board decided to ask shareholdersto appoint Marie Lloberes as director for a period of four years,i.e., until the end of the Annual General Meeting to be calledto approve the 2016 financial statements.■■After having placed on record the resignation of Tiberto RuyBrandolini d’Adda as director, the Board also decided to askshareholders to appoint Jean-Yves Durance – currently a nonvotingobserver of the Company – as director. Article 13 ofSequana’s Articles of Association stipulates that as from70 years of age, a director may be appointed for a term of upto one year. Accordingly, Jean-Yves Durance, who is 70 yearsold, would be appointed for one year, i.e., until the end of theAnnual General Meeting to be called to approve the 2013financial statements.In order to ensure an effective rotation of directors, the terms ofoffice of directors whose renewal or appointment the Board willrecommend to shareholders have been set at varying periods ofup to four years, in accordance with the Company’s Articles ofAssociation.If the shareholders approve the Board’s recommendations, the composition of the Board of Directors at the end of the Annual GeneralMeeting of 27 June 2013 will be as follows:Expiry of term of officeAGM called to approvethe financial statements for:Luc Argand Independent director 2013Jean-Pascal Beaufret Independent director 2013Odile Desforges 2015Jean-Yves Durance (1) Independent director 2013Pascal Lebard 2016Marie Lloberes Independent director 2016Pierre Martinet 2015Michel Taittinger Independent director 2016Allianz France represented by Peter Etzenbach 2013Fonds Stratégique d’Investissement (FSI) represented by Bertrand Finet 2015Eric Lefebvre Non-voting observer 2014(1) Should the Annual General Meeting of 27 June 2013 approve Jean-Yves Durance’s appointment as director, Mr Durance will resign from his role as non-voting observer asof said date.See page 56 for the profile of new directors whose appointment isrecommended to shareholders.Provided that shareholders approve these recommendations atthe Annual General Meeting of 27 June 2013, the Board willcomprise ten directors, two of whom (including representativesof legal entities on the Board) will be non-French, and one nonvotingobserver. The average age of directors will be 58.As detailed on page 58, the recommendations to shareholderscomply with the recommendations set out in the AFEP-MEDEFcorporate governance code or in applicable legal regulations, asregards both independence and gender equality.As mentioned in the introduction to this chapter, the Nominationsand Compensation Committee has already suggested to theBoard of Directors that the composition of the Board’s committeesshould also respect these corporate governance rules whenthe committees are reshuffled at the end of the Annual GeneralMeeting of 27 June 2013.44 | Sequana | 2012 Document de référence (English version)

Corporate governanceBoard of Directors 2Profiles, directorships and positions held by the corporate officersThe information below consists of a short profile of corporate officers along with details of the directorships and positions held at thedate this registration document was filed and in the past five years. It covers:■■the ten directors and two non-voting observers in office;■■the two directors and the non-voting observer whose terms of office expired in 2012;■■the new directors whose appointment is recommended to the Annual General Meeting of 27 June 2013.Directors and non‐voting observers in officeTiberto Ruy Brandolini d’AddaChairman of the Board of Directors of Sequana■■Director and Chairman of the Board of Directors since 3 May 2005Chief Executive Officer from 3 May 2005 to 30 June 2007Tiberto Ruy Brandolini d’Adda was also a member of the Supervisory Board of Sequana (formerly Worms & Cie) between 2000 and 2005.His term of office, which was renewed in 2011, will expire at the end of the Annual General Meeting of 27 June 2013 (see pages 44 and 57).■■Mr Brandolini d’Adda is 65 years old and holds 6,214 shares in Sequana, registered in his name.■■He holds a law degree and has held various executive management positions with Fiat, the European Economic Commission and theIfil group (now Exor), as well as directorships in several different companies.Professional address: rue Chausse Coq, 10 – 1204 Geneva, SwitzerlandDirectorships and positions held in 2012 and since 1 January 2013:Active partner in Giovanni Agnelli e C. (Italy)Chairman of the Board of Directors and director of Exor SA (Luxembourg)Vice-Chairman of Exor SpA (Italy) – Listed companyDirector of SGS SA (Switzerland) – Listed companyDirector of Fiat SpA (Italy) – Listed companyDirector of Greysac SAS (until 30 September 2012)Member of the Board of Yafa SpA (Italy)Directorships and positions held in the past five years:Vice-Chairman and Managing Director of Exor group (Luxembourg)Vice-Chairman and member of the Executive Committee of Ifil SpAChairman of Exint SASDirector of Vittoria Assicurazioni (Italy)Director of Exor SpA (Italy)Director of Yura International BVDirector of Ifil SpA (Italy)Director of Espirito Santo Financial Group SA (Luxembourg)Director of Old Town SAMember of the Supervisory Board of Arjowiggins (1)Member of the Supervisory Board of Antalis International (1)(1) Subsidiary of Sequana.Sequana | 2012 Document de référence (English version) | 45

2Corporate governanceBoard of DirectorsPascal LebardChief Executive Officer of Sequana■■Director since 3 May 2005Deputy Chief Executive Officer from 3 May 2005 to 30 June 2007Chief Executive Officer since 1 July 2007Pascal Lebard was also a member of the Supervisory Board and Executive Board of Sequana (formerly Worms & Cie) between 2003and 2005.His term of office, which was renewed in 2011, will expire at the end of the Annual General Meeting of 27 June 2013. The Board willask shareholders to reappoint Mr Lebard as director for a period of four years, i.e., until 2017.■■Mr Lebard is 50 years old and holds 64,361 shares in Sequana, registered in his name. He also holds 3,338,717 shares (13.35% of theCompany’s capital) through DLMD, which he controls and of which he is Chairman.■■He is a graduate of the EDHEC business school. He began his career in the banking sector and went on to become an AssociateDirector of 3i SA. He has held several executive management positions in the Exor group (formerly Ifil) and also holds a number ofdirectorships in other companies.Professional address: Sequana – 8, rue de Seine – 92517 Boulogne Billancourt Cedex, FranceDirectorships and positions held in 2012 and since 1 January 2013:Chairman of Arjowiggins (1)Chairman of Antalis International (1)Chairman of Arjowiggins Security (1) (since 6 February 2013)Chairman of Arjowiggins Security Solutions (1) (since 6 February 2013)Chairman of Arjobex (1) (since 14 February 2013)46 | Sequana | 2012 Document de référence (English version)Director of Permal Group Ltd (UK)Director of CEPI (Confederation of European Paper Industries) (Belgium)Directorships and positions held in the past five years:Chairman of Fromageries de l’Etoile SASChairman of Etoile Plus SASChairman of DLMD SAS Chairman of Arjowiggins Security (1)Chairman of Pascal Lebard Invest SAS Chairman of Arjobex (1)Chairman of Boccafin SAS (1) Chairman of Arjowiggins Security Solutions (1)Chairman of Antalis Asia Pacific Pte Ltd (Singapore) (1)Member of the Supervisory Board of Ofi Private Equity CapitalChairman of AW Trading (Shanghai) Co Ltd (1) Deputy Chief Executive Officer of Sequana Capital (1)Member of the Supervisory Board of Eurazeo PMEDirector of SGS SA (Switzerland)Director of Arjowiggins HKK 1 Ltd (Hong Kong) (1) Director of Arjowiggins HKK 2 Ltd (Hong Kong) (1)Director of Arjowiggins HKK 3 Ltd (Hong Kong) (1)Manager of Ibéria SarlDirector of Greysac SAS (until 30 September 2012) Liquidator of Boccafin Suisse SA (1)Director of Club Méditerranée – Listed companyDirector of Lisi – Listed company(1) Subsidiary of Sequana.Luc ArgandPartner at the law firm Pfyffer & Associés, Geneva (Switzerland)■■Independent director of Sequana since 3 May 2005His term of office as director, which was renewed in 2011, expires in 2014.■■Mr Argand, a Swiss citizen, is 65 years old and holds 100 shares in Sequana.■■He is an attorney with the Geneva Bar, of which he was President from 1996 to 1998. He is also Arbitrator at the Court of Arbitrationfor Sport (Lausanne), was a member of the High Council for the Judiciary (Geneva) and is Chairman of the Supervisory Committeeof Notaries in Geneva. He is specialised in business, banking, sport and arbitration law.Professional address: Étude Pfyffer & Associés – 6, rue François Bellot – 1206 Geneva, SwitzerlandDirectorships and positions held in 2012 and since 1 January 2013:Chairman of the Board of Directors of Banque Syz & Co (Switzerland)Chairman of the Board of Directors of Financière Syz & Co (Switzerland)Chairman of the Board of Directors of Société de Gestion d’Oncieu et Cie SA (Switzerland)(until March 2012)Vice-Chairman of the Board of Directors of Banque Morval & Cie (Switzerland)Vice-Chairman of the Board of Directors of Palexpo (Switzerland) – Listed companyDirector of Banque Privée Edmond de Rothschild (Switzerland) – Listed companyDirector of Yafa SpA (Italy) (since January 2012)Director of Yura International BV (since January 2012)Director of Casino Barrière de Montreux (Switzerland) – Listed companyDirector of Compagnie Benjamin de Rothschild (Switzerland)Chairman of the Supervisory Committee of Notaries in GenevaArbitrator at the Court of Arbitration for Sport in Lausanne (Switzerland)Directorships and positions held in the past five years:Chairman of the Board of Directors of Hôtel Olden AG (Switzerland)Chairman of Salon International de l’Automobile de Genève (Switzerland)Member of the High Council for the Judiciary in Geneva (Switzerland)Director of LCF Holding Benjamin & Edmond de Rothschild (Switzerland)

Corporate governanceBoard of Directors 2Jean-Pascal BeaufretPartner at Portalis AM and member of the Investment Committee of Aurinvest Capital 3■■Independent director since 21 May 2008His term of office, which was renewed in 2011, expires in 2014.■■Mr Beaufret, a French citizen, is 62 years old and holds 100 shares in Sequana.■■He is a graduate of the HEC business school and of École Nationale d’Administration. He has had major responsibilities at theFrench Treasury, in the banking world and in industry. He held several senior posts at the French Ministry of Economy and Finance,particularly at the General Inspectorate of Finance (Inspection générale des finances), the French Treasury, and the French GeneralTax Division. He was deputy governor of CCF (1994-1996), Head of the French General Tax Division (1997-1999), Deputy ChiefFinancial Officer and then Chief Financial Officer of Alcatel Lucent (1999-2007). In 2008, he was a member of the Executive Boardof Natixis. From September 2009 to February 2012, he was Chief Financial Officer of Australian firm National Broadband NetworksCo Limited. In 2012, he became a partner of Portalis AM and authorised representative of venture capital firm Aurinvest Capital 3,and was appointed Managing Partner of Pardys SAS, a consulting firm, in 2013.Professional address: 16, rue de Bourgogne – 75007 Paris, FranceDirectorships and positions held in 2012 and since 1 January 2013:Partner of Portalis AM (since July 2012)Partner and member of the Investment Committee of Aurinvest Capital 3 (since July 2012)Managing partner of Pardys SAS (since January 2013)Chief Financial Officer of National Broadband Networks Co. Ltd (Australia)(until 17 February 2012)Directorships and positions held in the past five years:Director of National Broadband Networks Tasmania Ltd (Australia)Member of the Executive Board of NatixisDirector of Natixis Global Asset ManagementChief Financial Officer of Alcatel-LucentChairman of Alcatel-Lucent ParticipationsChairman and Chief Executive Officer of ElectrobanqueChairman of TelpartMember of the Supervisory Board of Thales Alenia SpaceDirector of Alcatel Standard AG (Switzerland)Odile Desforges(since 9 July 2012)■■Odile Desforges was appointed as a director by the Annual General Meeting of 26 June 2012, subject to completion of the capitalincrease and the acquisition by FSI of a stake in the Company. Her appointment therefore took effect on 9 July 2012 for a period of fouryears, i.e., expiring at the end of the Annual General Meeting to be called to approve the 2015 financial statements.■■Mrs Desforges, a French citizen, is 63 years old and holds 100 shares in Sequana.■■She graduated from Ecole Centrale de Paris and began her career as research officer at the Transport Research Institute. She joined theRenault group in 1981 as research officer at the Automobile division’s Planning department before becoming product engineer on theR19 and then for the M1 range. In 1986, she moved to Purchasing as Head of the Exterior Equipment department and was appointedDirector of body hardware purchasing. In March 1999, she became Executive Vice-President of the Renault VI-Mack group, in chargeof 3P (product planning, product development, purchasing project). In January 2001, she was appointed President of the AB Volvogroup’s 3P business unit. She became Senior Vice-President, Renault Purchasing, Chairman and Managing Director of the RenaultNissan Purchasing Organisation in 2003 as well as a member of Renault’s Management Committee. In 2009, she was appointed Head ofRenault’s Engineering and Quality Control department and also became a member of Renault’s Executive Committee. Odile Desforgesretired on 1 August 2012. She is currently a director of Safran and Vice-President of the Ecole Centrale de Paris alumni association.Professional address: 3, rue Henri Heine – 75016 Paris, FranceDirectorships and positions held in 2012 and since 1 January 2013:Head of Engineering and Quality of Renault group, and member of the ExecutiveCommittee of Renault – Listed company – (until 30 June 2012)Head of Renault Nissan Technology and Business Centre India (India) (until 30 June 2012)Head of Renault Nissan BV (Netherlands) (until 1 July 2012)Director of Renault Espana (Spain) (until 15 December 2012)Director of Safran – Listed companyDirector of GIE RegienovDirectorships and positions held in the past five years:Chairman and Managing Director of Renault Nissan Purchasing OrganisationSequana | 2012 Document de référence (English version) | 47

2Corporate governanceBoard of DirectorsLaurent MignonChief Executive Officer of Natixis■■Director since 3 May 2005Vice-Chairman from 3 May 2005 to 22 June 2007Laurent Mignon was also a member of the Supervisory Board of Sequana (formerly Worms & Cie) between 2002 and 2005.His term of office, which was renewed in 2011, will expire at the end of the Annual General Meeting of 27 June 2013.■■Mr Mignon is 49 years old and holds 16 shares in Sequana.■■He is a graduate of the HEC business school and the Stanford Executive Program. He acquired experience in the banking industry(Indosuez, Schroders) before joining the AGF group, where he held a number of executive management positions before beingappointed Chief Executive Officer. In September 2007, he joined the private bank Oddo & Cie as Managing Partner. Since May 2009,he has been Chief Executive Officer of Natixis.Professional address: Natixis – 30, avenue Pierre Mendès France – 75013 Paris, FranceDirectorships and positions held in 2012 and since 1 January 2013:Chief Executive Officer of Natixis – Listed companyChairman of the Board of Directors of Natixis Global Asset ManagementChairman of the Board of Directors of Coface (since 15 May 2012)Director of Arkema – Listed companyDirector of the Board of Lazard LtdDirectorships and positions held in the past five years:Chairman and Chief Executive Officer of Oddo Asset ManagementPermanent representative of Natixis, non-voting observer on the Board of Directors of BPCE Chairman of the Board of Directors of CoparcPermanent representative of Natixis on the Board of Directors of Coface(until 15 May 2012)Managing partner of Oddo & CieChairman of the Supervisory Board of Oddo Corporate FinanceChairman of the Supervisory Board of AGF InformatiqueChairman of the Supervisory Board of AVIPChairman of the Board of Directors of Génération VieMember of the Supervisory Board of La Banque Postale Gestion PrivéeDirector of Génération VieDirector of CogefiDeputy Chief Executive Officer of AGF SAChief Executive Officer of Groupe AGFChairman of the Executive Committee of AGF FranceVice-Chairman of the Supervisory Board of Euler HermèsMember of the Supervisory Board of Oddo & Cie SCADirector of AGF HoldingDirector of Natixis Global Asset ManagementDirector and Deputy Chief Executive Officer of AGF HoldingDirector of GIE Placements d’AssuranceDirector of W FinanceDirector of AGF Asset Management48 | Sequana | 2012 Document de référence (English version)

Michel Taittinger■■Independent director of Sequana since 3 May 2005Corporate governanceBoard of Directors 2Michel Taittinger was also a non-voting observer of the Supervisory Board of Sequana (formerly Worms & Cie) between 2000 and 2005.His term of office, which was renewed in 2011, will expire at the end of the Annual General Meeting of 27 June 2013. The Board willask shareholders to renew his tenure as director for a period of four years, i.e., until 2017.■■Mr Taittinger, a French citizen, is 69 years old and holds 37,000 shares in Sequana.■■He graduated from Institut d’Études Politiques in Paris. He has held a number of executive management positions and directorshipsin different companies.Professional address: 12 Mulberry Walk – London SW3 6DY, UKDirectorships and positions held in 2012 and since 1 January 2013:Director of Provence Prestige International(SICAV Crédit Suisse France)Directorships and positions held in the past five years:Non-executive director of Alpha Value Management (UK) LLPAllianz France■■Director since 3 May 2005Allianz France was also a member of the Supervisory Board of Sequana (formerly Worms & Cie) between 1998 and 2005.Its term of office, which was renewed in 2011, expires in 2014.■■Allianz France holds 100 shares in Sequana. Its parent, Allianz group, holds 2,554,803 Sequana shares (i.e., 10.22% of the Company’sshare capital).Registered office: 87, rue de Richelieu – 75060 Paris Cedex 02, FranceDirectorships and positions held in 2012 and since 1 January 2013: Member of the Supervisory Board of SCPI Domivalor 2Director of Allianz BanqueMember of the Supervisory Board of SCPI Domivalor 3Director of AGF 2XMember of the Supervisory Board of SCPI DomivalorDirector of GIE RegistarMember of the Supervisory Board of SCPI Domivalor 4Director of ACARMember of the Supervisory Board of Oddo & CieDirector of Allianz IardDirector of Allianz Burkina AssurancesDirector of Allianz VieDirector of Allianz Côte d’Ivoire Assurances (since 6 April 2012)Director of CalypsoDirectorships and positions held in the past five years:Director of CivipolMember of the Supervisory Board of SCPI Allianz Pierre ValorDirector of Compagnie de Gestion et de PrévoyanceMember of the Supervisory Board of SCPI Logivalor 6Director of Allianz France Richelieu I (formerly Allianz France Infrastructure) (until 2 July 2012) Director of Fédération des Indépendants du PatrimoineMember of the Supervisory Board of Idinvest PartnersDirector of SMAFMember of the Supervisory Board of SCPI Allianz Pierre Actif 2 (until 7 June 2012) Director of CamatMember of the Supervisory Board of SCPI Allianz Domi DurableMember of the Supervisory Board of SCPI Allianz Domi Durable 2Sequana | 2012 Document de référence (English version) | 49

2Corporate governanceBoard of DirectorsPierluigi Riches(until 15 July 2012)Senior Adviser – Phinance Partners (Italy)■■Mr Riches is 59 years old and does not hold any shares in Sequana in his own name.■■He graduated in economics from the University of Bocconi in Milan, and has held various positions, primarily in the insurance industry,where he began his career in financial posts. He joined the Allianz group in 1992 where he served as Chief Financial Officerthen Chief Executive Officer of various divisions within Riunione Adriatica di Sicurtà. In May 2007, he became Chief OperatingOfficer responsible for investments and member of the Executive Committee of Allianz France. In November 2011, he was appointedVice‐President of Group Regulatory Policy at Allianz SE in Munich. He left the Allianz group in October 2012.Professional address: Via Piermarini 8 – 20145 Milan, ItalyDirectorships and positions held in 2012 and since 1 January 2013:Director of Ras Asset Management SgrSenior Advisor of Phinance Partners (since 20 October 2012)Director of W FinanceVice-President of Group Regulatory Policy at Allianz SE (Germany) (until October 2012) – Director of CoparcListed companyDirector of ArcalisDirectorships and positions held in the past five years:Director of Ras Alternative Investment SgrChief Operating Officer responsible for investments and member of the Executive Director of RasbankCommittee of Allianz FranceDirector of Investitori SgrChairman of the Board of Directors of GIE Allianz Investment Management ParisDirector of Borgo San Felice srlChairman of the Board of Directors of Società Agricola San Felice (Italy)Director of Villa La PagliaiaMember of the Supervisory Board of Oddo & Cie SCADirector of Società Agricola San FeliceDirector of Immovalor GestionDirector of Creditras Assicurazioni SpADirector of Allianz IardDirector of Creditras Vita SpADirector of Allianz VieDirector of GenialloydDirector of Génération VieDirector of AGF Ras Holding BVDirector of Allianz BanqueDirector of Companhia de Seguros Allianz Portugal SADirector of Château Larose TrintaudonDirector of AGI – Allianz Global Investor Luxembourg SAPermanent representative of Allianz France on the Supervisory Board of Idinvest PartnersDirector of Emittenti Titoli SpAVice-Chairman of the Supervisory Board of AGF Private EquityDirector of Istituto Europeo di Oncologia srlVice-Chairman of Cityfile srlGeneral Manager of RAS – Riunione Adriatrica Di SicurtaChairman of Rasfin SimPermanent representative of AGF IART on the Board of Directors of AGF BoieldieuChairman of Ras Immobiliare srlPermanent representative of AGF Holding on the Board of Directors of Allianz BanqueMember of the Supervisory Board of Allianz Elementar Lebensversicherungs AGPermanent representative of AGF Holding on the Board of Directors of Génération VieMember of the Supervisory Board of Allianz Elementar Versicherungs AGPermanent representative of Allianz France on the Board of Directors of CompagnieMember of the Supervisory Board of Idinvest Partnersde Gestion et de PrévoyanceDirector of AVIPDirector of AGF Holding50 | Sequana | 2012 Document de référence (English version)

Corporate governanceBoard of Directors 2Peter Etzenbach(since 16 July 2012)Member of the Executive Committee in charge of the Investment business unit at Allianz France■■Mr Etzenbach is 45 years old and does not hold any shares in Sequana in his own name.■■He graduated from the ESCP Europe business school and began his career at Goldman Sachs in 1991, where he was made ExecutiveDirector in 1998. He joined Axa in 2005 as Lead Strategic Auditor in Paris before being made Senior Vice-President of BusinessSupport and Development of Axa in the US, and then Head of Group Strategy. As from 2008, he was also Chief Operating Officerof Axa Life Japan in Tokyo, where he was also a director responsible for the Finance and Investments division. Since 1 October 2011,he has been a member of the Executive Committee of Allianz France in charge of the Investment business unit.Professional address: Allianz France – 87, rue de Richelieu – 75002 Paris, FranceDirectorships and positions held in 2012 and since 1 January 2013:Chairman and Chief Executive Officer of Allianz France Richelieu I (until 2 July 2012)Chairman of Allianz France Richelieu I (since 2 July 2012)Chairman of Allianz Cash (since 26 March 2012)Director of Allianz IardDirector of Allianz VieDirector of Allianz BanqueDirector of Château Larose TrintaudonDirector of Génération VieDirector of Immovalor GestionPermanent representative of Allianz Vie on the Board of Directors of Cofitem-CofimurPermanent representative of Allianz Vie on the Board of Directors of Foncièredes 6 e et 7 e arrondissementsPermanent representative of Allianz Vie on the Board of Directors of Foncière ParisFrance (since 11 May 2012)Permanent representative of Allianz France on the Supervisory Board of Idinvest Partners(since 15 February 2012)Permanent representative of Allianz France on the Supervisory Board of Oddo & CieDirectorships and positions held in the past five years:Chairman of the Board of Directors of GIE Allianz Investment Management ParisChairman of the Supervisory Board of Axa Liabilities ManagersChief Operating Officer and director of Axa Life JapanDirector of Saint Georges REDirector of Axa Japan HoldingDirector of Axa SuduirautDirector of Axa Group SolutionsDirector of GIE Axa Group SolutionsDirector of GIE AxaDirector of Axa CessionsDirector of Axa Investment ManagersDirector of Axa REIMDirector of Axa Investment Managers Private EquityDirector of Axa Investment Managers Private Equity EuropeDirector of Alliance Bernstein Corporation (USA)Director of Axa Rosenbeg (USA)Director of Axa Corporate Solutions Life Reinsurance Cie (USA)Director of Axa Life Europe (Ireland)Director of Axa Technology ServicesDirector of Bharti Axa Investments Managers Private Limited (India)Permanent representative of Axa on the Board of Directors of Axa REPermanent representative of Axa on the Board of Directors of Axa RE FinanceSequana | 2012 Document de référence (English version) | 51

2Corporate governanceBoard of DirectorsExor SA (Luxembourg)■■Director since 3 May 2005Exor SA was also a member of the Supervisory Board of Sequana (formerly Worms & Cie) between 2004 and 2005.Its term of office, which was renewed in 2011, will expire at the end of the Annual General Meeting of 27 June 2013.■■Exor SA holds 4,685,844 shares in Sequana (18.74% of the Company’s share capital), all in registered form.Registered office: 22-24, boulevard Royal – 2449 Luxembourg, LuxembourgDirectorships and positions held in 2012 and since 1 January 2013:Directorships and positions held in the past five years:Director of Sequana - none -Represented byPierre MartinetManaging Director of Old Town (Luxembourg)Director of Sequana in his own name from 3 May 2005 to 21 July 2010Deputy Chief Executive Officer of Sequana from 3 May 2005 to 30 June 2007Pierre Martinet was also a member of the Supervisory Board of Sequana (formerly Worms & Cie) between 2004 and 2005.Since Exor SA’s term of office as director is due to expire at the end of the Annual General Meeting of 27 June 2013, the Board ofDirectors is asking shareholders to appoint Pierre Martinet as director in his own name for a period of three years.■■Mr Martinet is 63 years old and holds 2,176 shares in Sequana, registered in his name.■■He is a graduate of the ESCP Paris business school and holds an MBA from the Columbia Graduate School of Business. He began hiscareer in 1974 as an authorised M&A agent for Rothschild Banque, then joined Cartier in 1977 as General Secretary. Mr Martinetworked for Paribas Technology France in 1986 as the firm’s Chief Executive Officer and Managing Partner of venture capital fundsbefore joining the management of Perrier in 1990, where he was responsible for equity transactions. In 1993, after Nestlé’s takeoverbid for Perrier, Mr Martinet joined the Exor group, where he held various positions, including director and Chief Executive Officerof Exor SA in Paris. He is currently Managing Director of Old Town, Luxembourg.Professional address: 3, rue Saint-Léger – 1205 Geneva, SwitzerlandDirectorships and positions held in 2012 and since 1 January 2013:Chairman of Almacantar SA (Luxembourg)Director of Ipsen SA – Listed company (Euronext A)Member of the Supervisory Board of Cartier SA (Paris) (until 30 September 2012)Director of Cushman & Wakefield (USA) (until 10 October 2012)Member of the Supervisory Board of Banijay Entertainment (France)(until 17 December 2012)Director of Greysac SAS (until 30 September 2012)(1) Subsidiary of Sequana.Directorships and positions held in the past five years:Chairman of Arjo Wiggins Appleton Ltd (UK)Chairman of Ifil FranceChairman of Financière de Construction de Logements SASDirector of Old Town SA (Luxembourg)Director of Arjo Wiggins Appleton LtdDirector and Vice-Chairman of Exor (USA)Member of the Supervisory Board of Arjowiggins (1)Member of the Supervisory Board of Antalis International (1)Deputy Chief Executive Officer of Sequana CapitalDirector of Exor Finance Ltd (Ireland)52 | Sequana | 2012 Document de référence (English version)

Fonds Stratégique d’Investissement (FSI)(since 9 July 2012)Corporate governanceBoard of Directors 2■■FSI was appointed as a director by the Annual General Meeting of 26 June 2012, subject to completion of the capital increase andthe acquisition by FSI of a stake in Sequana. Its appointment therefore took effect on 9 July 2012 and its term of office, effective for aperiod of three years, expires at the end of the Annual General Meeting to be called to approve the 2014 financial statements.■■FSI holds 5,024,916 shares in Sequana (20.09% of the Company’s share capital).Registered office: 56, rue de Lille – 75007 Paris, FranceDirectorships and positions held in 2012 and since 1 January 2013:Director of AltradDirector of Cegedim – Listed companyDirector of CDC Entreprises Capital InvestissementDirector of CylandeDirector of DBV TechnologiesDirector of Dailymotion – Listed companyDirector of De DietrichDirector of Eramet – Listed companyDirector of Eutelsat Communications – Listed companyDirector of FariniaDirector of FSI PME PortefeuilleDirector of FT1CIDirector of HimeDirector of MäderDirector of Paprec HoldingDirector of Stentys – Listed companyDirector of SoprolDirector of SuperSonic ImageDirector of TDFDirector of Tokheim Luxco (Luxembourg)Director of Tokheim Luxco 2 (Luxembourg)Director of Vergnet – Listed companyDirector of ViadéoDirector of Tyrol Acquisition 1Director of Tyrol Acquisition 2Member of the Supervisory Board of Assystem – Listed companyMember of the Supervisory Board of Financière du MilléniumMember of the Supervisory Board of GrimaudMember of the Supervisory Board and Audit Committee of Inside Secure – ListedcompanyMember of the Supervisory Board of CrystalMember of the Supervisory Board of NGEMember of the Supervisory Board of Novasep HoldingMember of the Governance Committee and non-voting observer of AD IndustrieNon-voting observer of Avanquest – Listed companyNon-voting observer of CerenisNon-voting observer of DailymotionNon-voting observer of Financière CarsoNon-voting observer of GorgéNon-voting observer of HimeNon-voting observer of Innate Pharma – Listed companyNon-voting observer of QosmosNon-voting observer of Riou GlassNon-voting observer of SiclaéNon-voting observer of Stentys – Listed companyNon-voting observer of Tinubu SquareNon-voting observer of Tokheim GroupNon-voting observer of Vittal FinancesDirectorships and positions held in the past five years:- none -Represented byBertrand FinetDirector and member of the Executive Committee of FSI■■Mr Finet, a French citizen, is 47 years old and does not hold any shares in Sequana in his own name.■■He graduated from the ESSEC business school and began his career with 3i Group (first in London and then in Paris) as Head ofInvestments. He joined CVC Capital Partners France as Managing Director in 1996 and was appointed Chief Executive Officer ofCandover’s Paris branch in 2006. Since 2009, he has been Director and member of the Executive Committee of FSI.Professional address: Fonds Stratégique d’Investissement – 56, rue de Lille – 75007 Paris, FranceDirectorships and positions held in 2012 and since 1 January 2013:Member of the Supervisory Board and Strategy Committee of Mersen – Listed companyPermanent representative of FSI on the Supervisory Board and Audit Committeeof Assystem – Listed companyPermanent representative of FSI on the Board of Directors of FariniaPermanent representative of FSI on the Board of Directors of Tyrol Acquisition 1Permanent representative of FSI on the Board of Directors of Tyrol Acquisition 2Directorships and positions held in the past five years:Chief Executive Officer of Candover FranceSequana | 2012 Document de référence (English version) | 53

2Corporate governanceBoard of DirectorsJean-Yves Durance(since 9 July 2012)Non-voting observerChairman and Chief Executive Officer of Société Immobilière du Palais des Congrès (SIPAC)■■Jean-Yves Durance was appointed as a non-voting observer by the Annual General Meeting of 26 June 2012, subject to completionof the capital increase and the acquisition by FSI of a stake in Sequana. His appointment therefore took effect on 9 July 2012 andhis term of office, effective for a period of three years, expires at the end of the Annual General Meeting to be called to approve the2014 financial statements.The Board will ask shareholders to vote on his appointment as director for a period of one year at the Annual General Meeting of27 June 2013. If the appointment is approved, Mr Durance will resign from his current role as non-voting observer.■■Mr Durance, a French citizen, is 70 years old and holds 100 shares in Sequana.■■He graduated from Ecole Polytechnique and Institut d’Etudes Politiques de Paris, and has spent most of his career (1965‐2001) atCrédit Lyonnais, where he served as a member of the Executive Committee in charge of the branch network among other responsibilities.He was appointed Chairman of the Management Board of Marsh France until 2006 and currently holds several differentoffices in a number of companies.Professional address: SIPAC – 2, place de la Porte Maillot – 75853 Paris Cedex 17, FranceDirectorships and positions held in 2012 and since 1 January 2013:Chairman of Viparis HoldingChairman of Association des Utilisateurs de la Défense (AUDE)Director of Comexposium HoldingDirector of Compagnie DaherDirector of Etablissement Public d’Aménagement de la Défense (EPADESA)Member of the Supervisory Board of Quilvest Banque PrivéeChairman of the Hauts-de-Seine Chamber of Commerce and IndustryVice-Chairman of the Paris Chamber of Commerce and IndustryTreasurer of Comité Régional du Tourisme (CRT)Legal manager of JYM Conseil SARLDirectorships and positions held in the past five years:Chairman of the Board of Directors of CFCADirector of Fortis Investment ManagementEric Lefebvre(since 9 July 2012)Non-voting observerHead of Investment at FSI■■Eric Lefebvre was appointed as a non-voting observer by the Annual General Meeting of 26 June 2012, subject to completion of thecapital increase and the acquisition by FSI of a stake in Sequana. His appointment therefore took effect on 9 July 2012 and his term ofoffice, effective for a period of three years, expires at the end of the Annual General Meeting to be called to approve the 2014 financialstatements.■■Mr Lefebvre, a French citizen, is 45 years old and does not hold any shares in Sequana in his own name.■■He graduated from the ESC business school in Bordeaux and holds a Master’s level diploma in accountancy (DESCF). He joinedCaisse des Dépôts et Consignations in 1999 where he served as accountant in the Consolidation department (1999-2000), Head of theConsolidation department (2001), Deputy Head of Accounting for Caisse des Dépôts group (2002-2004), and Advisor to the Headof Investments and Development (2004-2008). Since 2008, he has been the Head of Investments at FSI.Professional address: Fonds Stratégique d’Investissement – 56, rue de Lille – 75007 Paris, FranceDirectorships and positions held in 2012 and since 1 January 2013:Director of FSI-PME PortefeuilleDirectorships and positions held in the past five years:Director of CDC EntreprisesDirector of CDC Capital InvestissementPermanent representative of FSI on the Board of Directors of SoprolMember of the Supervisory Board of Société National ImmobilièreNo directors except Pascal Lebard hold offices in any other companies belonging to the Sequana Group.54 | Sequana | 2012 Document de référence (English version)

2Corporate governanceBoard of DirectorsAlessandro Potestà(until 8 July 2012)Non-voting observer■■Alessandro Potestà had been a director since 19 May 2011. On 26 June 2012, he tendered his letter of resignation, which took effect on9 July 2012 following the capital increase and changes to the Company’s ownership structure. Alessandro Potestà was also a member ofthe Supervisory Board of Sequana (formerly Worms & Cie) between 2004 and 2005, and then served as a director up to 19 May 2011.■■Mr Potestà is 45 years old and no longer holds any shares in Sequana.■■He is a graduate in economics from the University of Turin, and holds several executive management positions within the Exor group(Investments department).Professional address: Viale dei Ciliegi 17 – 10024 Moncalieri (To), ItalyDirectorships and positions held in 2012 and since 1 January 2013:Director of Alpitour SpA (Italy)Directorships and positions held in the past five years:Director of SequanaManaging Director of Exor SpA (Italy)Director of Exor Inc. (USA)Director of Exor SA (Luxembourg)Director of Cushman & Wakefield (USA)Director of Turismo & Immobiliare SpA (Italy)Director of Exor Ltd (Hong Kong)Director of JRE Asia Capital Management LtdDirectors whose appointment is recommended to the Annual General Meeting of 27 June 2013Marie LloberesGeneral Manager, Mail operations – La PosteThe Board of Directors recommends that shareholders appoint Marie Lloberes as a director for a period of four years at its meeting of27 June 2013.■■Marie Lloberes, a French citizen, is 55 years old and does not hold any shares in Sequana.■■She graduated from Ecole Nationale Supérieure des Postes et des Télécommunications and has held various positions within theLa Poste group since 1984. She served as Head of the National Mail Assistance and Advisory department, Head of La Poste del’Aveyron, Coliposte, and La Poste de Haute Garonne, and subsequently Head of Mail production (2003) and Executive Head ofMail operations for Ile-de-France (2004). Since 2006, she has been the General Manager of Mail operations.Professional address: La Poste – 111, boulevard Brune – 75670 Paris Cedex 14, FranceDirectorships and positions held in 2012 and since 1 January 2013:Directorships and positions held in the past five years:Director of Docapost BPO IS - none -Information concerning Jean-Yves Durance and Pierre Martinet can be found on pages 52 and 54.56 | Sequana | 2012 Document de référence (English version)

Corporate governanceBoard of Directors 2Organisation and modusoperandi of corporatedecision-making bodiesOrganisation of management powersand oversightSince 1 July 2007, the duties of Chairman of the Board of Directorsand Chief Executive Officer have been separate. The separation ofthese corporate offices around the complementary skills and experienceof the current Chairman and Chief Executive Officer providesSequana with visibility over its operational activities while keepingthe Board’s work separate.Duties of the Chairman of the Board of DirectorsThe duties of Chairman are defined by Article 14 of the Company’sArticles of Association: “The Chairperson organises and directs thework of the Board of Directors and reports to the Annual GeneralMeeting. He ensures that the Company’s decision-making bodiesoperate effectively and that the directors are able to carry out theirduties and responsibilities.”These duties have been exercised by Tiberto Ruy Brandolini d’Adda,first as Chairman and Chief Executive Officer from 3 May 2005 to30 June 2007, and then as Chairman of the Board of Directors sincethe separation of these two offices on 1 July 2007.However, following the changes to Sequana’s ownership structurein 2012, Tiberto Ruy Brandolini d’Adda has signalled his intentionto stand down both as Chairman and as a director at the forthcomingAnnual General Meeting. After deliberating on the recommendationsof the Nominations and Compensation Committee aswell as on the appropriateness of continuing to separate the dutiesof Chairman and Chief Executive Officer, the Board of Directors’meeting to be held on 27 June 2013 after the Annual GeneralMeeting will nominate a new Chairman.Duties of the Chief Executive OfficerThe duties of Chief Executive Officer are defined by Article 17 ofthe Company’s Articles of Association: “The Chief Executive Officerhas the broadest powers to act in the Company’s name under all circumstances,within the scope of the corporate purpose and subject tothe powers vested by the law in Annual General Meetings and theBoard of Directors. He represents the Company in its dealings withthird parties.”However, following the recommendations of the Nominationsand Compensation Committee, since 1 July 2007 and through25 June 2012, the Chief Executive Officer must obtain the priorauthorisation of the Board of Directors before taking any decisionregarding an investment or divestment of more than €150 million,any financing operation involving a bilateral or syndicated loanagreement for more than €200 million, and generally any transactionlikely to affect the Group’s strategy or significantly changethe make-up of the Group.The Annual General Meeting of 26 June 2012 gave specific newpowers to the Board of Directors (see page 60) which are nowenshrined in the Company’s Articles of Association and have a defacto impact on the powers of the Chief Executive Officer.Since 1 July 2007, the duties of Chief Executive Officer asdescribed previously have been exercised by Pascal Lebard.As his terms of office both as director and Chief Executive Officerare due to expire at the end of the Annual General Meeting of27 June 2013, the Board of Directors’ meeting of 25 April 2013decided to recommend that shareholders reappoint Pascal Lebardas a director for a term of four years, expiring at the end of theAnnual General Meeting called to approve the 2016 financialstatements. This decision is in line with the recommendations ofthe Nominations and Compensation Committee.After deliberating on the recommendations of the Nominationsand Compensation Committee, the Board of Directors meetingto be held on 27 June 2013 after the Annual General Meeting,will make a recommendation regarding the appointment ofSequana’s Chief Executive Officer.Criteria for selecting Board membersMost Board members have held directorships or executive managementpositions in other companies and acquired both corporatemanagement skills and sufficient financial expertise to enablethem to deliberate independently and in an informed manner onthe Group’s financial statements, as well as on accounting complianceissues. They bring all of their complementary skills andexperience to the Board and the search for new directors is guidednot merely by the need to comply with good governance criteriabut by the constant need to consolidate the Board’s expertise interms of financial affairs and the Group’s specific businesses (distribution,logistics, etc.).Gender equalityIn 2012, only one of Sequana’s ten directors was a woman(Raffaella Papa until 9 July 2012 and Odile Desforges thereafter).If the proposed appointment of Marie Lloberes is ratified bythe Annual General Meeting of 27 June 2013, the Board ofDirectors of Sequana will comprise two women out of a total often directors.This breakdown will comply with the law of 27 January 2011relating to gender equality on boards of directors, whichsets a target of 20% of female directors by 2014, and with theAFEP‐MEDEF corporate governance code which recommendsachieving the same target by 2013.Sequana | 2012 Document de référence (English version) | 57

2Corporate governanceBoard of DirectorsDirector independenceUntil 4 June 2012, the composition of the Board of Directorsreflected the Company’s ownership structure and notably the provisionsof the shareholders agreement between Exor SA, DLMD andPascal Lebard (see page 189). Since the termination of said agreement,signalling the end of the agreement to act in concert, Sequanacan no longer be considered as a controlled company. The agreementsigned on 4 June 2012 by Sequana’s main shareholders does not constitutean agreement to act in concert since each shareholder effectivelyacts on its own behalf.Directors are considered independent if they have no direct or indirectrelations of any nature with the Company, the Group or theGroup’s management that could compromise their freedom to makeindependent decisions. Independent directors should not:■■be employees or corporate officers of the Company, employeesor directors of the parent company or of a company consolidatedby the parent, nor have occupied any of these positionsover the previous five years;■■be corporate officers of an entity in which the Company holdsa directorship, either directly or indirectly, or in which one ofits employees (designated as such) or corporate officers holds adirectorship (either at present or over the past five years);■■be a major customer, supplier, commercial banker or investmentbanker of the Company or the Group to which it belongs,or for which the Company or the Group accounts for a significantportion of business;■■have any close family ties to a corporate officer;■■have been an auditor of the Company over the previous five years;■■have been a director of the Company for more than twelve years.Given the positions that they occupy in the Company, Tiberto RuyBrandolini d’Adda and Pascal Lebard do not qualify as independentdirectors. In view of the Company’s ownership structure and theexistence of a shareholders’ agreement, their representatives may notbe considered as independent directors. Moreover, Laurent Mignon,as Chief Executive Officer of Natixis, one of Sequana’s main bankingpartners and creditors, is deemed to have a conflict of interestsand does not qualify as an independent director. The same considerationapplies to Odile Desforges given her links to FSI.Therefore, based on generally accepted independence criteria setout in reports published by AFEP-MEDEF, of the ten directorssitting on Sequana’s Board in 2012, three qualify as independent,namely Luc Argand, Jean-Pascal Beaufret and Michel Taittinger.The Board noted that Michel Taittinger has been a member ofone of Sequana’s corporate entities since 2000 but considers thathe still qualifies as an independent director despite the fact thathis cumulative terms of office exceed the 12-year period recommendedby the AFEP-MEDEF code. Michel Taittinger was anon-voting member of the Supervisory Board of Sequana (formerlyWorms & Cie) between 2000 and 2005. He became aSequana director in May 2005 and has only been able to vote atBoard meetings since that date. Therefore, the Board of Directorsconsiders that a person who has been a member of a corporateentity for more than 12 years should not automatically lose theirstatus as an independent director if they have been acting in anon-voting capacity for part of that period. The concern thatan excessively long term of office may limit the holder’s powersof analysis is perfectly legitimate, however it should not beapplied mechanically or without due regard to the diversity ofsituations. In the case in point, the length of Michel Taittinger’sterm of office has not been deemed an obstacle to his freedomof judgement or expression in Board meetings. Rather,Michel Taittinger’s experience is of major benefit in helping toassess the performance of Sequana and its businesses in all theircomplexity and ensuring effective oversight and control over theCompany. Michel Taittinger’s personal qualities, together withthe absence of any conflicts of interest with the Group’s activities,reinforced the Board’s opinion in this regard.If the list of independent directors proposed by the Boardof Directors is approved at the Annual General Meeting of27 June 2013, the Board will comprise five independent directors(Luc Argand, Jean-Pascal Beaufret, Jean-Yves Durance,Michel Taittinger and Marie Lloberes) out of a total of ten directors,i.e., half of all Board members will qualify as independent,thus bringing the Company into line with corporate governanceguidelines on director independence.Particular attention is paid to ensuring directors’ freedom ofjudgement on the Board and the Board’s committees, especiallythose bound by a shareholder agreement, to ensure that the directorscan fulfil their duties with the objectivity required.58 | Sequana | 2012 Document de référence (English version)

Corporate governanceBoard of Directors 2Based on information provided by members of the Board, theCompany has ascertained that, with the exception of Pascal Lebardand Nicolas Lebard who are brothers (Nicolas Lebard is thepermanent representative of DLMD and was a director ofthe Company until 9 July 2012), no director has family ties toanother director or to the management team. The Company hasalso ascertained that over the past five years, no director has beenconvicted of fraud or been subject to criminal, public or administrativesanctions; and that no director has been associated withbankruptcy, receivership or judicial liquidation proceedings orhas been prevented by a court or any other legal, administrativeor regulatory authority from acting as a member of a corporatedecision-making body or from being involved in a company’s dayto-daymanagement or conduct of its business.The independent directors have not reported any conflict ofinterest that would be likely to raise questions about their independencewith regard to the Company or the performance oftheir duties as corporate officers. For information purposes,Jean‐Pascal Beaufret is deemed to have indirect ties (via a companycalled Pardys of which he has been sole shareholder andmanaging director since January 2013) to Goldman Sachs investmentbank which the Group has used as a consultant from time totime. Jean‐Pascal Beaufret shall abstain from participating in anydeliberations or discussions regarding Sequana’s dealings withGoldman Sachs and shall not be involved in the provision of anyservices by Goldman Sachs to the Sequana Group. Consequently,the aforementioned situation is not deemed to compromiseJean‐Pascal Beaufret’s status as an independent director.None of the members of the corporate decision-making bodiesor the executive management team have entered into a serviceagreement with the Company or one of its subsidiaries providingfor the payment of benefits.The Company’s Articles of Association in their current form donot provide for employee-elected directors and no director has anemployment contract with the Company.Duties, rules of conduct and powersof the Board of DirectorsThe Board of Directors has the following responsibilities:Duty of administrationIn addition to handling matters that fall within the scope of thepowers ascribed to it by law or by regulations, the Board regularlymakes decisions regarding the Group’s strategy, internal restructuringoperations and important investment projects designed togenerate organic growth.Duty of reviewIn addition to the duties ascribed to it by law (reviewing andapproving the Company’s financial statements), the Board deliberateson significant acquisitions or sales of equity interests andassets that do not fall within the scope of the strategy it has determined.It also votes on any transaction or commitment that isliable to materially affect the Group’s earnings or to result in asignificant change in its balance sheet structure.Duty of cautionThe Board is kept informed on a regular basis, either directly orthrough its committees, of any significant event affecting theconduct of the Company’s business. It also has the right to obtaininformation at any time, including between meetings convenedto review the financial statements, on any significant changein the Company’s financial condition, liquidity position andcommitments.Duty of transparencyThe Board of Directors is responsible to the shareholders forensuring that all of its activities are conducted in a transparentmanner.Rules of conductAccording to the Company’s Articles of Association, each directormust hold at least 100 shares during his entire term of office.Each director also undertakes to comply with the rules of conductset forth in the Directors’ Charter and the Code of GoodConduct.These documents, which were approved by the Board of Directorson 3 May 2005 and amended on 28 March 2006, 19 March 2008and 21 May 2008 to incorporate best corporate governance practices,are designed to govern the rights and obligations of directorsirrespective of whether they are natural persons, legal entities, orpermanent representatives of these legal entities. In particular,they are intended to prevent potential conflicts of interest, andto define the rules under which the directors may trade in theCompany’s shares along with the disclosure requirements forsuch transactions.Within the scope of good corporate governance practices, theDirectors’ Charter and the Code of Good Conduct stipulate thatcorporate officers must comply with stock market rules on insidertrading and refrain from trading in the Company’s shares on thebasis of as yet unpublished privileged information they may havein their possession due to the position they hold. Corporate officersare required to hold newly-acquired shares for a minimum ofthree months and may not trade in the Company’s shares duringperiods immediately before the publication of the Company’sfinancial statements. They may not trade in the Company’s shareson the stock market between (i) the later of either the first tradingday immediately after the end of a calendar quarter, i.e.,the 20 th trading day (inclusive) preceding the Board meetingthat adopts the annual or interim financial statements, or the16 th trading day (inclusive) preceding the publication of quarterlyfinancial statements, and (ii) the publication date (inclusive) ofthe financial statements (generally the day after the Board meeting).As these rules are stricter than the recommendations issuedby the AMF in 2010 and better adapted to the Company’s wayof working, no changes were deemed appropriate. In accordancewith regulations, corporate officers must inform the AMF ofany transactions they have carried out involving the Company’sshares within five trading days of the transactions in question.They must also provide the Company with a copy of said disclosureswithin the same timeframe.Sequana | 2012 Document de référence (English version) | 59

2Corporate governanceBoard of DirectorsTo ensure that the Company’s corporate decision-making bodieswork in an effective manner, the Board of Directors has alsoadopted a set of internal rules which define the precise role of theBoard and the status of its members, and ensure that meetingsand discussions are conducted in an optimal and effective manner.The Board has also set up special committees composed ofdirectors to deal with matters that fall within the scope of theBoard’s duties. These committees deliberate and submit theiropinions and recommendations to the Board.Powers of the Board of DirectorsThe Annual General Meeting of 26 June 2012 approved a numberof amendments to the Articles of Association concerning theintroduction of an enhanced majority voting system for the adoptionof certain decisions by the Board of Directors. Since thatdate, the following decisions fall within the exclusive remit of theBoard of Directors and require approval by at least two-thirds ofthe directors present or represented at Board Meetings:■■the approval of the business plan and the annual budget forthe Company, Arjowiggins and Antalis International and anymaterial transaction not appearing in said annual budget;■■any investment project (or any project involving the creationof subsidiaries or any link-up or partnership having an equivalentoutcome) by the Company, Arjowiggins, Antalis or one oftheir subsidiaries, other than an intragroup transaction, witha unit value of more than €10 million (disbursement or capitalemployed or enterprise value);■■any proposed transaction concerning an acquisition, a saleor a transfer of assets (including securities) by the Company,Arjowiggins, Antalis International or one of their subsidiaries,other than an intra group transaction, with a unit value of morethan €20 million (enterprise value) or representing annual salesof more than €40 million;■■any proposed merger, demerger or partial contribution of assetsinvolving the Company, Arjowiggins, Antalis International orone of their main subsidiaries (the main subsidiaries within themeaning of this Article being the direct and indirect subsidiariesof Arjowiggins and Antalis International whose annual salesrepresent 5% or more of Arjowiggins’ or Antalis International’sconsolidated annual sales);■■any draft restructuring plan by the Company, Arjowiggins,Antalis International or one of their subsidiaries with a unitvalue of more than €10 million;■■any proposed capital increase without pre-emptive subscriptionrights for existing shareholders, by the Company, Arjowiggins,Antalis International or one of their subsidiaries;■■any financing or refinancing operation (including the issue ofdebt securities or the granting of sureties, endorsements, guaranteesor collateral of any kind) by the Company, Arjowiggins,Antalis International or one of their subsidiaries, with a unitvalue of more than €50 million;■■any proposal to amend the Articles of Association of theCompany, Arjowiggins or Antalis International or one of theirmain subsidiaries;■■the development or implementation of a strategic partnershipor the acquisition of a company operating in a different marketsegment from those in which Arjowiggins and Antalis currentlyoperate;■■the appointment or revocation of the Company’s ChiefExecutive Officer or Deputy Chief Executive Officers andthe appointment or revocation of the Chairman or a ChiefExecutive Officer of Arjowiggins or Antalis International;■■the dividend policy of the Company, Arjowiggins and AntalisInternational;■■any legal or administrative proceedings initiated by theCompany, Arjowiggins, Antalis International or one of theirsubsidiaries for more than €5 million;■■any agreements entered into by the Company, Arjowiggins orAntalis International with related parties (shareholders or corporateofficers); and■■the implementation of any stock subscription or purchaseoptions, share award plans or similar mechanisms.Preparation of the Board’s work, organisationand modus operandiThe Board of Directors meets at least four times a year, and wheneverthe Company’s interests so require, to deliberate as a collegialbody on the matters referred to it for approval.The schedule of Board and committee meetings is adopted at theend of a given year for the following year. However, unscheduledmeetings may be called where necessary in exceptionalcircumstances.Barring exceptional circumstances, prior to each Board meetingdirectors receive a formal notice of meeting along with the minutesof the previous meeting and any documentation and informationnecessary to deliberate on the upcoming items on theagenda.Depending on the agenda and nature of the issues to be discussed,the Chairman of the Board may request that one of the Board’sthree committees meet before the date of the Board meeting.The information needed for the Board’s discussions is sent todirectors several days before the meeting. This timing is compatiblewith the confidentiality requirements applicable to any transferof privileged information, and allows directors to examine indepth the documents sent.The same procedure applies to the Board’s committees.The Audit Committee meets to review the annual or interimfinancial statements before the relevant Board meeting is calledto adopt those financial statements.The information provided to directors during Board meetingsincludes comprehensive documentation regarding issues on theagenda. Generally speaking, and depending on the nature of thesubject to be discussed, internal and/or external information isprovided for each issue on the agenda as well as draft deliberationswhere appropriate. The information pack also includes thedraft press release usually published the day after the meetingbefore the Paris stock market opens for trading, in accordancewith the AMF’s recommendations.60 | Sequana | 2012 Document de référence (English version)

Corporate governanceBoard of Directors 2Directors may participate in Board meetings via video conferenceor telecommunication and are deemed to be present for purposes ofquorum and majority requirements, except when this is disallowedby French law for certain items on the agenda of the meeting.Assessment of the Board’s performanceUnder the Board of Directors’ internal rules, the Board meets oncea year to assess its operation and independence. At each annualmeeting, it also assesses the performance of corporate officers.The Board may also commission (at least once every three years)an assessment of its own performance by an external consultantor by the Board secretary. The Board made use of this facility,and at its meeting of 8 March 2012, commissioned an assessmentfrom the Board secretary. The results of this assessment were disclosedto the Board on 27 April 2012.Based on directors’ responses to the questionnaire sent out, the proceduresin place and the quality of work performed by the Boardwere felt to be satisfactory. The issues covered in the study includethe frequency of and care taken to prepare meetings, the quality ofthe Board’s discussions, the independence of the views expressed,the access of directors to the information needed for their deliberationsalong with the contents thereof, and the minutes drafted.Without calling into question the quality and quantity of informationprovided to the Board of Directors, the survey highlightedthat improvements are expected, especially in light of the currenttense market environment (lower volumes and pressure on rawmaterials prices), so that it has more comprehensive informationconcerning the Group’s industrial and commercial activities inparticular, and that it be called upon more frequently to debate thestrategy implemented by the Company. Certain directors considerthat the role and composition of the Strategy Committee could bestrengthened in this respect. The composition of the Board couldbe strengthened by the presence of a director – preferably independent– with expertise in the Group’s activities (distribution,paper sector or another capital intensive industry).Lastly, among the subjects that the Board and its specialisedcommittees could deal with to improve the quality of their workand play their role in full, the survey suggests that special attentionbe paid to two points: the succession plans for the Chairmanand Chief Executive and risk prevention and management.Missions entrusted to the Board committeesNominations and Compensation CommitteeIn accordance with the committee regulations adopted by theBoard of Directors on 3 May 2005, the role of the Nominationsand Compensation Committee is to review all matters relating tothe composition, organisation and modus operandi of the Board ofDirectors and its committees and to submit to the Board’s recommendationson compensation to be paid to executive managersand corporate officers, including the Chairman and the ChiefExecutive Officer. The committee reviews stock option plans andany proposals for share awards submitted by management.Audit CommitteeIn accordance with the committee regulations adopted by theBoard of Directors on 3 May 2005 and subsequently amendedon 27 July 2010, the Audit Committee focuses on three mainareas: (i) the financial reporting process, (ii) the effectiveness ofrisk management and internal control procedures, and (iii) theindependence of Statutory Auditors and the performance of thestatutory audit engagement.The committee monitors issues regarding the preparation andvalidation of accounting and financial data, ensures that theaccounting policies used to prepare the consolidated and parentcompany financial statements are appropriate and applied consistently,and that major transactions are accounted for appropriatelyat the level of the Group. It also verifies that internal data compilationand validation procedures are designed with this purposein mind. The committee analyses (a) the scope of the consolidatedGroup and, where appropriate, the reasons why certain entitiesare not consolidated, (b) the accounting standards applicable tothe Group and their implementation, (c) the annual and interimconsolidated and parent company financial statements along withany financial and accounting issues brought to its attention byexecutive management, particularly as regards the Group’s cashposition, financing and compliance with bank covenants, and (d)the risks to which the Group may be exposed and any materialoff-balance sheet commitments.The committee is kept up to date on the organisation and operationof risk management procedures by executive management,and ensures that these procedures are effective. It also overseeshow risks are flagged up, monitored or covered by appropriateinsurance policies. The committee issues recommendations onthe organisation of the Group’s internal audit department and isinformed of the internal audit agenda. It also receives regular summariesof internal audit reports. The committee also familiarisesitself with the internal audit action plan, is informed at least oncea year of the progress of this plan, and monitors the procedures putin place by the Company to ensure the actions taken are effectiveand comply with regulations and a recognised framework.The Audit Committee is provided with the report of theChairman of the Board of Directors on internal control and riskmanagement procedures and issues an opinion before the reportis approved by the Board.The committee is responsible for the Statutory Auditor selectionprocedure and makes recommendations to the Board onthe appointment or renewal of Statutory Auditors. The committeeensures that the Statutory Auditors meet the requisite independencecriteria and makes recommendations on fees payable toStatutory Auditors in respect of their statutory audit engagement.It also issues recommendations on advisory engagements andother related audit services that may be provided by the StatutoryAuditors or by members of their network outside the statutoryaudit engagement, and ensures that such engagements complywith legal regulations. Every year, the committee is briefed by theStatutory Auditors on the amount and breakdown of fees per categoryof audit and advisory engagement and other services paidby the Group to the Statutory Auditors or members of their networkin the past year. It also examines the auditors’ work scheduleand the findings of the audit. On closing the interim and annualfinancial statements, the committee receives a report from theStatutory Auditors setting out the key issues resulting from theirwork and the accounting options applied.Sequana | 2012 Document de référence (English version) | 61

Corporate governanceBoard of Directors 2Conduct of the Group’s operationsThe Board regularly reviews the market position of Group companiesand deliberates on Group strategy and the industrialprocesses to be rolled out in its subsidiaries, as well as on anyrestructuring operations that need to be carried out in responseto difficult market conditions. At each of the Board’s meetings,executive management gives a comprehensive presentation on theconduct of the Group’s operations.The Board gave in-depth consideration to the main financial andtax issues concerning the Group during the year and discussedthe Group’s refinancing at length. A number of Board meetingswere dedicated entirely to this issue. Since the Group’s financinglines were due to expire in 2012, the Board reviewed the refinancingplans put forward by executive management. The Board waskept abreast of discussions held with the Group’s banks as well aswith shareholders with a view to devising refinancing solutions.It subsequently reviewed the terms and conditions of the refinancingarrangements negotiated with the banks and approvedthe signature of the agreements in principle (term sheets) settingout these terms and conditions. In April 2012, the Board authorisedthe Chief Executive Officer to sign the bank agreementstogether with the related collateral arrangements and guaranteesprovided to the banks. From among the different financingalternatives available, the Board opted for a €150 million capitalincrease which was taken up by the Company’s main shareholdersand FSI.In 2012, the Board continued its analysis of the restructuringplans and asset divestments in progress in its subsidiaries as wellas acquisitions made by Antalis.In early 2013, the Board again gave in-depth consideration tothe main financial issues concerning the Group and discussed atlength the Group’s refinancing.Financial statementsIn early 2012, after noting that an agreement in principle hadbeen signed with its banks setting out the terms and conditionsof the Group’s refinancing and having considered the opinionof its Audit Committee, the Board approved the 2011 consolidatedfinancial statements based on the going concern accountingprinciple, as well as the projected management accounts. It alsorecommended not paying any dividends in respect of 2011. Atthis same meeting, the Board also considered and approved therenewal of the Statutory Auditors whose tenure was due to expire.At its meeting of 27 April 2012, the Board considered internalcontrol issues within the Group and approved the Chairman’sreport on internal control and risk management procedures.At its meeting of 25 July 2012, after having considered the opinionof the Audit Committee, the Board approved the consolidatedfinancial statements at 30 June 2012 and the financial documentationdrawn up in application of the French CommercialCode (Code de commerce). It also prepared an interim review ofoperations.During the year, it reviewed the budget for 2012 and monitoredthe budget against the Group’s actual results. At the end of 2012,the Board reviewed the provisional budget for 2013 and approvedthe Group’s 2013-2015 three-year business plan.In early 2013, after having considered the opinion of its AuditCommittee, the Board approved the 2012 consolidated financialstatements as well as the projected management accounts. Italso recommended not paying any dividends in respect of 2012.At its meeting of 25 April 2013, the Board reviewed the consolidatedfinancial statements at 31 March 2013 and approvedthe Chairman’s report on internal control and risk managementprocedures.2010 share award plansOn 8 March 2012, after having considered the report of theNominations and Compensation Committee, the Board notedthat the free shares due to vest (i) on 30 April 2012 under the9 February 2010 plan for beneficiaries resident in France andemployees of French entities, and (ii) on 30 April 2014 for beneficiariesresident outside France and employees of non-Frenchentities, would partially vest based on the Group’s resultsat 31 December 2011. In a subsequent meeting, the Boardnoted that the corresponding shares had been issued and theCompany’s share capital increased accordingly. At its meetingsof 8 March 2012 and 4 June 2012, the Board also decided thatcertain employees whose employment contract is terminated bytheir employer would retain their rights to all or some of the freeshares granted to them.In early 2013, after having considered the report of theNominations and Compensation Committee, the Board notedthat, based on Sequana’s results at 31 December 2012, a smallnumber of share awards would vest at 30 April 2012. It also notedthe issue of the corresponding shares and increase in share capital.The Board also decided that one employee whose employmentcontract was terminated by their employer would retaintheir rights to share awards.Delegations of authority to handle financial transactionsAt its meeting of 8 March 2012, the Board renewed, under thesame terms, the authorisation granted on 9 March 2011 to theChief Executive Officer to grant sureties, endorsements and guaranteeson the Company’s behalf for all transactions and/or financingoperations up to an aggregate limit of €200 million and fora period of one year. Sequana used €16.5 million of this authorisation,mostly to guarantee commitments made by its subsidiariesto third parties. On 27 February 2013, the Board renewedthe authorisation granted to the Chief Executive Officer underthe same terms for a one-year period through 26 February 2014.However, the aggregate limit was reduced to €100 million andany sureties, endorsements and guarantees for individual amountsin excess of €50 million are subject to prior authorisation of theBoard of Directors.Pursuant to the authorisation granted to it by the Annual GeneralMeeting of 26 June 2012, the Board also gave full powers to theChief Executive Officer to trade in the Company’s shares on theopen market, under the terms and within the limits set by theMeeting, and in accordance with stock market regulations. Thisauthorisation was used in 2012 and early 2013 in connection withthe ongoing liquidity agreement described on page 191.Sequana | 2012 Document de référence (English version) | 63

2Corporate governanceBoard of DirectorsAs part of the Group’s new refinancing conditions approved in2012, at its meeting of 27 April 2012, the Board granted fullpowers to the Chief Executive Officer to sign the final loanagreements for Sequana and its operating subsidiaries, totallingjust over €1 billion. At its meeting of 4 June 2012, the Boardgranted full powers to the Chief Executive Officer to initiate andcarry out the share capital increase.On 25 April 2013, the Board granted full powers to the ChiefExecutive Officer to sign amendments to the Arjowiggins andSequana loan agreements, mainly for the purpose of adjustingthe financial covenants and extending the maturities of the creditlines through 30 November 2015.Annual General MeetingAt the beginning of 2012, the Board of Directors convened theCombined General Meeting of 26 June 2012 and approved theagenda for the meeting and the related necessary documentation,in particular the resolutions to be submitted to the shareholdersfor approval. Draft resolutions included amendments to theArticles of Association making it possible for the shareholders toparticipate in Annual General Meetings electronically.At its meeting of 27 April 2012, the Board also reviewed the2011 registration document.On 4 June 2012, the Board decided to amend the agenda of theAnnual General Meeting of 26 June 2012 and to add a number ofdraft resolutions in light of the undertaking by FSI to subscribeto Sequana’s share capital increase.During its meeting held on 25 April 2013, the Board sent out theconvening notices for the Combined General Meeting to be heldon 27 June 2013, decided which documents would be submittedto the meeting and reviewed the 2012 registration document.Committee meetings and workNominations and Compensation CommitteeThe committee met on three occasions in 2012, with an attendancerate of 92%. The committee reviewed director independenceand made recommendations regarding the Chief ExecutiveOfficer’s variable compensation for 2011. It also set the fixedcompensation payable to the Chief Executive Officer and themethods to be applied to calculate his variable compensation for2012, to be used as a basis for the Board’s discussions. The committeealso reviewed and approved the form and content of the“Compensation” section of the 2011 registration document.During the second-half of the year, following the appointment ofnew directors by the Annual General Meeting of 26 June 2012,the committee again assessed director independence and issuedrecommendations regarding the reconstitution of the Board’scommittees.The committee met two times at the beginning of 2013. It identifiedsuitable candidates to replace those directors whose termsof office were due to expire at the end of the Annual GeneralMeeting called to approve the 2012 financial statements. It thensubmitted its recommendations to the Board of Directors so thatthe Board could in turn recommend that shareholders appointcandidates who comply with AFEP-MEDEF recommendationsin terms of independence, experience and gender to which theCompany refers in its corporate governance practices.The Committee put forward a number of recommendations concerningthe amount of variable compensation payable to theChief Executive Officer for 2012 and the amount of his fixedcompensation and the methods to be used to calculate his variablecompensation for 2013. It also re-examined director independenceand the form and content of the “Compensation” section ofthe 2012 registration document.Audit CommitteeThe Audit Committee met on five occasions in 2012 in the presenceof management, with an attendance rate of 94%.It reviewed Sequana’s refinancing requirements and the impactof upcoming maturities of its outstanding debt on the approvalof the 2011 financial statements. After learning of the termsand conditions of the Group’s new financing arrangements, itreviewed the 2011 financial statements and made recommendationsto the Board. The committee also analysed internal controlprocedures put in place. It was briefed on the internal controlreports for 2011 and obtained an understanding of the internalaudit plan for 2012. The Committee reviewed the Chairman’sreport on internal control and risk management procedures for2011 in line with good corporate governance practices and itsown guidelines. The committee also debated the steps to be takengiven that the terms of office of a principal and a deputy StatutoryAuditor were due to expire.The committee also reviewed the Company’s interim financialstatements at 30 June 2012 and the work of the Group’s internalaudit department in the first half of the year.The committee has met on three occasions since the beginningof 2013. It dedicated an entire meeting to examining the risksto which the Group may be exposed. It reviewed the Group riskmap and the IT security plan, particularly for Antalis whereIT security is an essential component of the logistics networkand customer service. The committee then reviewed Sequana’srefinancing requirements once again together with the impact ofupcoming maturities of its outstanding debt on the approval ofthe 2012 financial statements. After reviewing the 2012 financialstatements and making recommendations to the Board in thisrespect, it analysed the internal control procedures put in place.The Audit Committee was briefed on the internal control reportsfor 2012, obtained an understanding of the internal audit plan for2013 and reviewed the Chairman’s report on internal control andrisk management procedures for 2012.Strategy CommitteeThe Strategy Committee met once in 2012, with an attendancerate of 80%. It examines the Group’s strategic focuses.64 | Sequana | 2012 Document de référence (English version)

Executive CommitteeThe Executive Committee is made up of senior Group executives.At 31 December 2012, the Committee included the following members:Corporate governanceExecutive Committee – Compensation2Pascal LebardHervé PoncinGuy LéonardXavier Roy-ContancinIsabelle Boccon-GibodAntoine CourteaultChief Executive Officer of Sequana, Chairman of Antalis and ArjowigginsChief Operating Officer of AntalisChief Operating Officer of ArjowigginsManaging Director of the Creative Papers division (until 30 June 2012)Group Human Resources Director (since 1 July 2012)Group Chief Financial Officer, Chief Financial Officer of AntalisExecutive Vice-PresidentCompany SecretaryGilles Raynaud, Group Human Resources Director until 30 July 2012, was also a member of the Executive Committee until this date.CompensationThe Board of Directors reviews the Company’s executive compensation practices and ensures that they comply with the recommendationspublished by AFEP and MEDEF, or with recommendations that may be issued by competent authorities, in particular the AMF.Executive corporate officersThe roles of Chairman of the Board of Directors and ChiefExecutive Officer of the Company were separated in 2007. Since1 July of that year, Pascal Lebard has been Chief Executive Officerof Sequana and Tiberto Ruy Brandolini d’Adda, Chairman of theBoard of Directors.The AFEP-MEDEF’s recommendations include the Chairmanof the Board of Directors in their definition of executive corporateofficers – even when the Chairman has no executive role. Tocomply with these recommendations, the detailed informationprovided below discloses compensation received by Pascal Lebardand Tiberto Ruy Brandolini d’Adda.CompensationCompensation payable to the Chief Executive OfficerThe annual compensation paid to the Chief Executive Officercomprises a fixed portion and a variable portion determined bythe Board of Directors based on recommendations made by theNominations and Compensation Committee.The fixed portion of Pascal Lebard’s annual compensation,amounting to €900,000 for 2011, was maintained in2012, pursuant to a decision of the Board of Directors’ meetingof 8 March 2012 previously approved by the Nominationsand Compensation Committee. Based on a recommendationof the Nominations and Compensation Committee, the Boardof Directors’ meeting of 25 April 2013 decided to maintainPascal Lebard’s fixed compensation at €900,000 for 2013.Variable compensation payable in respect of 2010 was calculatedbased on changes in consolidated debt during the year, workingcapital and consolidated operating income in the period, as wellas on the implementation of announced and/or future cost cuttingplans. This variable compensation may be increased by theBoard of Directors on the recommendation of the Nominationsand Compensation Committee, provided that (i) the strategicoperations approved by the Board are carried out effectively;(ii) the Group meets its three-year business targets; and (iii) theRACE 2012 programme is implemented successfully at Antalis.Based on these principles and given the Group’s performance in2010, the Board meeting of 9 March 2011 set Pascal Lebard’svariable compensation for 2010 at a gross amount of €870,000.This amount, payable in 2011, was approved upfront by theNominations and Compensation Committee. The Board alsodecided to maintain the criteria used to calculate Pascal Lebard’svariable compensation for 2011 insofar as these continue to reflectthe objectives of the Group’s three-year business plan.At its meeting of 8 March 2012, the Board of Directors decidedthat no variable compensation would be paid to Pascal Lebardin respect of 2011. This decision was in line with the recommendationsof the Nominations and Compensation Committeeand with Pascal Lebard’s own proposals, taking into accountthe Group’s situation and its operating performance in 2011. Atthe same meeting, the Board decided to base the calculation ofPascal Lebard’s variable compensation for 2012 on the followingcrteria: (i) changes in consolidated EBITDA over the period;(ii) the Group’s net debt at end-2012; (iii) continued prudentmanagement of working capital; and (iv) a continuation of costandcapacity-reduction policies. The Board also decided that thisvariable amount could be increased by the Board on the recommendationof the Nominations and Compensation Committee,provided that strategic transactions are carried out on good termsin line with the three-year business plan and with the Group’sgeneral refinancing arrangements.Sequana | 2012 Document de référence (English version) | 65

2Corporate governanceCompensationAt its meeting of 26 March 2013, the Board of Directorsdecided that despite the disappointing results in 2012 related tothe tough economic conditions, most of the criteria determiningPascal Lebard’s variable compensation for 2012 (payable in2013) had been met. The Board also noted that Pascal Lebardhad not been found wanting in the exercise of his duties and hadworked very hard throughout the year to turn the Group aroundand secure refinancing. After considering the opinion of theNominations and Compensation Committee, assessing the qualityof Pascal Lebard’s work and deeming the related criteria tohave been met, the Board decided to pay Pascal Lebard variablecompensation for 2012 but to cap the amount at 50% of his fixedcompensation, i.e., €450,000.As regards Pascal Lebard’s variable compensation for 2013, inorder to strengthen his motivation and reflect the extent of thechallenges facing the Group, the Board decided to maintain thecriteria used to calculate Pascal Lebard’s variable compensationfor 2012, i.e., (i) changes in consolidated EBITDA over theperiod; (ii) the Group’s net debt at end-2013; (iii) continued prudentmanagement of working capital; and (iv) a continuation ofcost- and capacity-reduction policies.Although these criteria were quantified in a precise manner, thesedetails are not disclosed for reasons of confidentiality.Compensation payable to the Chairman of the Boardof DirectorsSince 1 January 2008, Tiberto Ruy Brandolini d’Adda hasreceived annual attendance fees of €250,000 in his capacity asChairman of the Board of Directors, on top of the attendancefees to which he is already entitled in his capacity as director.These additional fees are deducted from the aggregate amount ofattendance fees payable (see details on page 68). The additionalfees are consideration for his duties as Chairman of the Boardand specifically for his role and responsibilities in organising theBoard’s work as defined by the Articles of Association.Aggregate executive compensation and benefitsThe table below sets out compensation paid by Sequana and the companies it controls to executive corporate officers in 2011 and 2012:(Gross amount in euros before tax)Pascal LebardChief Executive OfficerFinancial year 2011 Financial year 2012Amounts paidduring 2011Amounts payableand paidin respect of 2011Amounts paidduring 2012Amounts payableand paidin respect of 2012Fixed €900,000 €900,000 €900,000 €900,000Variable €870,000 €0 €0 €450,000Exceptional - - - -Attendance fees €49,838 €52,468 €57,786 €47,402Tiberto Ruy Brandolini d’AddaChairman of the Board of DirectorsFixed - - - -Variable - - - -Exceptional - - - -Attendance fees €299,838 €302,468 €307,786 €297,402TOTAL €2,119,676 €1,254,936 €1,265,572 €1,694,804No benefits of any kind (including fringe benefits) were grantedby Sequana (or the companies it controls) to its executive corporateofficers in 2011 or 2012.Other than the compensation mentioned above, the Companydid not make commitments of any kind to its executive corporateofficers in terms of compensation, indemnities or benefits payableor likely to be payable in connection with or following theassumption, termination or change of duties.The executive corporate officers are not bound to the Company byany non-competition clause.Pascal Lebard and Tiberto Ruy Brandolini d’Adda, who meetthe definition of executive corporate officers provided by AFEP-MEDEF and are required to comply with rules regarding combininga corporate office with an employment contract, do not haveand have never had an employment contract during their respectiveterms of office (including any contracts which have been temporarilysuspended) with Sequana or a company it controls.Pascal Lebard benefits from the same pension scheme as theCompany’s other executives. Like the Company’s other executives,he is also entitled to supplementary life and disabilityinsurance.66 | Sequana | 2012 Document de référence (English version)

Corporate governanceCompensation2Stock optionsNo stock subscription or purchase options were granted to executivecorporate officers by the Company or by the companies itcontrols in 2011 or 2012.No stock subscription or purchase options were exercised byexecutive corporate officers in 2011 or 2012.Sequana stock subscription options held by Pascal Lebard andTiberto Ruy Brandolini d’Adda in their capacity as executive corporateofficers and by Pierre Martinet (currently a non-executivecorporate officer) at 31 December 2012 are detailed below:Date of AGM 3 May 2005Date of Board meeting 3 May 2005Total number of options initially granted 515,000Total number of options (adjusted) (1) 226,813Total number of shares that may be subscribed by:Pascal Lebard 46,244Tiberto Ruy Brandolini d’Adda 110,103Pierre Martinet 70,466Earliest exercise date 3 May 2009Expiry date 3 May 2013Original exercise price €23.50Adjusted exercise price (1) €56.52Terms and conditions of exercise Vesting periods (2)Number of shares subscribed at 31 December 2012 0Cumulative number of options cancelled or lapsedat 31 December 2012Stock subscription options outstandingat 31 December 20120226,813Value per option (IFRS 2) €6.34(1) Adjustments provided for by law and the plans concerned, regarding (i) the numberof options and the exercise price (carried out in May 2005 and May 2006 followingthe payment of dividends wholly or partly deducted from the Company’s reserves, andin 2012 following the capital increase and the reverse stock split), and (ii) the numberof options (carried out in December 2006 following the buyback or possible buybackby shareholders of shares in the Company at a lower-than-market price).(2) This share plan provides for gradual vesting over successive three-year periods,corresponding to one-third of options granted by year of seniority.Share awardsOn 9 February 2010, Sequana set up a share award plan formanagement and executives considered to play a key role inthe Group’s development. Under this plan, Pascal Lebard wasawarded 540,000 shares measured at the grant date in accordancewith IFRS 2, at an amount of €5.4670 per share.All 540,000 shares accruing to Pascal Lebard are subject to presenceand performance conditions related to Sequana’s three-year businessplan. These conditions were assessed on 31 December 2011and on 31 December 2012. The performance criteria for the sharesgranted to Pascal Lebard are based equally on Sequana’s consolidatedEBITDA and on its consolidated net debt.As 50% of the related performance conditions had been met at31 December 2011, Pascal Lebard acquired 180,000 Sequanashares on 30 April 2012 (with a par value of €1.50 each). Thevested shares represent 50% of two thirds of the total numberof shares awarded. The remaining shares would have vested on30 April 2013 if the specified performance conditions had beenmet at 31 December 2012. However, as this was not the case,Pascal Lebard did not receive any shares in 2013 and no longerhas any share award entitlements.In accordance with the AFEP-MEDEF recommendations onexecutive compensation, Pascal Lebard is required to hold a portionof the shares he acquired on 30 April 2012, corresponding to50% of net capital gains on the acquisition value, until the end ofhis initial or renewed term of office. The remaining shares mustalso be held for a period of two years following the vesting date.No free shares were awarded to Tiberto Ruy Brandolini d’Addain respect of the 9 February 2010 plan.No free shares (including performance shares) were awarded tothe Company’s executive corporate officers in 2011 or 2012.Details of share award plans outstanding at 31 December 2012are provided on page 194.No hedging instruments were used by the Company for beneficiaries,including corporate officers, of outstanding stock optionplans.None of the aforementioned stock options had been exercised atthe date this document was filed.Details of stock option plans outstanding at 31 December 2012are provided on page 193.Sequana | 2012 Document de référence (English version) | 67

2Corporate governanceCompensationNon-Executive Corporate OfficersMembers of the Board of Directors receive attendance fees in anamount determined by the Annual General Meeting.Amount of attendance feesThe Annual General Meeting of 21 May 2008 set the annualamount of attendance fees payable to members of the Board ofDirectors to €700,000, applicable from 2008 until such time asshareholders decide otherwise.At its meeting on the same date (21 May 2008), the Board renewedthe decision taken at its meeting of 25 July 2007 based on theseparation of the offices of Chairman of the Board of Directorsand Chief Executive Officer of the Company, to compensate theChairman with an exceptional attendance fee of €250,000 inaddition to the attendance fees to which he is already entitled inhis capacity as a director. These additional fees are considerationfor his duties as Chairman and are deducted from the aggregateamount of annual attendance fees payable.In line with the rules adopted by the Board on 3 May 2005 whichremain in force, the remaining amount of €450,000 payable todirectors and non-voting observers is split into a fixed portionpaid in consideration of the work carried out by the directors outsideof Board meetings and for the duties entrusted to them, anda variable portion to be allocated among the directors and nonvotingobservers in accordance with their attendance at Boardmeetings and, if applicable, at the meetings of any committees ofwhich they are members.The fixed portion, representing 40% of total attendance fees,is divided equally between the directors. The variable portion,comprising 60% of total attendance fees, is divided among themembers of the Board, the committee members and non-votingobservers in accordance with their rate of attendance at the meetingsto which they are invited in relation to their respective dutiesand responsibilities.Payment of attendance feesPending any new decision by the Board, attendance fees for eachfinancial year shall be paid as follows:■■prepayment of part of the fixed portion and part of the variableportion calculated on the basis of directors’ attendance at pastmeetings and the estimated number of meetings for the year, atthe end of the Annual General Meeting held during the yearin question;■■payment of the remainder of the fixed and variable portions inthe first month of the year following that in respect of whichthe attendance fees are paid.Aggregate attendance fees paid in respect of 2012, including theamount paid to the Chairman of the Board of Directors, totalled€700,000.When attendance fees are payable to legal-entity directors, theyare paid directly to the entity in question and not to their permanentrepresentatives (i.e., to Allianz France for Pierluigi Richesand Peter Etzenbach, to Exor SA for Pierre Martinet, to FSI forBertrand Finet, and to DLMD for Nicolas Lebard). Attendancefees for Raffaella Papa and Alessandro Potestà were paid toExor SA, and those for Eric Lefebvre are paid to FSI.68 | Sequana | 2012 Document de référence (English version)

Corporate governanceCompensation2Attendance fees (1) and other compensation received by non-executive corporate officersThe table below sets out attendance fees and other compensation paid by Sequana and the companies it controls to non-executive corporateofficers in 2011 and 2012:Non-executive corporate officerLuc ArgandAmounts paidduring 2011Amounts paidduring 2012Attendance fees €49,838 €57,786Other compensation – –Jean-Pascal BeaufretAttendance fees €35,954 €53,698Other compensation – –Odile Desforges (2)Attendance fees – –Other compensation – –Jean-Yves Durance (2)Attendance fees – –Other compensation – –Eric Lefebvre (2)Attendance fees – –Other compensation – –Laurent MignonAttendance fees €27,814 €39,671Other compensation – –Raffaella PapaAttendance fees – €38,014Other compensation – –Alessandro PotestàAttendance fees €42,896 €12,370Other compensation – –Michel TaittingerAttendance fees €41,698 €37,239Other compensation – –Allianz FranceAttendance fees €40,023 €56,130Other compensation – –DLMDAttendance fees €37,151 €56,130Other compensation – –Exor SAAttendance fees €35,954 €59,442Other compensation – –FSI (2)Attendance fees – –Other compensation – –TOTAL €311,328 €410,480(1) Before withholding tax, if applicable.(2) The directors and non-voting observers appointed on 26 June 2012 only received their attendance fees for 2012 in January 2013.The corporate officers do not receive any other attendance feesfrom the Company’s subsidiaries in respect of their duties withinthe Company, or any other benefits from the Company.Excluding Pierre Martinet (Deputy Chief Executive Officer ofthe Company from 3 May 2005 to 30 June 2007), who receivedstock options in 2005 (see page 67), non-executive corporateofficers do not hold any stock options or free shares (includingperformance shares) in the Company.Sequana | 2012 Document de référence (English version) | 69

2Corporate governanceCompensation – Related-party agreementsExecutive CommitteeIn line with the Group’s compensation policy for top-level managementand key management executives, compensation payableto members of the Executive Committee includes a fixed portionand a variable portion based on the Group’s performance (particularlykey results for the year in question) and on the executives’individual performance.The aggregate amount of gross compensation and benefits paid tomembers of the Executive Committee during 2012 (see page 65for details of Executive Committee members), excluding compensationpaid to the Chief Executive Officer and described above,totalled €2.4 million, including €1.7 million relating to fixed compensation(€2.8 million in 2011, including €1.8 million relating tofixed compensation). A termination indemnity of €0.5 million wasalso paid to a member of the Executive Committee during the year.Under the share award plan approved by the Board of Directorson 9 February 2010, the six members of the Executive Committee(excluding the Chief Executive Officer whose compensation isdescribed on page 67) received a total of 118,666 Sequana shareson 30 April 2012 as one of the plan performance conditions hadbeen met at 31 December 2011. This award corresponded to50% of two thirds of the total number of shares initially awardedunder the plan. As the performance conditions relating to thesecond tranche of free shares (see page 194) had not been met at31 December 2012, no free shares will be awarded to ExecutiveCommittee members in 2013 and they have no further shareaward entitlements.Related-party agreementsA number of agreements were entered into in 2012 that fall withinthe scope of Article L. 225-38 of the French Commercial Code.The following description of these agreements includes referencesto (i) the refinancing agreements signed on 30 April 2012between the Group’s banks and Sequana and its subsidiariesArjowiggins and Antalis International, and (ii) the capitalincrease of €150,056,232 approved by the Board of Directors atits meeting of 4 June 2012. The subscription period for the capitalincrease ran from 14 June to 27 June 2012 and the new shareswere settled and delivered on 9 July 2012. These two transactionsare referred to respectively as the “Refinancing of the Group” andthe “Capital Increase”.Shareholder loan agreement of 27 April 2012■■On 27 April 2012, Sequana signed a shareholder loan agreementwith Exor SA for an amount of €21.182 million.Given that Exor SA holds over 10% of the voting rightsof Sequana and has two representatives on its Board ofDirectors in the persons of Tiberto Ruy Brandolini d’Addaand Pierre Martinet, this constitutes a related-party agreementwithin the meaning of Article L. 225-38 of the FrenchCommercial Code.■■On 27 April 2012, Sequana signed a shareholder loan agreementwith Allianz France, Allianz Vie and Allianz Iard foran amount of €8.876 million. Each of these three entities subscribedto the Capital Increase of 26 June 2012 and convertedtheir shareholder loans into equity of the Company.Given that Allianz France, Allianz Vie and Allianz Iard togetherhold over 10% of the voting rights of Sequana and that AllianzFrance is a director of the Company, this constitutes a relatedpartyagreement within the meaning of Article L. 225-38 of theFrench Commercial Code.Both of these loan agreements obtained the prior approval of theBoard of Directors on 8 March 2012. However Exor SA (representedby Pierre Martinet), Tiberto Ruy Brandolini d’Addaand Raffaella Papa (who has indirect ties to the Exor group), andAllianz France (represented by Pierluigi Riches) abstained fromvoting.Agreement to underwrite a future capital increaseby the CompanyFor the purpose of securing shareholder loans (see above), theBoard of Directors of Sequana authorised the signature of anagreement with Société Générale and Natixis to underwrite acapital increase to be approved at some time in the future by theBoard. The agreement entered into by Exor SA and the companiesof the Allianz group to subscribe to the Capital Increase providedthat they would convert their respective shareholder loansinto equity of the Company. The portion of the Capital Increasenot taken up by these main shareholders – up to the necessarylegal minimum to enable a capital increase to be carried out –was underwritten by Société Générale and Natixis for a totalamount of €23.25 million in agreements dated 11 April 2012 and15 May 2012.Sequana paid Natixis an underwriting fee of €900,000. TheBoard of Directors of Sequana approved the Capital Increase on4 June 2012 and the underwriting agreement was replaced by anunderwriting and placement agreement (see below).Given that Laurent Mignon is Chief Executive Officer of Natixisand a director of Sequana, the Board of Directors considered thatthis underwriting agreement may not be deemed to be an operatingagreement from the Company’s perspective, but rather arelated-party agreement within the meaning of Article L. 225-38of the French Commercial Code.The agreement was approved by the Board of Directors on8 March 2012 but Laurent Mignon abstained from voting.70 | Sequana | 2012 Document de référence (English version)

Corporate governanceRelated-party agreements2Group refinancing agreements of 30 April 2012On 30 April 2012, Sequana, Arjowiggins and AntalisInternational and their banking partners signed agreementsmodifying the terms and conditions of credit facilities previouslygranted, essentially by amending the related financial covenantsand extending their maturities until 30 June 2014.Under the terms of these agreements, Sequana provided the bankswith guarantees and collateral (pledges on Antalis Internationalsecurities and the assignment of Antalis International andArjowiggins receivables) together with commitments from bothof the Company’s main shareholders (mainly subordination ofthe shareholder loans described previously and an undertaking tosubscribe to the Capital Increase) and from Sequana itself concerningits subsidiaries (mainly subordination of amounts owedby Sequana to Arjowiggins, Antalis International or to some oftheir subsidiaries).The agreements also contained restrictions regarding the paymentby the Group’s subsidiaries of dividends or service commissionsto Sequana or the payment of a dividend by Sequana in2012, 2013 or 2014.Although these agreements between the lending banksand Sequana and its subsidiaries, Arjowiggins andAntalis International – in respect of which Sequana’s main shareholdersprovided comfort letters – do not have a direct impacton any of the Group’s entities or on Sequana’s shareholders, butrather on the lending banks, the contractual documents weresigned by each one of these entities which has at least one corporateofficer in common with Sequana or ties of ownership suchthat one of the companies holds more than 10% of the capitalof another. Consequently, these agreements and commitments,which indirectly impact one or all of the borrower entities, maybe considered related-party agreements within the meaning ofArticle L. 225-38 of the French Commercial Code.Furthermore, the Company noted that Pascal Lebard is a corporateofficer of Sequana, Arjowiggins and Antalis International,that the shareholders concerned own more than 10% of Sequana(Exor or the Allianz group as a whole), and that Sequana andExor SA have directors/representatives in common.Consequently, these agreements were approved in advance by theBoard of Directors on 27 April 2012, notably due to their crucialimportance in finalising the Group’s credit facilities and thereforetheir total compliance with Sequana’s corporate purpose. TibertoRuy Brandolini d’Adda (both in his capacity as Chairman andrepresentative of Raffaella Papa), Pascal Lebard, Allianz France(represented by Pierluigi Riches) and Exor SA (represented byPierre Martinet) abstained from voting.Memorandum of understanding of 4 June 2012On 4 June 2012, a Memorandum of understanding was signedbetween Sequana, FSI, Exor SA, Allianz France, AllianzVie, Allianz Iard, DLMD, Pascal Lebard (in his own name),BNP Paribas Arbitrage, The Royal Bank of Scotland NV andThe Royal Bank of Scotland Plc. BNP Paribas Arbitrage, TheRoyal Bank of Scotland NV and The Royal Bank of Scotland Plcare parties to the agreement on account of the call options theyhold on the Sequana shares owned by DLMD. The agreementwas intended to define the terms and conditions under which FSIand Sequana’s main shareholders would subscribe to the CapitalIncrease and to make a number of changes to the Company’s corporategovernance practices.Exor SA, DLMD and the Allianz group (Allianz France, AllianzVie and Allianz Iard) each hold over 10% of the voting rights ofSequana and each has one or more representatives on Sequana’sBoard of Directors. In addition, Pascal Lebard is a director andChief Executive Officer of Sequana. Consequently, this agreementis deemed to be a related-party agreement within the meaningof Article L. 225-38 of the French Commercial Code.It was approved by the Board of Directors on 4 June 2012 prior toits signature but Tiberto Ruy Brandolini d’Adda, Pascal Lebard,Raffaella Papa, Allianz France (represented by Pierluigi Riches),Exor SA (represented by Pierre Martinet) and DLMD (representedby Nicolas Lebard) abstained from voting.Underwriting and placement agreementof 12 June 2012On 12 June 2012, Sequana signed an underwriting and placementagreement with Natixis and Société Générale, joint leadmanagers and bookrunners for the Capital Increase. The agreementset out the terms and conditions under which the two bankswould underwrite the subscription of a number of new shares correspondingto the difference between the number of new sharesrequired for the full amount of the issue and the number of newshares covered by irrevocable subscription commitments.Given that Laurent Mignon is Chief Executive Officer of Natixisand a director of Sequana, the Board of Directors consideredthat this agreement may not be deemed to be an operating agreementfrom the Company’s perspective, but rather a related-partyagreement within the meaning of Article L. 225-38 of the FrenchCommercial Code.The agreement was approved by the Board of Directors on4 June 2012. Laurent Mignon abstained from voting.Sequana paid Natixis €1,117,070.06 in underwriting fees andout-of-pocket expenses.No agreements entered into in previous periods remained in forcein 2012.As indicated on page 66, none of the commitments referred to inArticle L. 225-42-1 of the French Commercial Code were givenby Sequana (or by one of its subsidiaries) to its Chairman or ChiefExecutive Officer.Moreover, aside from ties of ownership, there are also agreementswithin the Sequana Group covering the provision of internal,legal, administrative, accounting and financial services as well asintragroup financing and tax consolidation agreements that linkor may link Sequana and its subsidiaries. These agreements arecommon to any group and are entered into on an arm’s lengthbasis. The services are paid for in line with general market practices.There are no other agreements between Sequana and itssubsidiaries provided in exchange for consideration that are likelyto be construed as related-party agreements.Sequana | 2012 Document de référence (English version) | 71

2Corporate governanceStatutory AuditorsStatutory AuditorsThe principal Statutory Auditors (see below) prepare auditors’ reports in respect of the parent company and consolidated financial statementsof Sequana:PrincipalAppointment Renewal of term of office Expiry of term of officePricewaterhouseCoopers Audit 19 May 1998 18 June 2004 201663, rue de Villiers 19 May 201092208 Neuilly-sur-Seine Cedex, Francerepresented by Catherine SabouretConstantin Associés (membre de Deloitte Touche Tohmatsu Limited) 10 May 2006 26 June 2012 2018185, avenue Charles de Gaulle92200 Neuilly-sur-Seine, Francerepresented by Jean-Paul SéguretDeputyYves Nicolas 18 June 2004 19 May 2010 201663, rue de Villiers92208 Neuilly-sur-Seine Cedex, FranceFrançois-Xavier Ameye 10 May 2006 26 June 2012 2018185, avenue Charles de Gaulle92200 Neuilly-sur-Seine, FranceAs the terms of office of Constantin and François-Xavier Ameyeas principal and deputy Statutory Auditors, respectively, were dueto expire, the Annual General Meeting of 26 June 2012 renewedtheir appointment for a term of six years, i.e., expiring at the endof the Annual General Meeting called to approve the 2017 financialstatements.This recommendation was made to the shareholders by the Boardof Directors based on the prior approval of the Company’s AuditCommittee, which examined issues concerning auditor independenceand the need to rotate the Constantin partner signingoff on the financial statements.The Audit Committee noted that Constantin is now part of theDeloitte network and that new teams had been assigned to theaudit. It therefore suggested that the Board recommend renewingConstantin as Statutory Auditors. This does not comply withall of the recommendations of the AFEP-MEDEF corporategovernance code. Based on the above, the Company also recommendedthat François-Xavier Ameye be reappointed as deputyStatutory Auditor.Thierry Quéron, who represented Constantin Associés as principalStatutory Auditor for six years, was replaced by Jean‐Paul Ségureton 26 June 2012, in accordance with Article L. 822-14, paragraph1 of the French Commercial Code.Details of fees paid to Statutory Auditors are disclosed in Note 34to the consolidated financial statements.72 | Sequana | 2012 Document de référence (English version)

Chapter 3RISK MANAGEMENTIndustrial and environmental risks 74Risks to people 74Environmental risks 75Use of chemical products, fibres and mineral content,and related discharges 75Use of energy and atmospheric discharges 75Use of water and waste effluent 75Management of waste 76Risks to goods and property 76Fire 76Flooding 76Technical breakdowns 76Business-related risks 77Risks related to the paper market 77Raw materials and energy risks 77Customer risk 78Country risk 78Incoterms 78Financial risks 79Market risk 79Foreign exchange risk 79Interest rate risk 79Liquidity risk 79Equity price risk 81Legal risks 81Specific regulations 81Links with or dependence on other parties 82Pension benefit obligations for staff in foreign subsidiaries 82Assets required for operations that are not ownedby Group companies 82Anti-trust legislation 82Claims and litigation 83Investigation into anti-trust practices 83Tax risk 83Insurance coverage 84Internal controland risk management procedures 85Report of the Chairman of the Board of Directorson internal control and risk management procedures 85The internal control and risk management system 85Charters and procedures 86Internal control initiatives 87Internal control oversight 88Financial reporting system 88Statutory Auditors’ report, prepared in accordancewith Article L. 225-235 of the French CommercialCode, on the report prepared by the Chairmanof the Board of Directors of Sequana 90~Credit risk 81Economic assumptions usedin the financial statements 81Sequana | 2012 Document de référence (English version) | 73

3Risk managementIndustrial and environmental risksInvestors are requested to review all of the information presented inthe registration document, including the following section on riskexposure, prior to taking a decision to acquire Sequana shares or anySequana equity-based financial instruments. The risks described arethose risks existing at the present time which, in the opinion ofGroup management and in the event that they crystallise, may havea material adverse impact on Sequana’s business, financial position,results or development prospects. Investors should bear in mind thatas of the date of publication of the registration document, other unidentifiedrisks or risks not deemed by management as constitutinga material potential risk to Sequana’s business, financial position,results or development prospects may also exist.The Group has taken measures to contain certain risks and toenhance its risk management procedures. These are presented in theReport of the Chairman of the Board of Directors which describesthe conditions for preparing and organising the work of the Board(chapter 2) as well as the internal control procedures deployedthroughout the Group which are included at the end of this chapter.The risks to which the Group is exposed mainly comprise industrialand environmental risks, financial risks and legal risks. Where possible,the Group insures against all or a portion of these risks.Industrial and environmental risksRisks to peopleSequana’s production and distribution businesses give rise to a certainnumber of industrial and environmental risks. Arjowiggins’production-related risks concern the nature and use made of rawmaterials and equipment as well as the different types of wastegenerated by the manufacturing sites. Antalis’ industrial and environmentalrisks are mainly indirect and located upstream from itsdistribution activity. Antalis manages these risks by requiring allsuppliers to make detailed disclosures concerning the origin ofraw materials and the manufacturing processes involved.Through the equipment and the various components used inpaper manufacturing, Sequana’s industrial sites present a certainnumber of risks for operatives. These risks break down into variousdifferent categories:■■Risks related to airborne particles (fine wood dust);■■Risks related to the use of chemical products (inhalation followingaccidental liquid spills, creation of toxic clouds due toleakage from containers or faulty equipment, accidental explosionsduring movements of chemicals, accidental release intothe environment of chlorine dioxide, explosions of stored products,etc.);■■Risks related to pollution and discharges (odorous compoundemissions, noise, waste sludge containing heavy metals, phenols,resin acids, chlorinated organic compounds, etc.);■■Risks related to machines and fixtures (fire, crushing or pinchingof limbs in a machine, falls into open bowls during preparation,injury by cutting, electric shocks related to unprotectedelectric relays, etc.);■■Risks related to handling and on-site operations (back injuries,shocks or crushing caused by falling packaging/reels, shocks orcrushing caused by lifting and handling vehicles, etc.).These numerous dangers inherent to industrial paper manufacturingand the use of various items of equipment can lead to occupationalinjury and serious accidents, both during the usage phaseand during cleaning and maintenance operations.Sequana is therefore responsible for putting in place and ensuringthe rigorous application of the most stringent standards guaranteeingthe safety of its employees and regularly verifying andadjusting the Group’s policy in this area. These standards areimplemented via regular audits and the analysis of each incidentor accident. The Arjowiggins group also systematically organisestraining sessions for each employee before he/she takes up theirpost as well as regular awareness-raising campaigns.The Group systematically engages in dialogue with employeerepresentative bodies (previously the Occupational Health andSafety Committee in France) in order to take into considerationthe employees’ expectations, and to actively prepare ways of raisingawareness and training schemes aimed at reducing the risksin plants and warehouses.Furthermore, in order to prevent physical injury, and more generally,ensure good workplace safety conditions, the security ofindustrial installations is progressively bolstered at each productionsite through continuous investment.As part of this process, 12 of Arjowiggins’ 22 sites have been certifiedOHSAS 18001 (occupational health and safety) and certificationis pending for another three sites.74 | Sequana | 2012 Document de référence (English version)

Environmental risksPotentially dangerous raw materials and different types of pollutingenergies (involving waste management) used in paper manufacturingpose a number of environmental risks. The Groupmanages these risks in three ways: (i) by continually strivingto limit the use of such raw materials; (ii) by controlling wastethrough procedures that are at least compliant with local regulations,and (iii) by impacting its energy mix in order to reduce theuse of fossil fuels with a large carbon footprint.The Group developed its own environmental policy in 2012 anddeployment will begin in 2013. The policy will reflect currentcompliance issues and legislation, particularly Directive 2004/35/EC on environmental liability (or “damage to biodiversity”) andits transposition in 2008 into French legislation in French LawNo. 2008-757. From 3 March 2013, the Group will also be compliantwith EU Timber Regulation 995/2010 which aims to banall illegally harvested timber from the European Union.Use of chemical products, fibresand mineral content, and related dischargesThe risks associated with certain chemical products (chlorinedioxide, sulphuric acid and soda ash) used in paper making needto be very carefully monitored. Arjowiggins constantly strives tocarefully monitor and limit the use of these products. Wheneverpossible, it systematically recycles waste paper and increases theuse of recycled paper as a secondary raw material in certain divisionsin an effort to deploy solutions with the least possible impacton both people and the environment. Preventing and reducingthe risk of accidents due to dispersal of the aforementioned products,resulting in environmental pollution, is a major concern forthe Group and its production entities.Arjowiggins rigorously applies legislation in the countriesin which it is present in respect of authorisations, securityforms, labelling, and storage, utilisation, transport and evacuationprocedures. In particular, it applies REACH regulations(Registration, Evaluation, Authorisation and restriction ofCHemical substances) that have been in force since 1 June 2007(EC 1907/2006).Use of energy and atmospheric dischargesArjowiggins’ energy policy has two major focuses. The first isimproving energy efficiency on an ongoing basis. The related initiativesinvolve daily, rigorous machine maintenance and targetedinvestments in machines that use less energy.Risk management3Industrial and environmental risksThe second is concerned with the energy mix. Constantly risingprices for fossil fuels, coupled with the increasing strain placedon the environment by these same fossil fuels, are diverting theGroup’s present and future energy procurement strategy towardsalternative – mostly renewable – sources of energy. Initiatives toreplace fuel or coal with natural gas are systematically deployedat sites that are still heavy users of these sources of energy. Thekey strategy over the coming years will be based around switchingto renewable resources such as biomass. Generating heatfrom biomass boilers that use wood chips has many advantages,most notably a much smaller carbon footprint than any other fossilfuel. Using waste (wood) to produce biomass-to-energy alsoreduces drawdown of non-renewable fossil raw materials and therelated GHG emissions. This is the principle underpinning theenergy switching project being developed at the ArjowigginsHealthcare plant in Palalda, France, in partnership with a localoperator. The project should be up and running in 2013 and numberof similar projects are currently being studied in the differentArjowiggins divisions.Use of water and waste effluentMajor quantities of water are drawn down, mainly to preparepaper pulp, and blend and convey the fibres throughout themanufacturing process. But the quantity of water actually consumed(not counting the water returned to the natural environment)is merely 5% to 10% of the volume drawn down. Thereforerisks related to the use of water arise on both the large volumestaken from, and the quality of the water returned to the naturalenvironment.Reducing the quantity of water used in the paper manufacturingprocess is a major issue at Arjowiggins’ different plants.Some are located in areas of potential seasonal water stress wherelocal authorities have imposed restrictions on both individualsand businesses. Consequently, the Group must do its utmost todevelop production techniques that reduce water drawdown andthe Group’s water footprint. Closed-loop water recycling projectsare currently being studied at several sites although they have tocontend with numerous constraints related to the chemical qualitiesand temperature of the water recycled. Other ways of reducingthe amount of water used in manufacturing processes includemore effective maintenance of equipment and water pipes toeliminate leaks as well as the use of water substitutes in certainwashing processes.Sequana | 2012 Document de référence (English version) | 75

3Risk managementIndustrial and environmental risksThe quality of waste effluent and management of the related riskis the overriding environmental concern at all Arjowiggins plants.Each has its own waste treatment facilities and these must complywith very strict legislation. This guarantees that the quality ofwaste water complies rigorously with local regulations. Water andwaste water quality is checked both upstream and downstreamfrom each plant on a daily basis and regularly monitored by therelevant local authorities. The existing physico-chemical facilitiesat these plants now also include biochemical treatment facilitiesand some have been equipped with tailored waste treatment cycles.Management of wasteA commitment to reduce waste is another key plank in Arjowiggins’strategy. The group is using ISO 14001 EnvironmentalManagement Certification – which it has obtained for 20 of its22 plants – to manage its waste more efficiently through systematicsorting of all waste before it is entrusted to firms specialisedin recycling or waste treatment. Waste reduction initiativesreduce Arjowiggins’ carbon footprint and the related costs.Risks to goods and propertyWhile the major risks involved in manufacturing and distributingpaper concern people and the environment, risks relating to equipment,buildings and products also need to be considered. The differentgroup sites are also exposed to potential risks that includefire, flooding and technical breakdowns (breakages, collapse, etc.).FireFires could potentially be caused by industrial manufacturingprocesses, certain raw materials, dust and certain maintenanceoperations.An annual review of fire risks by Arjowiggins’ insurers is usedas the basis for managing this risk. Most high-risk areas housingequipment or used for storage have been fitted with a sprinklersystem.On-site teams have been set up and trained in fire drill proceduresand evacuation exercises are organised regularly at each plant.FloodingPaper plants are systematically located very near rivers and potentiallyexposed to the risk of flooding. Flooding risks at each plantare also reviewed annually by Arjowiggins and its insurers.Each plant has developed plans to clean up waterways and canalsin their vicinity, surveillance procedures based on warning levelsand emergency plans for protecting or evacuating machinery andproducts.Technical breakdownsIn spite of the deployment of maintenance and security measures,technical breakdowns affecting plant and equipment may stillcause harm to either people or property. The related risks at eachplant are also reviewed annually by Arjowiggins and its insurers.In 2012, Sequana’s insurer declared that 19 plants were “Highly-Protected Risks” (HPR) – the highest possible safety statusdesignation.76 | Sequana | 2012 Document de référence (English version)

3Risk managementBusiness-related risksCustomer risk (1)The Group’s companies have forged special relationships with theircustomers over the years. The degree of dependence on any one customeris analysed if the volume of sales with this customer exceeds10% of total sales.Antalis serves over 135,000 customers in 44 countries. The broaddiversity of its customer mix – offset and silkscreen printers, converters,companies, government organisations – means that Antalis has arelatively low customer concentration risk and none of its customersgenerates more than 10% of its total sales.While Arjowiggins has a slightly narrower customer mix thanAntalis (distributors, transformers, printers, etc.), it still has a relativelylow customer concentration risk and none of its customers(apart from Antalis) generates more than 10% of its total sales.Country riskThe subsidiaries of the Sequana Group operate in numerous foreigncountries whose currencies may at times fluctuate erratically andwhose political stability is not always certain. However, the impactof these risks on the financial statements of Antalis and Arjowigginsis attenuated by the fact that their operations are mainly concentratedin the European market.IncotermsGroup sales are exposed to a relatively low level of risk in relation toIncoterms (i.e., International Commercial Terms setting out the liabilitiesand obligations of a seller to a buyer under international contractsfor the sale of goods, particularly those dealing with loading,carriage, means of transport, insurance and delivery). The Group’sexposure varies depending on the business and how its supply chainsare organised.As a distributor, the bulk of Antalis’ sales are in local markets. Whilemost of its sales are subject to Incoterm DDP (Delivery Duty Paid),the fact that its supply chains are organised around physical deliverieswithin very short periods (less than one day) means that Incotermsare not all that relevant.When billing export sales, Arjowiggins usually uses Incoterm DDU(Delivered Duty Unpaid) for goods sent by road, and Incoterms CIF(Cost, Insurance and Freight) and CFR (Cost and Freight) for goodssent by sea. Consequently, at the end of the reporting period, salesfor goods in transit are only recognised once the risk and rewardshave been transferred to the customer. However, the proportion ofexport sales remains limited and the amount of undelivered sales atthe end of the reporting period is limited by supply chain logisticsdesigned to keep such exposure to a minimum.(1) See chapter 4 – Note 18c.78 | Sequana | 2012 Document de référence (English version)

Financial risksRisk managementFinancial risks3Market riskWithin the Group, Antalis and Arjowiggins each manages itsfinances autonomously. The Sequana Treasury Managementdepartment manages interest rate and foreign exchange risks onbehalf of each of the Group’s two main subsidiaries (Arjowigginsand Antalis). It uses swaps to hedge interest rate risk and forwardcontracts, swaps and options to hedge exposure to the effects offluctuations in foreign exchange rates.Market risks and hedging of market risks are described in furtherdetail in Note 18c to the consolidated financial statements.Foreign exchange riskForeign exchange risk is mainly concentrated in the Groups operatingsubsidiaries – Antalis and Arjowiggins – and related totheir businesses. It may arise on sales or purchases (raw materialsor goods for resale) billed in currencies other than an entity’s localcurrency. The Group hedges these risks when appropriate, mainlyusing forward contracts, currency swaps or currency options.The crystallisation and hedging of forex risk and fair value measurementof foreign exchange hedges are analysed in Note 18c tothe consolidated financial statements.Although Sequana’s net investments outside the euro zone areexposed to fluctuations in exchange rates generally – and in theeuro in particular – that may impact the Group’s assets and liabilities,it has not set up any hedges of investments in foreignoperations.Interest rate riskThe Group is exposed to interest rate risk on its debt as its primarysources of financing are at floating rates of one, two or threemonths in the currency concerned (Euribor for the euro andLibor for the US dollar and pound sterling). Derivatives are usedto manage this exposure (mainly swaps).The crystallisation and hedging of interest rate risk and fair valuemeasurement of interest rate hedges are analysed in Note 18c tothe consolidated financial statements.Liquidity riskMost of the Group’s debt is carried on the books of the two operatingsubsidiaries – Arjowiggins and Antalis. They finance theirbusinesses using their own credit facilities, mainly in the formof two confirmed syndicated loan agreements with top-rankingbanks.Arjowiggins regulary uses unconfirmed overdraft facilitiesgranted by some of these banks to meet its everyday cash flowneeds.Sequana disposes of confirmed bilateral loan agreements andoverdraft facilities with two top-ranking banks. A breakdown ofdebt by maturity is presented in Notes 17 and 18 to the consolidatedfinancial statements on pages 131 and 142.Details of each entity’s credit lines and maturities of cash flowsare presented in Note 17 and Notes 18b and 18c, respectively, tothe consolidated financial statements.The renegotiated terms and conditions of these refinancing agreementsat 31 December 2012 are presented in Note 17.Arjowiggins and SequanaIn the first quarter of 2013, the Group began discussions withits banks with a view to renewing its credit lines due to expire on30 June 2014.A number of agreements were finalised on 30 April 2013 as a resultof these discussions, extending (i) Arjowiggins’ syndicated facilitysigned in 2007 and renewed in 2012; and (ii) Sequana’s credit lineand confirmed overdraft facility, through to 30 November 2015.Sequana | 2012 Document de référence (English version) | 79

3Risk managementFinancial risksAs part of these agreements, Arjowiggins obtained certainchanges in the contractual terms and conditions of the facilities,in particular as regards financial covenants. These covenants canbe summarised as follows:■■Consolidated net debt/consolidated EBITDA (Leverage)at 31 March 2013

Risk managementFinancial risks3Discussions with Antalis’ banks to renew the company’s syndicatedcredit facility extended in 2012 through to 30 June 2014began in April 2013 and an agreement should be finalised by theend of the year.In late April 2013, the Company reviewed its liquidity risk and itbelieves that it can honour its commitments.As regards the renewal of the existing facilities including thealignment with current market conditions of the covenants andcosts, the renegotiated financing lines do not significantly modifythe available drawdowns on the Group’s credit facilities, whichare adequate in respect of the Group’s liquidity requirements.As previously mentioned, the use of the aforementioned creditlines is subject to compliance with financial covenants.Equity price riskThe Group sold virtually all of its equity interests in 2010 andnow has extremely limited exposure to equity price risk.The Group’s other marketable securities described in Note 8 tothe consolidated financial statements are mainly composed ofunits in money-market funds which are not exposed to equityprice risk.Credit risk (1)Credit risk represents the risk that a customer or receivable willbreach a contractual obligation and cause the Group to incur afinancial loss. This risk primarily arises in relation to marketablesecurities and trade receivables.In view of the Group’s current financial situation, its financialinvestments are either used to invest excess cash drawn downunder bank credit facilities or to put up collateral for its subsidiaries.The Group’s policy is only to grant financial guarantees tosubsidiaries in which it has a controlling interest.When implementing its hedging strategy (hedging of foreignexchange, interest rate and raw material risk), the Group is alsoexposed to counterparty risk with the pool of top-ranking banksit uses to set up its hedges.Customer credit risk is assessed at the level of each sub-groupbased on the size of each sub-group’s portfolio of trade receivables.It mainly comprises default risk arising from the period ofcredit granted to the customer where it is not possible to repossessthe goods sold – in spite of the contractual clause providingfor retention of title – because they have been transformed by thecustomer.The Group’s different types of credit risk exposure and the relatedprocedures and provisioning policy are presented in Note 18c tothe consolidated financial statements.Economic assumptions used in the financial statementsNote 3 of chapter 4 (page 108) describes the methods used by theGroup to assess the recoverable value of its assets, such as the discountrates and operating assumptions used to draw up businessplans. Any significant change in these methods is likely to havea significant impact on the Group’s financial statements and canrepresent a risk factor. The Group’s sensitivy to the assumptionsused is described in detail and mesured in Note 3.Legal risksSpecific regulationsEach of the Group’s companies takes measures to ensure compliancewith the specific laws and regulations governing its businessactivities.The industrial operations of the Arjowiggins’ sub-group are subjectto a range of regulations that are constantly evolving andbecoming ever-stricter, particularly in the environmental sphere.As a result, as mentioned previously, Arjowiggins treats environment-relatedindustrial risks as an inextricable component of itsoperations.In addition to the regulations referred to on page 75, Arjowiggins’French businesses are required to comply with regulations concerningenvironmentally classified facilities. The construction ofArjowiggins’ manufacturing sites, as well as their extension or conversiontherefore require a permit from the local authorities thattakes into account the technical and financial capacity of the applicantin compliance with Decree No. 2010-368 of 13 April 2010.Arjowiggins’ environmental report for 2012 is provided in chapter6, page 209.In accordance with Decree No. 2011-829 of 11 July 2011 concerningthe reporting of greenhouse gas emissions and the territorialclimate and energy plan, a number of the Group’s plantslocated in France now report annually on their GHG emissionsas well as the actions they have taken/are planning to take toreduce such emissions.(1) See chapter 4 – Note 18c.Sequana | 2012 Document de référence (English version) | 81

3Risk managementLegal risksLinks with or dependence on other partiesTo the best of the Company’s knowledge, no contracts have beenentered into by Group companies other than those mentionedbelow, the expiry or breach of which could have a significantimpact on the Company’s financial position, operations or results.The market structure of the Group’s subsidiaries – both in termsof purchasing and sales – enables them to limit supplier and customerrisks. In addition, no Group company is overly dependenton any of its suppliers or customers.Arjowiggins does not use virgin pulp in its production; howeverit remains exposed to fluctuations in paper pulp, cotton, wastepaper and energy prices.As regards intellectual property, the Group registers trademarksin France and throughout the world in order to protect the imageand products of its companies. A number of these trademarks arewidely renowned. All of the trademarks necessary for the Group’soperations are owned directly by the subsidiary concerned or bythe Group.The Group’s companies – particularly Arjowiggins – hold severalpatents which they use directly or licence to third parties. Theyalso use patents under licence from third parties, some of whichhave been granted exclusively.Although these trademarks, patents and licences have a certainvalue, the expiry or loss of the related rights would not jeopardisethe financial position of either Arjowiggins or Antalis.Pension benefit obligations for staffin foreign subsidiaries (1)Certain of the Group’s employees in foreign subsidiaries – notablyin the UK and the US – benefit from pay-as-you-go anddefined benefit pension plans. In particular, the Group’s UK pensionplans have been completely reviewed in liaison with theirindependent trustees in order to bring them into line with localregulations.The largest pension fund within the Group is the Wiggins TeapePension Scheme (WTPS).The participating companies fund the pension scheme in line witha funding plan reviewed annually with the trustees. Their contributionis based on beneficiary risk and the return on plan assets.There are several methods for measuring the benefit obligationand since the agreements signed in March 2008, Arjowigginsand Sequana have guaranteed 113% of the WTPS buy-out deficitas calculated annually, on a unilateral basis by the pension fundtrustees and their actuaries. The buy-out deficit represents thetheoretical deficit in the event of the transfer of the obligations inrelation to the fund to an insurance company. Since 1 April 2011,the amount of the guarantee is capped at the lower of (i) 113% ofWTPS’s buy-out deficit as estimated at 31 December each yearor (ii) GBP 164 million.Following the transfer of the working members of WTPS tothe Antalis Pension Scheme (APS) in 2010, a similar guaranteemechanism is in operation for this fund. The amount ofthe guarantee for APS is also equal to the lower of 113% of thefund’s buy-out deficit as estimated at 31 December each year, orGBP 36 million.In excess of these amounts, the guarantees given to WTPS andto APS may only be enforced subject to approval of the Board ofDirectors of Sequana. The guarantees expire on 31 March 2023and on 8 January 2024, respectively, for WTPS and APS, andmay be renewed.Assets required for operations that are not ownedby Group companiesThe only plant leased by Arjowiggins is the Priplak plant built in2002. In addition, Antalis leases a large number of its warehouses.Anti-trust legislationIn view of stricter anti-trust laws, the Group has set up an antitrustcompliance programme aimed at sharing best practices inthis field. This programme comprises training and initiatives tofoster awareness among employees of developments in anti-trustlegislation, and procedures for identifying, flagging and stampingout any non-compliant practices.The policy forms one of the key planks of Arjowiggins’ andAntalis’ employee training programmes.(1) See chapter 4 – Notes 16 and 31.82 | Sequana | 2012 Document de référence (English version)

Claims and litigationThe Group is involved in a number of legal proceedings, the mostsignificant of which are described in this document. Certain ofthese claims have arisen in connection with the normal courseof business and, when considered separately, are not expected toresult in significant costs for the Group. However, for the disputesdescribed below, the Group cannot totally rule out the possibilityof them having a significant impact on the financial statements atsome date in the future.Investigation into anti-trust practicesSince September 2010, both the EU and national competitionauthorities have been investigating horizontal cartel arrangementsin the envelope sector. Antalis’ Spanish envelope productionplant (Antalis Envelopes Manufacturing SL) and a Spanishmarketing entity (Hispaper) in which it had a non-controllinginterest have been inspected by the Spanish competitionauthorities.The procedures conducted by the Spanish CompetitionAuthority’s investigation department concluded that AntalisEnvelopes Manufacturing SL and Antalis International (solelyin its capacity as parent company) had been involved in anti-trustpractices on the envelope market (i) in Spain and (ii) for export.The Spanish Competition Authority handed down two rulings:in October 2012 regarding the export market and at the end ofMarch 2013 regarding the Spanish market. The rulings concludedthat Antalis Envelopes Manufacturing SL had taken partin a horizontal cartel on these two markets also involving othermajor companies.In view of Antalis’ cooperation with the investigation, theCompetition Authority accepted Antalis Envelopes ManufacturingSL’s pleading for leniency and the fines handed down were reducedby 40% to an overall amount of around €5 million.To protect its rights in connection with the appeal lodged by theother envelope manufacturers found liable, Antalis EnvelopesManufacturing SL has appealed or will appeal against these rulings.Risk managementLegal risks3Following a number of exchanges, the tax authorities reiteratedtheir position at the end of 2010 and issued an assessment for thecorresponding amounts.In early 2011, the tax authorities cancelled income tax payable byBoccafin under the parent-subsidiary regime for a total amountof €13.2 million. They also upheld Sequana’s request for cancellationof income tax already paid for Boccafin at tax group level fora further amount of €23.4 million (excluding interest on arrears).The cost of the tax reassessment for Sequana, net of the aforementionedcancellations, would be approximately €63.6 million,including principal, late payment interest and VAT through toend-December 2012.Boccafin and its legal advisors consider these reassessments to beunfounded. They believe that the arguments they have put forwardto prove that Boccafin belonged to the Sequana tax group in2005 are sufficiently solid to ensure a favourable outcome to anysubsequent dispute.In October 2011, Boccafin filed an application to initiate proceedingsin order to challenge the tax authorities’ arguments thatit was not part of the Sequana tax group. In response, the taxauthorities filed their statement of defence in June 2012, to whichBoccafin replied in August 2012.Boccafin and its legal advisors believe that this latest statement ofdefence does not offer any new information that calls into questionthe company’s position, and this position was therefore reiteratedin its reply.Accordingly, the company’s expectations as to the outcome ofthese proceedings remained unchanged at 31 December 2012.To the best of the Company’s knowledge, no other governmental,legal or arbitration proceedings are in progress or pending thatmay have – or have had – a material impact on the financial position,business activity or results of the Company or the Groupover the past twelve months.Tax riskFollowing a tax audit covering 2005 and 2006, the French taxauthorities claimed that Boccafin – formerly Permal Group –which was a limited partnership with share capital at that time,was not part of the Sequana tax group and issued tax reassessmentnotices for income tax and long-term capital gains generatedmostly on the disposal of Permal shares in 2005.Sequana | 2012 Document de référence (English version) | 83

3Risk managementInsurance coverageInsurance coverageSequana has set up worldwide insurance programmes to providecoverage against its main business-related risks (accidental damageto buildings, equipment, finished and semi-finished goodsand raw materials; the financial consequences of civil liabilityarising from the Group’s operations or from physical injuryand material and consequential damage caused to third parties;and claims arising from the professional travel commitments ofemployees and executives).The main insurance policies have been taken out in Sequana’sname and provide coverage for all of the subsidiaries in most ofthe countries in which the Group does business. This means thatthe entire Group now enjoys similar insurance coverage and thesame level of guarantees.The principal insurance cover contracted is as follows:■■insurance for damage to buildings (including production andstorage units) and their contents (manufacturing materials,IT equipment, sundry equipment, inventories, etc.) providingcoverage representing the amount of the loss likely to beincurred;■■insurance against business interruption arising from propertydamage;■■insurance to cover physical injury and material and consequentialdamage caused to third parties and involving the civil liabilityof Sequana or its subsidiaries: business and product liability;■■insurance covering claims arising from the professional travelcommitments of employees and executives;■■insurance covering damage to goods in transit;■■insurance against fraud and malicious damage.All of these polices have been taken out with major internationalinsurers.Sequana considers that the insured coverage reflects the type ofrisks incurred by the Group as well as comparable cover availableon the market for companies of similar size that are engaged insimilar business activities.In accordance with standard insurance practices, these are “Allrisks with exceptions”-type policies and they provide for exclusions,loss limits for certain risks defined on a plant-by-plantbasis, such as equipment breakdown, poor supplier performanceor substandard service, natural catastrophes, pollution, IT incidents,and acts of terrorism, adapted to the amount and risks coveredfor each business.Sequana has also deployed a prevention programme – in liaisonwith its brokers and insurers – for the purpose of reducing boththe risk of damage to property and business interruption risk.The Group has also taken out directors’ and corporate officers’liability insurance.In order to ensure that it pays competitive premiums for appropriatelevels of coverage, Sequana puts these insurance policiesout to tender every two or three years.Sequana has a captive insurance entity that it uses to optimisefinancing of the risk of damage to property and business interruptionrisk. The captive entity reinsures any claims by Arjowiggins/Antalis for an annual net-of-excess amount of €1.5 million perclaim and €3 million per loss year.For reasons of confidentiality, and due to the structural complexityof the policies in question, the Group does not consider itappropriate to disclose a breakdown of the costs and coveragelevel for each of the insured risks.However, the following table sets out the amounts covered for themain risk areas.(€ millions per claim per annum) Sequana GroupProperty damage and business interruption 450Civil liability 65To the best of the Company’s knowledge, the Group is notexposed to any specific risks – such as serious labour disputes –other than those customarily inherent in any industrial or commercialactivity (chapter 6, Environmental policy on page 207).84 | Sequana | 2012 Document de référence (English version)

Risk management3Internal control and risk management proceduresInternal control and risk management proceduresThis section presents the internal control and risk management procedures deployed on a Group-wide basis. As regards financial andaccounting information, Sequana has developed internal control procedures which it aims to apply in accordance with the ReferenceFramework for internal control issued by the AMF.Report of the Chairman of the Board of Directors on internal controland risk management proceduresThe internal control and risk managementsystemObjectivesSequana has implemented various measures aimed at optimisinginternal control within the Group, notably by ensuring that thereare no significant factors that may affect the reliability of the individualand consolidated financial statements. This involves takingaccount of the material risks arising from the business activitiesconducted by the Company and its subsidiaries as described atthe beginning of this section, as well as the risk of error and fraud– particularly in the area of finance and accounting – in order toensure the reliability and transparency of financial and accountinginformation and to safeguard the interests of the Company’sshareholders. However, no control system can provide absoluteassurance that these risks have been completely eliminated.The procedures applied by executive management and otheremployees of the Company and its subsidiaries under the supervisionof the Board of Directors are designed to provide reasonableassurance regarding the achievement of objectives concerning thereliability of information and compliance with (i) applicable lawsand regulations and (ii) the Group’s internal practices.The internal control system is underpinned by three principles:■■shared responsibility: internal control is based on resourcesprovided by the subsidiaries and on the responsibility of eachemployee, backed by a system of delegation that enables theGroup’s policies to be consistently applied. Every manager hasa duty to exercise effective control over the activities for whichhe or she is responsible;■■definition and compliance with standards, procedures and datareporting processes;■■the segregation of tasks: the person carrying out an operationmust not also be responsible for validating and controlling thatoperation.Risk management is the responsibility of the different divisionsin charge of the various risk areas, i.e., the Finance department,Legal department, Purchasing department, the departmentresponsible for corporate social responsibility and for protectingpeople and goods, and the Treasury Management department.OverviewExecutive managementSequana’s executive management team is responsible for theinternal control system. The Chief Executive Officer ensuresthat the procedures in place enable the Group to prepare reliableconsolidated financial statements, and to effectively monitor itssubsidiaries.Executive management devises the Group’s internal control strategyand oversees the implementation of all the related measures.Information is centralised in the form of performance indicatorsreported to executive management on a regular basis as well asthrough monthly meetings held to review the performances ofthe subsidiaries. The Internal Audit department also providesexecutive management with regular reports.The subsidiaries, which in France have generally become simplifiedjoint stock companies controlled by a sole shareholder withoutany corporate decision-making bodies, are headed up bythe Chairman of the Company and, where appropriate, a ChiefOperating Officer chosen on the basis of his or her skills andorganisational abilities. They must consult with their majorityshareholder before taking a certain number of key decisions.Thresholds have been laid down in the entities’ Articlesof Association regarding investments and divestments, providingguarantees or collateral, taking on debt and signing settlementagreements concerning legal proceedings. The majority shareholdermust be consulted if these thresholds are exceeded.Operating departmentsThe Internal Audit department has operational lines reportingto the Chief Executive Officer of Sequana and its missions areorganised on a Group-wide basis in accordance with a pre-determinedaudit plan and special assignments that may arise duringthe year.Internal audits are directly requested and monitored by Groupexecutive management or the heads of the Group’s subsidiaries ordivisions. The fact that the Chief Executive Officer of Sequana isChairman of both Arjowiggins and Antalis has simplified decisionmaking and speeded up the entire internal audit process.Sequana | 2012 Document de référence (English version) | 85

3Risk managementInternal control and risk management proceduresThe Internal Audit department comprises a team of auditors –mostly specialised in financial audits and audits of critical processes– backed up by external resources. The role of the InternalAudit department is to (i) provide an independent assessment ofinternal control at each level in the Group, (ii) assist the executivemanagement teams in assessing the effectiveness of their riskmanagement systems, (iii) verify that the procedures described arecorrectly applied, and (iv) ensure that any problems are resolvedand their causes eradicated. It is also responsible for regularlychecking that accounting procedures are correctly applied, monitoringthe overall internal control environment and ensuring thatrules on corporate ethics are respected. Centralising the internalaudit function has helped to streamline Group-wide audit plansand processes: once each mission has been completed, a reportcomplete with recommendations is sent to Group executive managementand to the executive management of the audited entity.The finance departments of Sequana and its subsidiaries – in liaisonwith the business managers in the subsidiaries – are in chargeof preparing budgets and financial projections, as well as individualand consolidated financial statements. They are also taskedwith overseeing the operations carried out by the Group as well aswith drawing up and relaying accounting procedures throughoutthe Group, and ensuring that these are correctly applied and thatthey comply with the laws and accounting standards applicable tothe preparation and publication of financial statements. In addition,the finance departments are responsible for publishing thefinancial statements on a timely basis.The Financing and Treasury Management department managesthe Group’s finance and cash resources. It is tasked with trackingthe Group’s liquidity position and with structuring and negotiatingits financing arrangements (financing lines, factoring agreements,etc.). It uses financial forecasts and weekly cash reports tocoordinate financing of the operating subsidiaries and the transferof any surplus cash to the appropriate holding company via currentaccounts or lending/borrowing arrangements. As stipulatedin the different financing agreements, there are no cash poolingarrangements between Antalis, Arjowiggins and Sequana.The Financing and Treasury Management department is also incharge of hedging foreign exchange and interest rate risk for theGroup’s main entities and for arranging credit risk insurance forsubsidiaries involved in a factoring programme.The IT department is responsible for data security and ensuringthat information is communicated via reliable and secure networks,as well as for developing and maintaining applicationstailored to the Group’s needs. Efficient, secure IT networks areparticularly vital for Antalis, given the mission-critical importanceof its sales and marketing and logistics and IT functions.IT systems have to be fast and reliable and sophisticated enoughto be able to handle customer requirements in real time. Theapplications deployed by Antalis (software, e-commerce platformsetc.) and the accompanying human resources are monitoredespecially closely.Data integrity and the effectiveness of automatic controls areenhanced by the use of standard access control software and userprofiles. The security of the IT network and systems is enforcedby advanced intrusion detection and protection technology. Inaddition, the Group’s main applications and financial consolidationsoftware have back-up procedures guaranteeing rapid recoveryof data and services in the event of any major incident.In early 2013, the Audit Committee ensured that all of these processeswere functioning effectively for Antalis.Audit CommitteeSequana’s Audit Committee is composed of three members ofthe Board of Directors. It is responsible for verifying that adequateinternal procedures have been deployed for compiling andcontrolling financial information and ensuring that such informationis reliable. Audit Committee meetings are attended bySequana’s Chief Executive Officer, Chief Financial Officer andthe Statutory Auditors. The Committee reviews the financialstatements prepared by the Company before they are approvedby the Board of Directors and ensures that the Group’s financialreporting correctly reflects its financial situation. TheCommittee’s duties also include examining the risks to which theGroup may be exposed. It receives the action plans and reportsprepared by the Internal Audit department and ensures that anyrecommendations or findings are properly followed up.Lastly, it analyses any financial or accounting issues referred toit by the Chief Executive Officer. The Audit Committee meetsat least twice a year to examine the interim and annual financialstatements, and more often if required. It reports to the Board ofDirectors of Sequana.In 2012, Sequana’s Audit Committee met five times and – in thepresence of the Head of Internal Audit - devoted two meetings tothe audit plans for the main Group operating subsidiaries. It wasalso presented the conclusions of assignments conducted in 2012and the recommendations that needed to be followed up. In early2013, an entire meeting was given over to a review of IT systemsand the consolidated risk map (updated in late 2012) in the presenceof the Head of Group IT systems.Charters and proceduresCode of conductThe Group’s code of stock market conduct is regularly updated totake account of the new provisions incorporated into the FrenchMonetary and Financial Code (Code monétaire et financier) andthe General Regulations of the AMF. The Group’s ethical rulesare based on both corporate responsibility and good governanceprinciples. They are designed to guarantee transparency, avoidconflicts of interest, and prevent the improper use or disclosure ofinsider information.The Group has recast its code of conduct to bring it into line withnew regulations and best practices concerning commercial relations.It describes the relations of the various Group entities withthird parties (customers and suppliers) with a view to enhancingcompliance with anti-corruption and anti-trust legislation and itwas distributed throughout the Group at the beginning of 2013.86 | Sequana | 2012 Document de référence (English version)

3Risk managementInternal control and risk management proceduresLastly, the Group’s management keeps careful tabs on delegationsof power, ongoing legal disputes and insurance coverage, aswell as on control procedures concerning employee-related issues,environmental matters, manufacturing processes and informationsystems.The Legal department oversees a procedure for validating contractsand significant undertakings entered into in the name ofany Group company. Both Antalis and Arjowiggins have developeda procedure for tracking major legal disputes in progressand reporting back to Group executive management and theStatutory Auditors.Internal control oversightOversight of the internal control system is the responsibility ofSequana’s executive management team which reports to the AuditCommittee. It must ensure that the system is appropriate for andcompliant with Group objectives. The Internal Audit departmentis also involved in this process via the assignments they carry outand the resulting reports and follow-up procedures. The annualaudit plan is approved by the Chief Executive Officer and ChiefFinancial Officer of Sequana and every month the Internal Auditdepartment submits a formal report which it discusses with theChief Executive Officer.Internal audit reports give rise to action plans and documentedfollow-up procedures.Financial reporting systemSequana’s financial reporting system is underpinned by internalcontrol procedures related to the preparation and processing offinancial and accounting information.Accounting policiesThe Group’s accounting procedures are drawn up under thesupervision of Sequana’s Chief Financial Officer and are regularlyupdated to incorporate changes in the applicable accountingstandards and rules. This same process is adopted for the Group’srisk management rules. Group-wide reporting instructions andguidelines have also been drawn up.Sequana complies with IFRS whose application is mandatory forthe annual financial statements prepared by companies listed inthe European Union.Financial and accounting informationThe individual and consolidated financial statements are used totrack and analyse the performance of each business. Historical andprojected financial data are regularly reviewed at meetings organisedwith the finance directors of the Group’s main subsidiaries.Any sensitive or problematic issues are examined in depth atthese meetings, mainly for the purpose of ensuring the reliabilityof the financial data reported by the subsidiaries.Budgets, forecasts and reportingAlthough the Group’s subsidiaries manage their operations autonomously,control procedures have been set up to oversee theirbudgeting and financial processes. Meetings are held betweenSequana and its subsidiaries on an annual basis for budgets,six‐monthly for forecasts and monthly for reporting processes.The budgeting processes as well as the reviews of the three-yearbusiness plans and financial forecasts serve as a framework fortracking monthly and annual results. A shorter-term frameworkis used when medium-term forecasting becomes difficult due to alack of visibility into the Group’s markets. In all cases, variancesare analysed at Group level and must be explained by the subsidiaries;corrective measures are taken where necessary.As part of the Group’s monthly consolidation process, Sequana’sAccounting department, as well as the financial control departmentsof the main subsidiaries, check that transactions havebeen correctly recorded in the financial statements. The monthlyreporting system also enables Sequana to keep abreast of thefinancial and economic developments in each business area andthe operations conducted by each subsidiary.Financing and treasury managementThe general strategies for treasury management and bank relationsare coordinated at Group level. The subsidiaries report ontheir cash positions twice monthly.The Group Finance department negotiates financing facilitiesand handles liquidity and cash-flow management and markettransactions in line with each subsidiary’s individual capacities.Capital expenditure commitments are finalised once the correspondingbudgets have been approved.Participants in the financial reporting systemSequana’s Finance department ensures that the information providedin the individual and consolidated financial statements istrue and fair and complies with the Group’s rules and procedures.As the department in charge of publishing the financial statements,it also verifies, where appropriate, that the financial statementscomply with the standards applicable to listed companiesat the end of each reporting period.The work performed by the Finance department covers (i) routinetransactions such as sales, purchases, expenses, capital employedand treasury management, (ii) estimation processes, includingthe valuation of assets for the purpose of impairment testing, and(iii) handling one-off operations such as financial transactions orchanges in Group structure.The Finance department plays an active role in the Group’s assetvaluation process and provides the executive management teamwith all the necessary information to enable it to estimate balancesheet asset values and to assess whether any impairment lossesshould be recorded.88 | Sequana | 2012 Document de référence (English version)

Risk management3Internal control and risk management proceduresFor subsidiaries that are major contributors to the Group’s earnings,regular meetings are organised and each month an analysisof the accounts is prepared and presented to management (listof individual accounts, cash flow statements, analysis of budgetversus actual figures and management indicators). In its annualaudit plan, the Internal Audit department includes assignmentsdirectly or indirectly linked to financial reporting in order tocheck that suitable controls are in place and work properly. Theinternal auditors systematically monitor the implementation ofany corrective measures recommended at the conclusion of theirengagements.The objective of the systems put in place is to provide assuranceto the Chairman of the Board of Directors, the Chief ExecutiveOfficer of Sequana and the Audit Committee that the proceduresapplied within the Group to ensure the reliability of financialinformation are appropriate. Sequana intends to pursue its workon internal control and to continually enhance the quality andreliability of the financial information provided to its shareholders.The above report on Group administrative structures and internalcontrol procedures testifies to the Group’s commitment in thisarea. In order to achieve all of the stated objectives, Sequana hasdeployed general internal control procedures that are based to alarge extent around the Reference Framework for internal controland recommendations issued by the AMF.Sequana | 2012 Document de référence (English version) | 89

3Risk managementInternal control and risk management proceduresStatutory Auditors’ report, prepared in accordance withArticle L. 225-235 of the French Commercial Code, on the reportprepared by the Chairman of the Board of Directors of SequanaFor the year ended 31 December 2012This is a free translation into English of the Statutory Auditors’ special report on related-party agreements and commitments issued in French and is provided solely for theconvenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standardsapplicable in France.Sequana8, rue de Seine92100 Boulogne-BillancourtFranceTo the Shareholders,In our capacity as Statutory Auditors of Sequana and in accordancewith Article L. 225-235 of the French Commercial Code(Code de commerce), we hereby report to you on the report preparedby the Chairman of your Company in accordance withArticle L. 225-37 of the French Commercial Code for the yearended 31 December 2012.It is the Chairman’s responsibility to prepare, and submit to theBoard of Directors for approval, a report describing the internalcontrol and risk management procedures implementedby the Company and providing other information required byArticle L. 225-37 of the French Commercial Code in particularrelating to corporate governance.It is our responsibility:■■to report to you on the information set out in the Chairman’sreport on internal control and risk management proceduresrelating to the preparation and processing of financial andaccounting information; and■■to attest that the report sets out the other information requiredby Article L. 225-37 of the French Commercial Code, it beingspecified that it is not our responsibility to assess the fairness ofthis information.We conducted our work in accordance with professional standardsapplicable in France.Information concerning the internal controland risk management procedures relatingto the preparation and processing of financialand accounting informationThe professional standards require that we perform proceduresto assess the fairness of the information on internal control andrisk management procedures relating to the preparation and processingof financial and accounting information set out in theChairman’s report. These procedures mainly consisted of:■■obtaining an understanding of the internal control and riskmanagement procedures relating to the preparation and processingof financial and accounting information on which theinformation presented in the Chairman’s report is based, and ofthe existing documentation;■■obtaining an understanding of the work performed to supportthe information given in the report and of the existingdocumentation;■■determining if any material weaknesses in the internal controlprocedures relating to the preparation and processing of financialand accounting information that we may have identified inthe course of our work are properly described in the Chairman’sreport.On the basis of our work, we have no matters to report on theinformation given on internal control and risk management proceduresrelating to the preparation and processing of financial andaccounting information, set out in the Chairman of the Board ofDirector’s report, prepared in accordance with Article L. 225-37of the French Commercial Code.Other informationWe attest that the Chairman’s report sets out the other informationrequired by Article L. 225-37 of the French Commercial Code.Neuilly-sur-Seine, 30 April 2013The Statutory AuditorsPricewaterhouseCoopers AuditCatherine SabouretConstantin AssociésMember of Deloitte Touche Tohmatsu LimitedJean-Paul Séguret90 | Sequana | 2012 Document de référence (English version)

Chapter 4FINANCIAL POSITION – RESULTSOverview of the Group’s financial positionat 31 December 2012 92Consolidated results 92Parent company results 93Consolidated financial statementsfor the year ended 31 December 2012 94Consolidated statement of financial position 94Consolidated income statement 95Consolidated statement of comprehensive income 96Statement of changes in consolidated equity 96Consolidated statement of cash flows 97Notes to the consolidated financial statements 98Statutory Auditors’ report on the consolidatedfinancial statements 163Parent company financial statementsfor the year ended 31 December 2012 164Statement of financial position 164Income statement 165Notes to the parent company financial statements 166Notes to the statement of financial position 169Other disclosures 172Securities portfolio at 31 December 2012 177Five-year financial summary 177Statutory Auditors’ reporton the financial statements 178Statutory Auditors’ special reporton related-party agreements and commitments 179Proposed allocation of net loss 181~Sequana | 2012 Document de référence (English version) | 91

4Financial position – resultsOverview of the Group’s financial position at 31 December 2012Overview of the Group’s financial positionat 31 December 2012Consolidated resultsReported sales for 2012 were €3,852 million, compared with€3,944 million for 2011.Recurring operating income declined 37% to €56 million, downfrom €89 million in 2011 (which included a €25 million gainarising on changes to pension funds).The Group posted an operating loss of €68 million in 2012, comparedwith a loss of €3 million recorded one year previously. Thisincluded “Other operating income and expenses, net” for a negativeamount of €124 million, mainly comprising:■ ■ €52 million in restructuring costs (€44 million in 2011);■■net additions to provisions for asset impairment losses of€53 million, of which €30 million were recorded by Arjowigginsand €23 million by Antalis (in 2011, Arjowiggins booked netadditions of €61 million).The net financial loss of €51 million was a deterioration on theprior year loss of €40 million due to the combined effect of:■■a €5 million increase in interest expense in line with the highermargin applicable to amounts drawn down by the Group on thecredit facilities renewed in April 2012;■■amortisation of the costs of renewing these credit facilities on astraight-line basis for an amount of €4 million.The Group’s effective tax rate in 2012 was 0% due to a net taxexpense of zero for the period, versus a negative rate of 81.4% in2011. These rates mainly reflect the impacts of the following:■ ■ €25 million in unrecognised deferred tax assets in respect oftax loss carryforwards in 2012, compared to an amount of€40 million in 2011;■■tax savings of €3 million on unrecognised prior-year tax losses,compared with cancellation of net recognised prior-periodlosses of €11 million in 2011;■ ■ €7 million in impairment recognised on goodwill and deemedto be non-deductible for tax purposes (€7 million was also recognisedin 2011).Net loss attributable to owners was €119 million, compared to anet loss of €77 million in 2011.Consolidated assets totalled €2,474 million at 31 December 2012,versus €2,711 million one year earlier.Non-current assets totalled €1,176 million at 31 December 2012,compared to €1,240 million at 31 December 2011. The differencewas mainly due to €53 million in impairment loss provisions recognisedon fixed assets during the period.Shareholders’ equity totalled €654 million compared with€669 million at 31 December 2011.Gross debt, i.e., short- and long-term debt, fell from €934 millionat 31 December 2011, to €723 million at 31 December 2012.Net debt, i.e., gross debt less cash and cash equivalents totalling€183 million (€323 million in 2011) and sundry items amountingto €2 million (€2 million in 2011) also dropped to €538 million at31 December 2012, compared to €609 million one year previously.92 | Sequana | 2012 Document de référence (English version)

Financial position – resultsOverview of the Group’s financial position at 31 December 20124Parent company resultsThe Group’s parent company generated a net loss of €28 millionin 2012 compared with a net loss of €331 million in 2011.The net non-recurring loss for 2012 was €18 million and primarilycomprised provisions for impairment losses recognised oninvestments.Total assets amounted to €1,731 million at 31 December 2012versus €1,651 million one year earlier.Total investments rose from €1,640 million at 31 December 2011,to €1,711 million at 31 December 2012, reflecting share capitalincreases at Arjowiggins SAS and Antalis International of€63 million and €25 million, respectively, and net additions toimpairment provisions for an amount of €17 million.Trade payables (net of €2 million in provisions taken) can be brokendown as follows by maturity:■■due within 30 days: €1.9 million;■■due within 60 days: €0.1 million.Total equity increased from €1,546 million at 31 December 2011to €1,667 million at 31 December 2012 and reflected the combinedimpact of the €150 million capital increase in July 2012 and the netloss of €28 million for the year.There have been no material changes in the Group’s financial or commercial position since 31 December 2012, excluding those mentioned inthe financial data for the first quarter 2013, presented in Chapter 1, and those related to the refinancing of Arjowiggins and Sequana, presentedin Chapter 3. The latest financial information verified by the Statutory Auditors is that relating to the financial year ended 31 December 2012.Sequana | 2012 Document de référence (English version) | 93

4Financial position – resultsConsolidated statement of financial positionConsolidated financial statements for the year ended31 December 2012Consolidated statement of financial positionAssets(€ millions) Notes 31/12/2012 31/12/2011Non-current assetsGoodwill 5a 634 625Other intangible assets 5b 71 66Property, plant and equipment 6 347 401Investments in associates 7 5 5Non-current financial assets 8 13 12Deferred tax assets 19 7 16Other non-current assets 10 99 115TOTAL NON-CURRENT ASSETS 1,176 1,240Current assetsInventories 9 448 457Trade receivables 10 523 558Other receivables 10 120 122Current financial assets 8 8 11Cash and cash equivalents 11 183 323TOTAL CURRENT ASSETS 1,282 1,471Assets held for sale 4c 16 –TOTAL ASSETS 2,474 2,711Equity and liabilities(€ millions) Notes 31/12/2012 31/12/2011EquityShare capital 225 74Additional paid-in capital 95 95Cumulative translation adjustment (55) (61)Retained earnings and other consolidated reserves 508 638Net loss attributable to owners (119) (77)SHAREHOLDERS’ EQUITY 12 654 669Non-controlling interests 14 – 1TOTAL EQUITY 654 670Non-current liabilitiesProvisions 15, 16 165 146Long-term debt 17 677 28Deferred tax liabilities 19 23 56Other non-current liabilities 20 3 2TOTAL NON-CURRENT LIABILITIES 868 232Current liabilitiesProvisions 15, 16 40 36Short-term debt 17 46 906Trade payables 20 622 631Other payables 20 244 236TOTAL CURRENT LIABILITIES 952 1,809Liabilities related to assets held for sale 4c – –TOTAL EQUITY AND LIABILITIES 2,474 2,711The notes are an integral part of the financial statements.94 | Sequana | 2012 Document de référence (English version)

Financial position – resultsConsolidated income statement4Consolidated income statement(€ millions) Notes 2012 2011Sales 29 3,852 3,944Other operating income 21 33 15Purchases consumed and change in inventories (2,647) (2,737)Personnel expenses 22 (601) (587)External expenses (459) (459)Taxes other than income taxes (15) (14)Depreciation and amortisation (66) (68)Net (additions to) reversals of provisions (12) 22Other operating expenses (29) (27)RECURRING OPERATING INCOME 56 89Other operating income 11 28Other operating expenses (135) (120)Other operating income and expenses, net 24 (124) (92)OPERATING LOSS (68) (3)Cost of net debt (37) (32)Other financial income and expenses, net (14) (8)Net financial loss 25 (51) (40)Income tax benefit (expense) 27 – (35)Net loss from consolidated companies (119) (78)Share of earnings of associates 7 – 1Net loss from continuing operations (119) (77)Net income (loss) from discontinued operations 4b – –NET LOSS (119) (77)Attributable to:- Sequana shareholders (119) (77)Earnings per share- Weighted average number of shares outstanding 20,405,216 12,473,881- Diluted number of shares 20,405,216 12,473,881Basic earnings (loss) per share (in €) 13- Loss per share from continuing operations (5.85) (6.21)- Earnings (loss) per share from discontinued operations – 0.03- Consolidated loss per share (5.85) (6.18)Diluted earnings (loss) per share (in €) 13- Diluted loss per share from continuing operations (5.85) (6.21)- Diluted earnings (loss) per share from discontinued operations – 0.03- Consolidated diluted loss per share (5.85) (6.18)The notes are an integral part of the financial statements.Sequana | 2012 Document de référence (English version) | 95

4Financial position – resultsConsolidated statement of comprehensive incomeConsolidated statement of comprehensive income(€ millions) Notes 2012 2011Net loss (119) (77)Items that may be recycled to profit or loss 10 (6)Translation adjustments 6 (12)Gains and losses on interest and exchange rate derivatives – hedge accounting 18 5 5Tax impact of gains and losses on interest and exchange rate derivatives – hedge accounting (1) 1Items that may not be recycled to profit or loss (54) (39)Actuarial gains and losses related to pension and other post-employment benefit obligations 16 (65) (38)Tax impact of gains and losses related to pension and other post-employment benefit obligations 11 (1)Total other comprehensive loss (44) (45)TOTAL COMPREHENSIVE LOSS (163) (122)Of which:- Attributable to Sequana shareholders (163) (123)- Attributable to non-controlling interests – 1The notes are an integral part of the financial statements.Statement of changes in consolidated equity(€ millions)Numbersof sharesissued (2)Sharecapital (2)Additionalpaid-in capitalCumulativetranslationadjustmentCumulativefair valueadjustmentRetainedearningsand otherconsolidatedreservesShareholders’equityNon-controllinginterestsTotal equityEquity at 1 January 2011 8,257,500 74 95 (48) (11) 704 814 – 814Dividends – – – – – (20) (20) – (20)Net loss – – – – – (77) (77) – (77)Other comprehensive income – – – (13) 6 (39) (46) 1 (45)Other movements (1) – – – – – (2) (2) – (2)Equity at 31 December 2011 8,257,500 74 95 (61) (5) 566 669 1 670Net loss – – – – – (119) (119) – (119)Capital increase 16,751,872 151 – – – (5) 146 – 146Other comprehensive income – – – 6 4 (54) (44) – 44Changes in scope of consolidation – – – – – – – (1) (1)Other movements (1) – – – – – 2 2 – 2Equity at 31 December 2012 25,009,372 225 95 (55) (1) 390 654 – 654(1) In 2012, “Other movements” corresponded essentially to the matching entry for cumulative translation adjustments recycled to profit or loss following the derecognition ofan Arjowiggins’ subsidiary in Argentina.In 2011, it reflected the impact of (i) changes in the value of Sequana’s treasury shares; and (ii) share award plans implemented (see Note 12c) for a negative amount of €2 million.(2) Share capital operations and the related number of shares are disclosed in Note 12; the total number of shares in this table applies the reverse stock split which took placein November 2012 retroactively. This operation is described in Note 12a.96 | Sequana | 2012 Document de référence (English version)

Consolidated statement of cash flowsFinancial position – resultsConsolidated statement of cash flows4(€ millions) Notes 2012 2011Cash flows from operating activitiesNet loss - total (119) (77)Elimination of non-cash and non-operating income and expenses:+/- Depreciation, amortisation and provisions (except on current assets), net 28 123 98+/- Disposal gains and losses 28 4 (23)+/- Other non-cash income and expenses 1 –+/- Income tax expense and benefits (including deferred taxes) 19 – 35- Share of earnings of associates – (1)Gross cash flows from operating activities 9 32- Taxes paid (19) (20)Change in operating working capital 28 33 39+/- Change in loans and guarantee deposits 3 (1)NET CASH GENERATED FROM OPERATING ACTIVITIES 26 50Cash flows from investing activities- Expenditure on acquisitions of property, plant and equipment and intangible assets 5, 6 (58) (73)+ Proceeds from disposals of property, plant and equipment and intangible assets 4 13+ Proceeds from disposals of financial assets 28 3 –+/- Impact of changes in scope of consolidation 28 (41) 97+/- Other cash flows related to investing activities 1 1NET CASH GENERATED FROM (USED IN) INVESTING ACTIVITIES (91) 38Cash flows from financing activitiesDividends paid to parent company shareholders – (20)Capital increase (decrease) in cash 12 146 –+/- Purchases and sales of treasury shares – (1)+/- Net change in borrowings and debt 17 (211) (50)+/- Change in marketable securities with maturities greater than three months – 5+/- Other cash flows related to investing activities 1 –NET CASH USED IN FINANCING ACTIVITIES (64) (66)Effects of fluctuations in foreign exchange rates – (4)CHANGE IN CASH AND CASH EQUIVALENTS (129) 18Net cash and cash equivalents at start of year 303 285Net cash and cash equivalents at end of year 174 303YEAR-ON-YEAR INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (129) 18Analysis of net cash and cash equivalents at end of yearCash and cash equivalents 11 183 323Short-term bank borrowings and bank overdrafts 17 (9) (20)NET CASH AND CASH EQUIVALENTS AT END OF YEAR 174 303The notes are an integral part of the financial statements.Sequana | 2012 Document de référence (English version) | 97

4Financial position – resultsNotes to the consolidated financial statementsNotes to the consolidated financial statements99 Note 1 Significant events of the year100 Note 2 Summary of significant accounting policies108 Note 3 Measurement of impairment losses111 Note 4 Changes in scope of consolidation113 Note 5a Goodwill114 Note 5b Other intangible assets115 Note 6 Property, plant and equipment117 Note 7 Investments in associates117 Note 8 Financial assets118 Note 9 Inventories119 Note 10 Other assets120 Note 11 Cash and cash equivalents120 Note 12a Share capital120 Note 12b Stock options122 Note 12c Share award plans123 Note 12d Treasury shares123 Note 12e Cumulative translation adjustment123 Note 12f Dividends paid124 Note 13 Earnings per share124 Note 14 Non-controlling interests127 Note 16 Employee benefits131 Note 17 Debt134 Note 18 Financial instruments143 Note 19 Deferred taxes146 Note 20 Other liabilities147 Note 21 Other operating income147 Note 22 Personnel expenses147 Note 23 Remuneration paid to corporate officers148 Note 24 Other operating income and expenses149 Note 25 Net financial income (loss)149 Note 26 Foreign exchange gains and losses150 Note 27 Income tax benefit (expense)151 Note 28 Analysis of consolidated cash flows152 Note 29 Segment information154 Note 30 Related-party transactions155 Note 31 Off-balance sheet commitments157 Note 32 Headcount158 Note 33 Subsequent events158 Note 34 Statutory Auditors’ fees159 Note 35 Scope of consolidation125 Note 15 Provisions98 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Note 1 - Significant events of the yearAcquisitions (see Note 4):■■On 3 January 2012, Antalis acquired the packaging distributionbusiness of UK-based Ambassador at a cost of GBP 9 million(€10 million). Ambassador represents approximately €30 millionin additional annual sales.■■On 29 February 2012, Antalis completed its acquisition of theGerman company Pack 2000 for an amount of €16 million.This entity generates annual sales of almost €25 million.■■On 3 September 2012, Antalis acquired Branopac, a specialisedpackaging distributor in the Czech Republic, for 81 million Czechkoruna (€3 million). Branopac reports annual sales of around€3 million.■■On 12 September 2012, Antalis completed its acquisition of theChilean entity Abitek. The operation cost 8,369 million Chileanpesos (€14 million) and should bring in around €12 million inadditional annual sales.Restructuring■■To deal with declining demand in certain markets, Arjowigginsincurred a total of €36 million in restructuring costs (including€6 million in asset write-downs), involving capacity reductionmeasures and the closure of the Witcel (Argentina) andDalum (Denmark) plants together with the planned closure ofthe Ivybridge plant in the UK.■ ■ For similar reasons, Antalis implemented restructuring plans –mainly in the UK, Spain, Portugal and Benelux – which generateda net expense of €22 million for the period.Impairment losses booked on goodwilland other fixed assetsFollowing a review of operating activities and impairment testingat year-end, the Group recognised a non-recurring expense of€54 million comprising:■ ■ impairment losses of €20 million on goodwill previously recognisedin the books of Antalis;■ ■ impairment losses of €43 million taken on property, plantand equipment and intangible assets, mainly on the books ofArjowiggins’ Coated US division;■■the reversal of impairment losses previously recognised on property,plant and equipment by Arjowiggins’ Graphic division foran amount of €9 million.Refinancing of the GroupOn 30 April 2012, the Group and its banks finalised the renewalof the syndicated credit facilities signed in 2007 by Arjowigginsand Antalis as well as Sequana’s confirmed credit facility throughto 30 June 2014.The main contractual terms and conditions of these facilitiesand details of any drawdowns and repayments are disclosed inNote 17 “Debt”.Capital increaseOn 13 June 2012, Sequana announced that it was increasing itscapital by an amount of €150 million (€146 million after deductingthe related transaction costs). The subscription period for thecapital increase closed on 27 June 2012. The Group’s main shareholderssubscribed to a total of €51 million, including €30 millionin shareholder loans (arranged on 30 April 2012 within the scopeof the renewed financing agreements) which have been convertedinto equity.The Fonds Stratégique d’Investissement (FSI) has now becomethe Company’s largest shareholder by subscribing to €45 millionworth of capital.The newly-created shares were issued on 9 July 2012 and a total of€150 million in share capital was paid up in full.Sequana | 2012 Document de référence (English version) | 99

4Financial position – resultsNotes to the consolidated financial statementsNote 2 - Summary of significant accounting policiesA - General informationSequana, the Group holding company, is a French sociétéanonyme whose head office is at 8, rue de Seine, 92100 Boulogne-Billancourt. It is listed on NYSE Euronext Paris.The main activities of the Sequana Group are:■■manufacture of technical and creative paper throughArjowiggins, which is wholly owned;■■distribution of paper and packaging products through Antalis,which is wholly owned.The Group has a footprint throughout the world. A descriptionof its subsidiaries’ businesses is provided in chapter 1 of thisRegistration Document.The Group’s consolidated financial statements have been preparedin accordance with the International Financial ReportingStandards (including IFRSs, IASs, SIC and IFRIC interpretations)adopted by the European Union before 31 December 2012and published by the IASB (International Accounting StandardsBoard).These standards can be viewed on the European Commission’swebsite at:http://ec.europa.eu/internal_market/accounting/ias/index_en.htm.The consolidated financial statements are presented in euros androunded to the nearest million unless otherwise specified. Theywere approved by the Board of Directors on 26 March 2013.In accordance with Article 28.1 of Regulation (EC) No. 809/2004of 29 April 2004, the consolidated financial statements for theyear ended 31 December 2010 are incorporated by reference inthe original French version of the 2011 Registration DocumentD.12-0473, filed with the AMF on 30 April 2012.A1 - Standards and interpretations effectivefrom 1 January 2012Mandatory applicationOnly Amended IFRS 7 – Financial Instruments (disclosuresconcerning transfers of financial assets) is mandatory for accountingperiods beginning on or after 1 January 2012 and this standardis not deemed to have a significant impact on the consolidatedfinancial statements. However, the Group has provided additionaldisclosures in relation to factoring in Note 18b.Optional applicationAside from Amended IAS 1 (disclosures concerning changesin Other Comprehensive Income), the Group has not electedto early adopt any of the other standards or interpretations publishedin the Official Journal of the European Union.Amended IAS 19 – Employee Benefits has not been early adoptedby the Group, but estimates of the expected impacts have beenprepared in Note 16.At the present time, the Group does not consider the impact ofthe other early-adoptable standards to be material.A2 - Standards and interpretations not yet effectiveat 31 December 2012The Group is currently analysing the potential impact of thestandards, amendments and interpretations to published standardsalready adopted by the European Union but not yet effectiveat 31 December 2012. At the present time, it does not expectthese to have a significant impact on the consolidated financialstatements. The standards, amendments and interpretations inquestion are:IFRS 9 – Financial InstrumentsDisclosures concerning financial assets and financial liabilities.IFRS 10 – Consolidated Financial StatementsPresentation and preparation of consolidated financial statementswhen an entity controls one or more other entities.IFRS 11 – Joint ArrangementsDisclosure requirements for partner-type arrangements.IFRS 12 – Disclosure of Interests in Other EntitiesDisclosure requirements concerning the nature of, and risks associatedwith interests in other entities.IFRS 13 – Fair Value MeasurementMeasurement uncertainty analysis disclosure for fair valuemeasurements.B - Consolidation, recognitionand measurement methodsB1 - Consolidation principlesSubsidiaries are all entities over which Sequana has, directlyor indirectly, sole or majority control. Control is defined as thepower to govern the subsidiary’s financial and operating policiesso as to obtain benefits from its activities. They are consolidatedusing the full consolidation method with recognition of non-controllinginterests. Control is presumed to exist when the Groupholds more than 50% of the voting rights, or when it exercises defacto control over the operational and financial management ofan entity. The existence and effect of potential voting rights thatare currently exercisable or convertible are included when calculatingthe control exercised by the Group.The Group does not consolidate any joint ventures held undercontractual arrangements.Associates are entities over which Sequana exercises significantinfluence, based on the extent of the Group’s power to participatein the financial and operating policy decisions of the investee,and generally accompanying a shareholding of between 20% and50% of the voting rights. Investments in associates are accountedfor using the equity method and are initially recognised at cost.The Group’s share in the net income or loss of an associate is recognisedin the consolidated income statement. If an operationis recognised directly in equity in the books of an associate, theGroup recognises its share in consolidated equity.100 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Subsidiaries are consolidated from the date on which control istransferred to the Group. They are deconsolidated from the datethat control ceases. The results of companies acquired during theyear are included in the consolidated income statement for theperiod subsequent to the date on which control is transferred tothe Group.Investments in entities deemed non-material or investments inentities over which the Group does not exercise significant influenceare classified either as “financial assets at fair value throughprofit or loss” or as “available-for-sale financial assets” and are carriedat fair value.A discontinued operation is a component of an entity that haseither been disposed of or is classified as held for sale and:■■which represents a separate major line of business or geographicalarea of operations;■■is part of a single coordinated plan to dispose of a separatemajor line of business or geographical area of operations; or■■is a subsidiary acquired exclusively with a view to resale.Gains or losses on the disposal of a business that meets the definitionof a discontinued operation are presented separately in theincome statement. The amount recorded comprises the total of:■■the post-tax profit or loss of discontinued operations prior tothe date of sale;■■the net-of-tax disposal gain or loss and related disposal costs;and■■any impairment losses arising on fair value measurement lesscosts to sell.B2 - Reporting dateThe Sequana Group has a 31 December year-end. The consolidatedfinancial statements include the financial statements ofsubsidiaries at 31 December, restated to comply with Groupaccounting policies.B3 - Estimates and valuationsThe preparation of financial statements frequently requires Groupmanagement to make certain estimates, evaluations and assumptionsthat they deem to be both realistic and reasonable.In order to limit uncertainty, these valuations and estimates arereviewed and analysed regularly based on actual data and experience,as well as on other factors deemed relevant in the light ofcurrent economic circumstances. The effects of these reviews arerecognised immediately.In recent years the highly volatile economic and financial environmenthas made forecasting for the various businesses especiallydifficult and actual results may differ from the estimates andrelated assumptions used.Estimates and assumptions that may have a material impact onthe assets and liabilities reported in the consolidated financialstatements include:b) Impairment tests on property, plant and equipment andintangible assetsThe Group tests its property, plant and equipment and intangibleassets for impairment in accordance with the method describedin Notes 2B7 and 2B8. An impairment loss is recognised if anasset’s estimated recoverable amount is lower than its carryingamount (see Notes 3b and 6).c) Provisions for pension and other employee benefit obligationsThe present value of the Group’s pension and other employee benefitobligations depends on the actuarial assumptions at the endof each reporting period – including the rate used to discount theobligations to present value – and any changes in these assumptionswill impact their carrying amount.At the end of each reporting period, the Group determines therate used to discount employee benefit obligations and the otherrelated assumptions, particularly market conditions, in accordancewith the procedures described in Notes 2B16 and 16.d) Fair value of derivatives and other financial instrumentsThe fair value of financial instruments that are not traded inan active market is determined using valuation techniques. TheGroup must use its judgement when determining the methodsand assumptions used at the end of each reporting period basedon market conditions (Note 2B14).e) Other provisionsThese mainly comprise provisions for legal and environmentalcontingencies as well as restructuring provisions, and they arerecalculated at the end of each reporting period based on theGroup’s assumptions (see Notes 2B17 and 15).f) Recognition of deferred tax assetsDeferred tax assets relating to tax losses are recognised in accordancewith prior-period results and the prospects of recoveringthese losses based on the Group’s budgets and medium-termbusiness plans (3-5 years) (see Notes 2B12 and 19). Similarly,deferred taxes arising from deductible temporary differences arerecognised to the extent that it is probable that future taxableprofit will be available against which the temporary differencescan be utilised.B4 - Inter-company transactions and balancesInter-company transactions and balances and gains on transactionsbetween Group companies are eliminated in full on consolidation.Losses resulting from inter-company transactions areonly eliminated when there is no indication of impairment.Gains on transactions between the Group and its associates areeliminated based on the Group’s interest in the associate and arerecognised as a deduction from the investment. Losses are eliminatedin the same way only when there is no indication of impairmentof the assets concerned.a) Impairment tests on goodwillImpairment testing is conducted at least once a year in accordancewith the method described in Note 2B6. The value in use of CashGenerating Units is estimated by discounting future cash flows topresent value (see Notes 3a and 5a).Sequana | 2012 Document de référence (English version) | 101

4Financial position – resultsNotes to the consolidated financial statementsB5 - Foreign currency translationFunctional currency and presentation currencyThe consolidated financial statements are presented in euros,which is the parent company, Sequana’s functional and presentationcurrency.Translation of transactions denominated in foreign currencyFor each Group company, transactions denominated in a currencyother than its functional currency are translated using theexchange rates prevailing at the dates of the transactions.Monetary assets and liabilities denominated in foreign currencyare translated into euros at the closing exchange rate. The correspondingforeign exchange gains and losses are recognised inprofit or loss, except when deferred in equity as qualifying cashflow hedges or hedges of net investments in a foreign operation.Foreign exchange gains and losses on loans or borrowings with aforeign subsidiary which are, in substance, a part of the Group’snet investment in that subsidiary are recognized directly in equityuntil the investment is sold, when they are recycled to the incomestatement.Translation of the financial statements of foreign entitiesThe results and financial positions of all Group companies thathave a functional currency different from the presentation currencyare translated into euros as follows:■■assets and liabilities for each period presented are translated atthe closing rate at the end of each reporting period (except forequity which is stated at historical values);■■income and expenses and items presented in the statement ofcash flows are translated at average exchange rates, unless aspecific exchange rate is applicable;■■all resulting exchange differences are recognised as a separatecomponent in shareholders’ equity.When a foreign operation is sold, translation adjustments initiallyrecognised in equity are recycled to the income statement aspart of the disposal gain or loss.B6 - GoodwillThe purchase method of accounting is used for all business combinationscarried out by the Group.At the acquisition date, goodwill is initially measured at cost,representing the excess of the cost of the acquisition over theGroup’s share in the net fair value of the subsidiary or ownedassociate’s assets acquired and liabilities assumed at that date. Foreach business combination and in accordance with the acquiree’sbusiness outlook, goodwill may be measured using the full goodwillmethod, i.e., measurement also includes any non-controllinginterests at the acquisition date.Initial accounting for a business combination and measurementof the fair values of assets acquired and liabilities assumed mustbe completed within 12 months of the acquisition date and anysubsequent changes are recognised as retroactive adjustments tothe provisional amount of goodwill recorded. After the initial12-month period, any adjustments to goodwill are recogniseddirectly in profit or loss.Acquisition costs are expensed directly and no longer included inthe cost of the business combination.Contingent consideration or earn-out payments are measured attheir fair value at the acquisition date. They are recognised inequity if payment results in the delivery of a fixed number ofequity instruments to the acquiree. Otherwise they are recognisedin liabilities. Any adjustments after the 12 months followingthe acquisition are recognised as a receivable or payable witha matching entry in profit or loss.Goodwill is recognised in assets. Negative goodwill is recogniseddirectly in profit or loss.After initial recognition, goodwill is not amortised but is testedfor impairment and carried at cost less any accumulated impairmentlosses. Impairment testing is performed at least once a yearat the reporting date, or more often if events or changes in circumstancesindicate that a risk of impairment exists. For the purposeof these tests, goodwill is allocated to cash-generating units(CGUs) or groups of CGUs likely to benefit from the synergiesdeveloped within the scope of the business combination and representingthe lowest operational level at which the Group monitorsthe rate of return on investments.A goodwill impairment loss is recognised when the carryingamount of the CGU (or group of CGUs) to which it is allocatedexceeds its recoverable amount. The recoverable amount correspondsto the higher of fair value less costs to sell and value inuse (estimated by discounting future cash flows to present value).B7 - Other intangible assetsOther intangible assets are measured at cost, less any accumulatedamortisation and impairment losses.Other intangible assets mainly comprise software, which is eitheracquired or developed in-house. The related costs are only capitalisedwhen they are identifiable as assets and reliably measurable,and when it is probable that future economic benefits willflow to the Group from their use.Research and development costs incurred by the Group arecapitalised once they meet the capitalisation criteria set out inIAS 38. They are amortised over the useful life of each project fortheir value net of any research tax credits obtained by the Groupin relation to the costs.The Group’s other intangible assets have finite useful lives and areamortised from the time that they are ready for use. Amortisationis calculated using the straight-line method based on the followingestimated useful lives:■■software■■patents■■customer relationships3 to 8 yearsup to 5 years7 to 11 yearsAmortisation methods and useful lives are revised at the end ofeach reporting year, or more frequently where required.Intangible assets with indefinite useful lives are tested for impairmentat least once a year at the reporting date, however, they maybe estimated several times a year if there is an indication of unfavourabledevelopments in certain indicators. An impairment lossis recognised when the carrying amount of an asset exceeds itsestimated recoverable amount. Impairment losses on intangibleassets other than goodwill may be reversed.102 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4B8 - Property, plant and equipmentProperty, plant and equipment are stated at (historical) cost,less any accumulated depreciation and impairment losses. Costincludes the acquisition cost and all costs directly attributable tothe asset’s acquisition or development, transfer to the location ofuse and preparation in order to enable it to operate in the mannerintended by management.Components of property, plant and equipment with differentuseful lives are recognised separately.Expenditure related to the replacement or renewal of a componentof an item of property, plant and equipment is recognisedas a separate asset and the replaced asset is derecognised. Othersubsequent expenditure relating to an item of property, plant andequipment is not recognised in assets unless it is probable thatthe future economic benefits associated with the expenditure willflow to the entity and the cost can be measured reliably. All othersubsequent expenditure is expensed as incurred.Regular maintenance costs relating to items of property, plantand equipment (cost of labour, consumables and small spareparts) are also expensed as incurred.Bridging interest charges or construction period interest chargeson assets that take a substantial period of time to get ready fortheir intended use (“qualifying assets”) are capitalised. However,borrowing costs are generally expensed as incurred as the natureof the Group’s business is such that it acquires or manufacturesvery few “qualifying assets”.Revaluations made in accordance with local accounting standardsin the countries in which the Group operates are eliminated.With the exception of land, property, plant and equipmentare depreciated from the time that the assets are ready for use.Depreciation is calculated on a straight-line basis over the followingestimated useful lives:■■buildings■■industrial machinery and equipment■■other property, plant and equipment10 to 40 years5 to 20 years3 to 25 yearsDepreciation methods, residual values and useful lives arereviewed at least at the end of each reporting year and more oftenif there is an indication of impairment.An impairment loss is recognised if an asset’s estimated recoverableamount is lower than its carrying amount. Impairment losseson property, plant and equipment may be subsequently reversedwhere appropriate.Government grants used to partially or wholly finance the costof an item of property, plant and equipment are recognised asa liability under “deferred income” and recycled to the incomestatement on a systematic basis over the useful life of the correspondingasset.B9 - Non-derivative financial assetsInitial recognitionPurchases and sales of financial assets are recognised on the tradedate corresponding to the date on which Sequana commits topurchasing or selling the assets.Financial assets are derecognised when the contractual rights toreceive the cash flows from the assets have expired or have beentransferred, and the Group has transferred substantially all risksand rewards of ownership to another party without retainingcontrol over the asset.Financial assets are initially recognised in the statement of financialposition at fair value plus transaction costs directly attributableto the purchase or issue of the asset (except for financialassets at fair value through profit or loss, whose transaction costsare recognised in profit or loss).A financial asset is classified as “current” when the cash flowsexpected to be derived from the instrument are due within12 months after the end of the reporting period.Subsequent measurementAt initial recognition, the Sequana Group classifies financialassets into one of the four categories provided for in IAS 39 –Financial Instruments: Recognition and Measurement, dependingon the purpose for which they were acquired. The assets aresubsequently measured at amortised cost or fair value dependingon their classification.Amortised cost is the amount at which the financial asset ismeasured at initial recognition minus principal repayments, plusor minus the cumulative amortisation using the effective interestmethod of any difference between that initial amount and theamount payable at maturity.The fair value of instruments quoted in an active market correspondsto their quoted market price. The fair value of instrumentsthat are not quoted in an active market is determined using valuationtechniques including recent arm’s length market transactions,reference to a transaction that is substantially the same,or discounted cash flows and option pricing models, using datainputs based on observable market transactions wherever possible.If it is impossible to reliably estimate the fair value of anequity instrument it is stated at historical cost.The categories of financial assets used by the Group are as follows:■ ■ held-to-maturity investments: non-derivative financial assetswith fixed or determinable payments and fixed maturities thatthe Group has the intention and ability to hold until maturity.They are measured at amortised cost and any impairment lossesare recognised through profit. For the Group, held-to-maturityinvestments comprise security deposits, seller loans and certainfinancial loans;Sequana | 2012 Document de référence (English version) | 103

4Financial position – resultsNotes to the consolidated financial statements■■loans and receivables: non-derivative financial assets with fixedor determinable payments that are not quoted in an active market.They include short-term loans and trade receivables and aremeasured at amortised cost using the effective interest method.If they are impaired, an impairment loss is recognised throughprofit;■■financial assets at fair value through profit or loss: financialassets that are acquired or originated principally for the purposeof selling in the short-term. They are marked to marketand valuation gains and losses are recognised in profit or loss.This category includes cash and cash equivalents and certainnon-consolidated investments;■■available-for-sale financial assets: non-derivative financialassets that are not classified in any of the other categories. Theyare marked to market and valuation gains and losses are recognisedin equity. They include other non-consolidated investmentsand marketable securities. When available-for-salefinancial assets are sold or impaired, cumulative changes infair value previously recognised in equity are transferred to theincome statement.At the end of each reporting period, the Group assesses whetherthere is any objective indication that its financial assets areimpaired.B10 - InventoriesInventories are measured at the lower of cost and net realisablevalue. Cost is determined using the “Weighted Average Cost”(WAC) method or the “First in-First out” (FIFO) method.Similar-type inventories are measured using the same method.Inventories of finished goods and work-in-progress are measuredon the basis of their cost, which, in addition to design, raw materialsand direct labour costs, also includes a share of overheadsother than administrative overheads. Borrowing costs are notincluded.The net realisable value of inventories is based on their estimatedmarket value under normal business conditions less costs to selland includes any provisions for obsolescence.B11 - Trade and other receivablesTrade and other receivables are initially recognised at fair valueand subsequently measured at amortised cost in accordance withthe effective interest method, less any provisions for impairmentlosses.A provision for impairment is recognised through the incomestatement if there is an objective indication of impairment, or ifthere is a risk that the Group will not be able to collect the contractualamounts due (principal plus interest) at the contractualpayment dates. The amount of this provision is equal to the differencebetween the asset carrying amount and the value of estimatedrecoverable future cash flows, discounted using the initialeffective interest rate.In accordance with IAS 39 “Financial Instruments”, the Groupderecognises receivables when the contractual rights to the cashflows have been transferred, as well as the majority of risksand rewards of ownership of these receivables. Any commissionsbilled on these transfers are recognised in “Other financialincome and expenses” (see Note 25). For the risk transfer analysis(see Note 18b), dilution risk is ignored in the event it has beendefined and limited (and in particular, correctly distinguishedfrom late payment risk).The Group generally assigns only receivables without the possibilityof recourse against the seller in the event of non-paymentby the debtor.B12 - Current and deferred taxesCurrent tax is the estimated amount of income tax due on thetaxable profit or loss for the period and includes prior-periodadjustments.Deferred tax assets and liabilities are determined using tax rates(and laws) that have been enacted or substantially enacted bythe end of the reporting period and are expected to apply whenthe related deferred income tax asset is realised or the deferredincome tax liability is settled.Deferred taxes are calculated for all deductible or taxable temporarydifferences. Deferred tax assets are recognised to the extentthat it is probable that future taxable profit will be availableagainst which the temporary differences can be utilised.The following items do not give rise to deferred taxation:■■recognition of goodwill;■■temporary differences on investments in subsidiaries whenthese will not reverse in the foreseeable future.Deferred tax assets and liabilities are only offset if they relate tothe same tax consolidation group.B13 - Cash and cash equivalentsCash and cash equivalents comprise cash in hand, demand deposits,certain highly liquid marketable securities, readily convertibleinto known amounts of cash, and subject to an insignificantrisk of changes in value with maturities of three months or less,and bank overdrafts. In the statement of financial position, bankoverdrafts appear under “Short-term debt” in current liabilities.Short-term investments are marked to market at the end of eachreporting period.B14 - Derivative financial instruments and hedgingThe Group uses derivative instruments (interest rate swaps andcollars, forward contracts and options on foreign currencies andraw materials) to hedge its exposure to risks from fluctuations ininterest rates, exchange rates and raw materials prices arising as aresult of its operating and financial activities. Derivatives are initiallyrecognised at fair value and are subsequently remeasured atfair value at the end of each reporting period.104 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Changes in fair value are recorded in profit or loss under eitherfinancial income or expenses, or current operating income andexpenses, depending on the type of instrument, except for thefollowing instruments that qualify for hedge accounting underIFRS:■■cash flow hedges: changes in the fair value of the effective portionof a derivative that is designated and qualifies as a cashflow hedge are recognised directly in equity. Amounts accumulatedin equity are recycled to the income statement duringthe period in which the hedged item affects profit (for example,when a planned sale actually takes place) or when the Groupno longer expects the hedged forecast transaction to occur.The gain or loss relating to the ineffective portion of the hedgeis recognised in the income statement in financial income orexpenses. When the forecast transaction that is hedged resultsin the recognition of a non-financial asset or liability, the cumulativefair value adjustments on the hedging instrument thatwere previously deferred in equity are transferred from equityand included in the initial measurement of the cost of the assetor liability concerned;■■fair value hedges: changes in the fair value of derivatives thatare designated and qualify as fair value hedges are recorded inprofit or loss under the same caption as any changes in the fairvalue of the hedged asset or liability that are attributable to thehedged risk;■■hedges of net investments in foreign operations: any fair valuegains or losses on the hedging instrument relating to the effectiveportion of the hedge are recognised in equity. The gain orloss relating to the ineffective portion is recognised immediatelyin profit or loss. When the foreign operation is divested,gains and losses accumulated in equity are transferred to theincome statement under the same caption as the disposal gainor loss.B15 - Assets held for sale and liabilities related to assetsheld for saleWhen the Group expects to recover the cost of an asset throughits sale rather than through use, and when a sale is deemed highlyprobable, the asset is classified as held for sale and is measuredat the lower of its carrying amount and fair value less costs tosell. Assets classified as held for sale are not depreciated but animpairment loss is recognised if their carrying amount is higherthan fair value less costs to sell. The impairment loss is reversed ifthere is a subsequent increase in fair value less costs to sell.If the sale involves more than one identifiable asset and insteadinvolves a Group of related assets and liabilities which the Groupintends to dispose of in a single transaction, this disposal group isclassified as being held for sale on a separate line in the statementof financial position – no offsetting is allowed between assets heldfor sale and the related liabilities – and is measured at the lower ofits carrying amount and fair value less costs to sell.B16 - Provisions for pension and other employee benefitobligationsSequana and its subsidiaries provide their employees with differenttypes of supplementary employee benefit plans. The specificcharacteristics of these plans vary depending on the laws, regulationsand practices applicable in each of the countries where theGroup’s employees work.The plans that have been set up are either defined contributionplans or defined benefit plans.A defined contribution plan is a pension plan under which theGroup pays fixed contributions to a separate organisation whichfrees the employer from all future legal or constructive obligationsin the event that plan assets are not sufficient to cover theamounts due to the employees. Therefore, apart from the expenserelating to the contributions paid to such organisations, no otherrelated liability is carried in the Group’s books.Defined benefit plans are all post-employment benefit plansother than defined contribution plans. The Group has an obligationto set aside provisions for the future benefits due to its activeemployees and to pay the benefits of its retired employees. Theactuarial risk and investment risk relating to these plans are bornein substance by the Group.Pension and other post-employment benefit obligations aremeasured in accordance with the projected unit credit method.The amount of the related provision is calculated on an individualbasis using assumptions in terms of life expectancy, employeeturnover, increases in salaries, increases in annuities, increases inmedical costs and discounting of future sums payable. The specificassumptions for each plan take account of the local economicand demographic circumstances.According to IAS 19, the rate used to discount employee benefitobligations should be determined by reference to market yieldson corporate bonds issued in the monetary zone in question, withmaturities similar to the corresponding obligations, and rated“high quality” by the established rating agencies.Sequana uses the Markit iBoxx indices for the euro and sterlingzones and the Citigroup indices for the dollar zone. These indicesare calculated daily for quite a comprehensive range of bondmaturities and ratings, and each bond in the index basket complieswith specific rating, maturity and liquidity criteria.All bonds in the basket are equally price-weighted in returns.Markit and Citigroup update all of the bonds in the index basketsevery month based on any changes to residual maturities orto credit ratings.Defined benefit plans are sometimes funded by external planassets. The liability recognised in respect of defined benefit pensionsand other long-term benefits is the present value of the projectedbenefit obligation at the end of the reporting period lessthe fair value of plan assets and minus any past-service cost notyet recognised (except for other long-term benefits for which thepast service cost is recognised directly in profit or loss). If theresult of this calculation is a net commitment, this is recognisedas a liability. If the calculated amount is a surplus, the amount ofthe recognised asset is capped in line with the guidance providedunder IFRIC 14 in respect of the limits on defined benefit assets.Sequana | 2012 Document de référence (English version) | 105

4Financial position – resultsNotes to the consolidated financial statementsActuarial gains and losses arising on pension benefit obligations,defined as changes related to experience adjustments andactuarial assumptions in accordance with IAS 19, are recogniseddirectly in equity (shown in the consolidated statement of comprehensiveincome). Actuarial gains and losses arising on otherlong-term benefits are recognised immediately in profit or loss.Defined benefit plans can give rise to the recognition of provisionsand mainly concern:a) pension benefit obligations:■■pension annuity plans,■■lump-sum payments on retirement,■■other pension obligations and supplementary pensions;b) other long-term benefits:■■long-service awards,■■early retirement plans;c) other employee benefits:■■healthcare plans,■■employee incentive and/or profit-sharing plans.B17 - Other provisionsA provision is recognised when the Group has a present obligation(legal or constructive) arising from a past event, whose amountcan be estimated reliably, and whose settlement is expected toresult in an outflow of resources embodying economic benefitsfor the Group.These mainly comprise provisions for environmental and legalcontingencies as well as restructuring provisions.Provisions are discounted where the effect of the time value ofmoney is material. Discounting is calculated based on risk-freerates net of inflation for each geographic area concerned.Provisions for environmental and legal contingenciesThe Group generally assesses its environmental and legal contingencieson a case-by-case basis, in accordance with the applicablelegal requirements. Provisions are recognised on the basis of thebest available information at end of the reporting period, providedthat such information enables a probable loss to be determinedand that a reliable estimate can be made of the amount ofthe obligation.Restructuring provisionsA restructuring provision is recognised when the Group hasapproved a detailed formal plan for the restructuring and haseither started to implement the plan or has publicly announcedits main features.B18 - DebtInterest-bearing debt is recognised at cost, which correspondsto the fair value of the amount received less directly attributabletransaction costs. Debt is subsequently recognised at amortisedcost. The difference between the cash received (less directlyattributable transaction costs) and the redemption value is takento profit based on the effective interest rate over the duration ofthe borrowings.Debt is classified as a current liability unless the entity has anunconditional right to defer settlement of the liability for at least12 months after the end of the reporting period.When a loan is recognised initially, any directly-attributabletransaction costs are deducted from the fair value if the borrowingsare recognised at amortised cost and then factored into theeffective interest rate.Net debt is an important indicator for the Group. It is the sum ofshort- and long-term debt, less cash and cash equivalents, othermarketable securities and certain investments accounted for ascash and cash equivalents. A breakdown is provided in Note 18,“Financial instruments”.B19 - Stock options and share awardsThe Group has granted options to purchase Sequana shares andshare awards to certain of its employees (“Equity-settled plans”).At the grant date, the fair value of the options and share awardsis calculated in accordance with the binomial method. This fairvalue is then recognised as an expense over the vesting periodof the options. This method enables the following elements tobe taken into account: the plans’ characteristics (exercise priceand period), market data at the grant date (risk-free rate, shareprice, volatility, expected dividend) and assumptions regardingthe behaviour of beneficiaries.The fair value of the options and share awards is recognised on astraight-line basis over the vesting period. This amount is recognisedin the income statement under “Personnel expenses” with acorresponding adjustment to equity. Upon exercise of the optionsor the vesting of share grants, the price paid by the beneficiariesto exercise the options, or the amount paid by Sequana forthe shares awarded, is recognised in cash with a correspondingadjustment to equity.At the end of each reporting period the Group assesses the numberof options that are expected to vest or to be exercised andrecognises the impact of its estimates in profit or loss, with a correspondingadjustment to equity.The related social security charges are an integral part of theseshare awards and are recognised immediately in profit or loss inthe reporting period in which the plans are set up.106 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4B20 - Treasury sharesTreasury shares are used within the scope of the liquidity contractset up to improve both the liquidity of the Sequana shareand the regularity of its quotations on the Eurolist market ofNYSE Euronext Paris (see Note 12d). They are recognised at costand as a deduction from equity until they are sold.Proceeds on the sale of treasury shares are debited to equity – andto cash when consideration is received – and no amount is recognisedin profit or loss for the period.B21 - Trade and other payablesTrade and other payables are initially recognised at fair valuewhich in most cases corresponds to their nominal amount.B22 - Revenue recognitionRevenues are measured at the fair value of the considerationreceived or receivable for sales of goods and services in the ordinarycourse of the Group’s activities, net of sales tax, and lessany trade or volume discount granted, goods returned and intercompanysales.Sales include sales of goods and services in the ordinary course ofthe Group’s main activities. For sales of manufactured goods andgoods purchased for resale, revenue is recognised in “sales” whenthe risk and rewards inherent to ownership of the goods havebeen transferred to the purchaser. For sales of services, revenue isrecognised by reference to the stage of completion of the transactionat the end of the reporting period, measured on the basis ofwork completed.In France, research tax credits are sometimes granted for researchand development expenditure incurred during the reportingperiod and they are recognised as a deduction from said expenditureand not as a deduction from income tax expense, exceptfor the portion that may be capitalised in line with accountingpolicies.Interest income is recognised on a time-proportion basis usingthe effective interest method.Dividends are recognised in the income statement when theshareholder’s right to receive a dividend has been established.B23 - Other operating income and expenses, netThis caption includes material items that must be disclosed separatelyfrom other items of profit and loss so as not to distort thepresentation of the Group’s results. Examples include:■■gains or losses on disposals of property, plant and equipmentand intangible assets (when these are not recognised in “discontinuedoperations”);■■impairment of assets (including goodwill impairment);■■restructuring costs;■■environmental costs related to closed sites or discontinuedoperations;■■additions to (reversals of) provisions for litigation; and■■other items of a non-recurring nature.B24 - Operating income and recurring operating incomePursuant to CNC Recommendation 2009-R-03 of 2 July 2009,the Group defines the two indicators that it discloses in its consolidatedincome statement as follows:■ ■ “Operating income” corresponds to all income and expensesthat are not related to financing activities, associates, discontinuedoperations and income taxes;■ ■ “Recurring operating income” is equal to “Operating income”less “Other operating income and expenses, net” (see the definitionin Note 2B23).The Group also uses the following indicator (EBITDA) to calculatecertain ratios (see Notes 12c and 18):■■Earnings before interest, taxes, depreciation and amortisation(or EBITDA) is equal to “Recurring operating income”,less net changes in depreciation, amortisation and provisionsrelated to operating activities. A reconciliation is provided inchapter 1 – Presentation of Sequana – Key figures.B25 - Net financial incomeNet financial income includes the following two items:■■cost of net debt, which corresponds to:• income from the investment of cash and cash equivalents andnet gains made on their sale,• interest on debt calculated using the effective interest method,the financial expense arising on discounting non-current liabilitiesand the costs of early repayment of borrowings or ofcancellation of credit facilities,• foreign exchange gains and losses,• changes in the fair value of derivatives related to componentsof net debt;■■other financial income and expenses, which include:• gains or losses on disposals of non-consolidated investments,• dividends,• changes in the fair value of derivatives related to financialassets,• bank charges and other financial fees and commissions.B26 - Income taxIncome tax expense corresponds to current taxes for all consolidatedsubsidiaries, adjusted for deferred taxes. Income taxes arerecognised in profit or loss unless they relate to items recogniseddirectly in equity, in which case they are recognised immediatelyin equity.The Group has elected to recognise the new national economiclevy (contribution économique territoriale – CET) applicable toFrench subsidiaries within the scope of the 2010 Finance Act,as follows:■ ■ the portion of the levy that relates to the company land tax(contribution foncière des entreprises – CFE) is recognised as anoperating expense;Sequana | 2012 Document de référence (English version) | 107

4Financial position – resultsNotes to the consolidated financial statements■■the portion of the levy based on companies’ “value added” (cotisationsur la valeur ajoutée des entreprises – CVAE) is recognisedas income tax because the amount of the value added is net ofincome and expenses and complies with the definition of anincome tax provided in IAS 12.2.B27 - Earnings per shareBasic undiluted earnings per share are calculated by dividing netincome attributable to owners by the average number of sharesoutstanding during the year, excluding treasury shares (calculatedon a monthly average basis).Diluted earnings per share are calculated by adjusting the averagenumber of shares outstanding to take into account (i) the conversionof all dilutive instruments (stock options); and (ii) the value ofall goods or services to be received in respect of each stock option.Share award plans subject to performance criteria are included inthe average number of shares outstanding during the year based onthe actual number of shares awarded, provided that the specifiedperformance conditions have been met prior to the reporting date.B28 - LeasesNon-current assets held under finance leases that transfer a significantportion of the risks and rewards of ownership to the Groupare recognised in the statement of financial position under property,plant and equipment. Finance leases are capitalised at theinception of the lease at the lower of the fair value of the leasedproperty and the present value of the minimum lease payments.Property, plant and equipment acquired under finance leases isdepreciated on a straight-line basis over the shorter of the usefullife of the asset (based on the same useful lives as for property,plant and equipment owned by the Group) or the lease term.The corresponding lease obligation, net of interest, is recognisedas a debt in liabilities.This accounting treatment applied to assets and liabilities relatedto finance leases leads to the recognition of correspondingdeferred taxes.Payments made under operating leases are recognised in expensesas incurred.B29 - Segment reportingPursuant to IFRS 8, the operating segments reported correspondto the reporting basis used in the internal reports that are regularlyreviewed by the Group’s operating decision makers (theChief Executive Officer assisted by members of the ExecutiveCommittee).Segment assets are the operating assets used by a segment inthe context of its operating activities. They include attributablegoodwill, property, plant and equipment and intangible assets aswell as all current assets attributable to the segment. They do notinclude current or deferred tax assets, assets held for sale, otherinvestments, or non-current receivables and other financial assets,which are identified as “unallocated assets”.Segment liabilities result from a segment’s activities and aredirectly attributable to the segment or can reasonably be allocatedto the segment. They include current and non-current liabilitiesother than debt, liabilities related to assets held for sale, and currentand deferred tax liabilities, which are identified as “unallocatedliabilities”.B30 - Statement of cash flowsThe statement of cash flows is presented using the indirect method.Note 3 - Measurement of impairment lossesGoodwill and intangible assets with indefinite useful lives aretested for impairment on an annual basis, or more frequently ifthere is an indication that they may be impaired. Property, plantand equipment and other intangible assets with finite useful livesare only tested for impairment if there is an indication that theymay be impaired.For impairment testing purposes, assets are allocated to cash-generatingunits (CGUs), defined as the smallest group of identifiableassets that generates cash inflows that are largely independentof the cash inflows of other groups of assets. Goodwill is tested atthe level of the CGUs likely to benefit from the synergies developedwithin the scope of the business combination resulting fromthe acquisition.The impairment test compares the carrying amount of the CGUor group of CGU’s (including any allocated goodwill) to theirrecoverable amount, which is the observable market price on anorganised market. If no observable market data is available, therecoverable value is deemed to be the value in use which is determinedbased on estimates and assumptions. In light of the currenthighly volatile economic and financial environment, actualfuture results may differ significantly from forecasts.Key assumptions used in impairment testing of goodwill:■■cash flow projections taken from the four-year business planwhich reflect expected changes in volumes, selling prices,direct costs and investments over the period, calculated usinghistorical financial data and assumptions concerning marketgrowth and earnings as well as trends forecast for the periodin question in the long-term business plan. In certain cases,business plan forecasts have been revised downwards to reflectuncertainty over the market outlook related to the tough currenteconomic climate;■ ■ a terminal value calculated by extrapolating the most recentcash flows included in the business plan using a steady longtermgrowth rate for cash flows beyond the period covered bythe plan that is considered appropriate for the market in whichthe CGU operates. The indefinite growth rates used to calculatethe terminal values are determined conservatively in linewith factors such as average inflation in the markets in whichthe CGU or group of CGU’s generate their sales;108 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4■■forecast discounted cash flows calculated by reference to a ratebased on the Sequana Group’s weighted average cost of capital,in the absence of a specific discount rate for the asset being tested.These discount rates are post-tax rates and they vary dependingon the country or geographic area in which the cash generatingunit is located. They generally correspond to the risk-free rate plusa country-/sector-specific risk premium. Other risks are factoredinto the cash flow projections in the business plans. Discount ratesfor each monetary zone were determined based on yields on highquality corporate bonds rated BBB with a maturity of ten years.Indefinite growth and discount rates used for impairment testing in the key geographic areas were as follows:Key assumptions used in impairment calculations for Antalis 2012 2011Long-term growth rate 1.50% 1.50%After-tax discount rate Europe 5.50% 6.50%South Africa 12.00% 13.00%South America 9.00% 8.75%Asia 8.50% 7.00%Key assumptions used in impairment calculations for Arjowiggins 2012 2011Long-term growth rate 1.00% 1.00%After-tax discount rate Continental Europe 6.25% 6.75%3a - GoodwillUnited States 6.00% 6.75%United Kingdom 5.75% 6.75%At 31 December 2012, the goodwill arising from the AWA Ltd takeover carried out in 2000 (€425 million) was allocated to the CGUsas indicated below:(€ millions) 31/12/2012 31/12/2011Arjowiggins Security 180 180Arjowiggins Creative Papers 90 90Antalis group 155 155TOTAL 425 425In 2011 and 2012, the Group did not recognise any impairmentlosses based on impairment testing of the CGUs to which thisgoodwill has been allocated.Other goodwillImpairment testing of goodwill carried on the books ofArjowiggins did not indicate any risk of impairment at31 December 2012. However, the Antalis group recognised animpairment expense of €20 million, mainly on goodwill carriedin the books of paper businesses in Germany (€15 million) andthe Netherlands (€5 million).In 2011, impairment testing of goodwill carried on the books ofArjowiggins resulted in the recognition of an impairment expenseof €18 million on goodwill previously recognised for ArjowigginsGraphic. No impairment was identified during impairment testingof goodwill carried on the books of Antalis.Sequana | 2012 Document de référence (English version) | 109

4Financial position – resultsNotes to the consolidated financial statements3b - Property, plant and equipmentand other intangible assetsDue to below budget operating performances and an unfavourablebusiness outlook for certain CGUs in 2012, Arjowiggins’ managementtested property, plant and equipment for impairment andrecognised impairment losses for a pre-tax amount of €43 millionat 31 December 2012. This amount mainly related to assetsat the Coated US division (€35 million) and the Ivybridge plantin the UK following the announcement of its closure (€5 million).Arjowiggins also reversed impairment losses previously recognisedon property, plant and equipment by Arjowiggins’ Graphic divisionfor a pre-tax amount of €9 million.In 2011, impairment testing had resulted in the recognition of a netimpairment expense of €43 million (Graphic: €26 million, CoatedUS: €11 million, Creative Papers: €6 million concerning the closureof two machines).In 2012, Antalis recorded impairment losses of €2 million onother intangible assets carried in the books of paper businesses inGermany.Antalis did not recognise any impairment losses on property, plantand equipment or other intangible assets in 2011.3c - Testing sensitivity to key assumptionsMeasurement of Group assets allocated to CGUs or a group ofCGU’s is subject to changes in the key assumptions used to calculatetheir value in use.These include:Sensitivity to a 1% increase in the after-tax discount rateAt 31 December 2012, a 1% increase in the after-tax discount ratewould generate additional impairment expense of €11 million.Sensitivity to a 1% decline in the long-term growth rateAt 31 December 2012, a 1% decline in the long-term growth ratewould generate additional impairment expense of €9 million.Sensitivity to a 1% increase in the after-tax discount rate and a1% decline in the long-term growth rateAt 31 December 2012, a 1% increase in the after-tax discount ratecoupled with a 1% decline in the long-term growth rate wouldgenerate additional impairment expense of €19 million.Sensitivity to a 5% decline in operating cash flowAt 31 December 2012, a 5% decline in operating cash flow inthe Group’s main cash-generating units over the period of thebusiness plan would generate additional impairment expense of€3 million.Break even analysisThe following table analyses percentage changes in each of the key variables in isolation and presents the increases/decreases necessaryfor the estimated recoverable amount of the Group’s main cash-generating units (CGUs) or groups of CGUs to be equal to their carryingamount.Break evenfor key assumptionsAntalis – Group goodwillAntalis – Dekker Packaging BVAntalis – PolandAntalis – South AmericaAntalis – AustriaArjowiggins SecurityArjowiggins GraphicArjowiggins Creative PapersIncrease in discount rate neededfor recoverable amount to be equalto carrying amount (points)3.0 points2.0 points2.0 points3.9 points1.7 points2.9 points3.7 points1.5 pointsDecrease in long-term growth rate neededfor recoverable amount to be equalto carrying amount (points)-5.5 points-3.1 points-5.5 points-18.5 points-2.5 points-3.7 points-4.8 points-1.8 pointsDecline in operating cash flow neededfor recoverable amount to be equalto carrying amount (%)-42.2%-33.5%-18.2%-34.6%-30.2%-36.5%-43.0%-26.0%110 | Sequana | 2012 Document de référence (English version)

Note 4 - Changes in scope of consolidationFinancial position – resultsNotes to the consolidated financial statements 44a - AcquisitionsDetails of acquisitions during the period are as follows (see Note 1 - Significant events of the year):(€ millions) Ambassador Pack 2000 Branopac AbitekAcquisition date 3 January 29 February 3 September 12 SeptemberPercentage holding 100% 100% 100% 100%Country UK Germany Czech Republic ChileAccounting year-end 31 December 31 December 31 December 31 DecemberFinancial data on acquirees (12 months)Sales 29 23 3 13Net income (loss) – 1 – 1Total assets 2 4 1 17Net income (loss) since the acquisition date – 1 – –Analysis of the acquisitionsPurchase price of equity investment (a) 10 16 3 14Consideration Cash Cash Cash CashFixed assets 6 6 1 2Working capital requirements 2 2 1 4Net debt – – – (1)Provisions (1) – – –Other assets (liabilities), net (1) (2) (1) (1)Net assets acquired (b) 6 6 1 4CALCULATION OF NET GOODWILL (A-B) 4 10 2 10Allocation of the purchase price of Ambassador, Pack 2000 and Branopac resulted in recognition of the following assets and liabilities:■■Trademarks: €3 million (Ambassador and Pack 2000),■■Contractual relationships: €8 million (Ambassador and Pack 2000),■■Goodwill: €16 million (Pack 2000: €10 million; Ambassador: €4 million; Branopac: €2 million),■■Deferred tax liabilities: (€3 million).Based on provisional purchase price allocation for Abitek, goodwill was recognised for an amount of €10 million.Allocation of the purchase price will be finalised within 12 months of the acquisition date, in accordance with IFRS 3.4b - Operations sold or in the course of being sold2012There are no operations sold or in the course of being sold within the meaning of IFRS 5 at 31 December 2012.2011In March 2011, Arjowiggins’ sold its Decor and Abrasive, Thin Opaque, and Fine Art papers businesses based at the Arches (France)and Dettingen (Germany) plants.Sequana | 2012 Document de référence (English version) | 111

4Financial position – resultsNotes to the consolidated financial statementsAn analysis of net income from discontinued operations is set out below:(€ millions) 2012 2011Arjowiggins’ businesses based at Arches & DettingenSales – 46Current operating expenses – (45)Non-current operating expenses – (2)Gain on disposal – 1Net financial income – –Pre-tax profit – –Income tax benefit (expense) – –NET INCOME FROM DISCONTINUED OPERATIONS – –The consolidated statement of cash flows includes the net movements related to assets or disposal group(s) held for sale, analysed as followsby type of cash flow:(€ millions) 2012 2011Arjowiggins - Arches & DettingenOperating activities – (6)Investing activities – 1Proceeds on disposal – 75Financing activities – –TOTAL NET CASH FLOWS – 704c - Assets held for sale and liabilities related to assets held for saleThese items break down as follows:(€ millions) 31/12/2012 31/12/2011Assets held for saleProperty, plant and equipment 16 –Inventories – –Trade receivables – –Other current assets – –TOTAL 16 –Liabilities related to assets held for saleTrade payables – –Other current liabilities – –TOTAL – –At 31 December 2012, assets held for sale essentially comprise land and other property, plant and equipment at the two production andconverting plants formerly operated by Dalum Papir A/S in Denmark which closed at the end of 2012 (see Note 1).The carrying amount of these assets has been stated at fair value less costs to sell, in accordance with IFRS 5.Fair values were assessed by the Group at year-end based on information available at that date:■■Land and buildings: expert appraisals by real estate specialists and a firm offer from a third party to acquire the Maglemølle site.■■Machines: market value certified by brokers with expertise in paper machines.■■Electricity production plant: firm offer from a third party.112 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Note 5a - Goodwill(€ millions) 2012 2011Balance at 1 JanuaryGross amount 1,018 1,019Impairment losses (393) (376)CARRYING AMOUNT 625 643First-time consolidated subsidiaries 26 3Translation adjustments 3 (3)Impairment losses (20) (18)Other – –Balance at 31 DecemberGross amount 1,048 1,018Impairment losses (414) (393)CARRYING AMOUNT 634 625Impairment losses are shown in the income statement under “Other operating income and expenses, net” and a breakdown of the totalis provided in Note 3a.Goodwill can be analysed as follows by business segment as of 31 December:(€ millions) 2012 2011Arjowiggins Security 185 185Arjowiggins Creative Papers 103 103Arjowiggins Graphic 17 17Sub-total – Arjowiggins 305 305Antalis – Group goodwill 155 155Antalis – France 12 12Antalis – United Kingdom 23 19Antalis – Germany & Austria 7 22Antalis – Switzerland 8 8Antalis – The Netherlands 3 8Antalis – Central and Eastern Europe 16 14Antalis – Baltic countries and Russia 10 9Antalis – Nordic countries 13 13Antalis – South America 43 31Antalis – Industrial packaging 34 24Antalis – Other subsidiaries 5 5Sub-total – Antalis 329 320CARRYING AMOUNT 634 625Sequana | 2012 Document de référence (English version) | 113

4Financial position – resultsNotes to the consolidated financial statementsNote 5b - Other intangible assets(€ millions) Brands, licences & patents Software Other TotalAt 1 January 2011Gross amount 2 152 26 180Accumulated amortisation and impairment – (104) (14) (118)CARRYING AMOUNT 2 48 12 62Increases (1) – 13 6 19Amortisation (2) – (14) (2) (16)Impairment losses – (1) – (1)Disposals – – (1) (1)Changes in scope of consolidation – – 1 1Reclassifications (2) 4 – 2At 31 December 2011Gross amount 1 167 28 196Accumulated amortisation and impairment (1) (117) (12) (130)CARRYING AMOUNT – 50 16 66Increases (1) – 12 3 15Amortisation (2) (2) (14) (2) (18)Impairment losses – (2) – (2)Disposals – (1) (1) (2)Translation adjustmentsChanges in scope of consolidation 10 – – 10Reclassifications – 6 (4) 2At 31 December 2012Gross amount 12 181 24 217Accumulated amortisation and impairment (3) (130) (13) (146)CARRYING AMOUNT 9 51 11 71(1) This item corresponds to acquisitions and internally-generated non-current assets in the respective amounts of €10 million and €5 million in 2012(2011: €10 million and €9 million, respectively).(2) The €18 million in amortisation recorded in 2012 is included in the “Depreciation and amortisation” caption in the income statement (2011: €16 million).Research and development expenditure recognised in the 2012 income statement amounted to €12 million (2011: €12 million).Capitalised research and development expenses are non-material on a Group-wide basis.114 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Note 6 - Property, plant and equipment(€ millions) Land Buildings Machinery & equipment Other TotalAt 1 January 2011Gross amount 26 337 1,664 142 2,169Accumulated depreciation and impairment – (193) (1,346) (102) (1,641)CARRYING AMOUNT 26 144 318 40 528Capital expenditure – 5 22 27 54Disposals – (1) – (1) (2)Depreciation (1) – (11) (33) (8) (52)Impairment losses (1) – – (42) (1) (43)Reversals of impairment losses (1) – – 1 – 1Reclassifications – 2 9 (5) 6Changes in scope of consolidation (2) (16) (66) (7) (91)At 31 December 2011Gross amount 24 304 1,496 139 1,963Accumulated depreciation and impairment – (181) (1,287) (94) (1,562)CARRYING AMOUNT 24 123 209 45 401Capital expenditure – 6 21 13 40Disposals (1) – – (1) (2)Translation adjustments – – – – –Depreciation (1) – (11) (31) (6) (48)Impairment losses (1) (4) (33) (2) (2) (41)Reversals of impairment losses (1) – – 9 1 10Reclassified to assets held for sale (2) (2) (4) (10) – (16)Other reclassifications (2) 3 – 13 (16) –Changes in scope of consolidation – 1 1 1 3At 31 December 2012Gross amount 24 286 1,395 130 1,835Accumulated depreciation and impairment (3) (205) (1,184) (96) (1,488)CARRYING AMOUNT 21 81 211 34 347(1) Depreciation expense for the reporting period is included in the “Depreciation and amortisation” caption in the income statement. Impairment lossesand reversals are included in “Other operating income and expenses, net” and analysed in Note 3 – Measurement of impairment losses.(2) Certain items of property, plant and equipment have been reclassified to assets held for sale in accordance with IFRS 5 (see Note 4).“Other reclassifications” essentially comprise assets in progress at the beginning of the period that were subsequently placed in service during the year.The amount of expenditure recognised end-2012 in relation to property, plant and equipment in progress was €16 million (2011: €23 million).No items of property, plant and equipment were pledged as collateral in either 2012 or 2011.The Group’s capital expenditure projects did not generate any capitalised borrowing costs in 2012 or 2011.Sequana | 2012 Document de référence (English version) | 115

4Financial position – resultsNotes to the consolidated financial statementsMovements in property, plant and equipment held under finance leases were as follows:(€ millions) Buildings Machinery & equipment Other TotalAt 1 January 2011Gross amount 11 15 20 46Accumulated depreciation and impairment (3) (10) (5) (18)CARRYING AMOUNT 8 5 15 28Capital expenditure – 1 – 1Depreciation and amortisation – (2) (1) (3)Changes in scope of consolidation – – (2) (2)At 31 December 2011Gross amount 11 15 16 42Accumulated depreciation and impairment (3) (11) (4) (18)CARRYING AMOUNT 8 4 12 24Capital expenditure – 1 – 1Disposals – – – –Depreciation and amortisation – (1) (1) (2)Translation adjustments – – – –Changes in scope of consolidation – – – –At 31 December 2012Gross amount 10 15 16 41Accumulated depreciation and impairment (3) (11) (5) (19)CARRYING AMOUNT 7 4 11 22The characteristics of these leases were as follows at 31 December 2012:(€ millions) Buildings Machinery & equipment Other TotalDisclosures concerning the Group’s lease liabilitiesNominal amount of liability at inception of the leases 11 15 16 42At year-end:Residual amount of fixed lease payments 2 4 9 15Residual amount of conditional lease payments 1 1 – 2TOTAL RESIDUAL LEASE LIABILITIES 3 5 9 17Maturities of residual lease liabilities at year-endLess than 1 year 1 2 1 42 to 5 years 1 2 6 9More than 5 years 1 – 2 3TOTAL RESIDUAL LEASE LIABILITIES AT YEAR-END 3 4 9 16Present value of lease liabilities 3 4 8 15116 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Note 7 - Investments in associatesMovements during the year(€ millions) 31/12/2012 31/12/2011Opening balance 5 6Income of associates – 1Changes in scope of consolidation – (1)Translation adjustments – (1)CLOSING BALANCE 5 5Analysis by investment(€ millions) 31/12/2012 31/12/2011Closing balanceArjowiggins subsidiaries 2 2Antalis subsidiaries 3 3TOTAL 5 5Income of associatesAntalis subsidiaries – 1TOTAL – 1Note 8 - Financial assetsAnalysis of financial assets carried in the statement of financial position(€ millions) 31/12/2012 31/12/2011Non-current financial assets 13 12Current financial assets 8 11TOTAL FINANCIAL ASSETS 21 23Gross amount 25 27Provision for impairment in value (4) (4)Movements in gross amount during the year(€ millions) 31/12/2012 31/12/2011Opening balance 27 35Increases 4 4Decreases and disposals (5) (7)Translation adjustments (1) (1)Changes in scope of consolidation – (4)CLOSING BALANCE 25 27Maturity of non-current financial assets(€ millions) 31/12/2012 31/12/20111 to 5 years 7 6More than 5 years 6 6CLOSING BALANCE 13 12Sequana | 2012 Document de référence (English version) | 117

4Financial position – resultsNotes to the consolidated financial statementsAnalysis by type of financial asset at closingNon-current financial assetsCurrent financial assets(€ millions)31/12/2012 31/12/2011 31/12/2012 31/12/2011Held-to-maturity investments 5 6 6 8Other deposits and guarantees 5 6 6 8Available-for-sale financial assets 6 6 2 2Non-consolidated investments 6 6 – –Marketable securities – – 2 2Loans and receivables issued by the Group 2 – – 1Special loans and other financial receivables 2 – – 1CLOSING BALANCE 13 12 8 11Note 9 - Inventories(€ millions) 31/12/2012 31/12/2011Raw materials and other supplies 78 91Work in-progress 31 29Semi-finished and finished goods 78 72Goods held for resale 261 265CARRYING AMOUNT (1) 448 457Gross amount 478 488Provision for impairment in value (30) (31)(1) Including the portion of inventories more than one year old. N/A N/AThe Group recognised the following amounts in the income statement in relation to inventories:Changes in inventories recognised in “Recurring operating income” (13) (19)Under “Net additions to (reversals of) provisions”:- Additions to provisions for impairment in value of inventories (8) (8)- Reversals of provisions for impairment in value of inventories 7 8Under “Other operating income and expenses, net”:- Additions to provisions for impairment in value of inventories (1) (2)- Reversals of provisions for impairment in value of inventories 1 –No inventories were pledged as collateral at 31 December 2012 (€4 million worth of inventories had been pledged at 31 December 2011).118 | Sequana | 2012 Document de référence (English version)

Note 10 - Other assetsFinancial position – resultsNotes to the consolidated financial statements 4Breakdown by type(€ millions) 31/12/2012 31/12/2011OTHER NON-CURRENT ASSETS 99 115Assets backing defined benefit pension plans 91 114Other assets related to employee benefits 7 –Current tax receivables 1 1Derivative instruments – –TRADE RECEIVABLES 523 558Gross amount 557 593Provision for impairment in value (34) (35)OTHER RECEIVABLES 120 122Current tax receivables 12 6Indirect tax receivables 23 24Receivables on disposals of non-current assets – 3Advances to suppliers 4 4Derivative instruments – 2Other receivables 81 83Movements in provisions for impairment31/12/2012 31/12/2011(€ millions)Trade receivables Other receivables Trade receivables Other receivablesOpening balance (35) (1) (38) (1)Net (additions to)/reversals of impairment provisions (2) – 1 –Translation adjustments – – 1 –Changes in scope of consolidation – – 1 –Reclassifications 3 – – –CLOSING BALANCE (34) (1) (35) (1)Of which, current (34) (1) (35) (1)Maturity of other assets (net)(€ millions) Total Less than 1 year 1 to 5 years More than 5 yearsAt 31 December 2012Other non-current assets 99 – – 99Trade receivables 523 523 – –Other receivables 120 120 – –At 31 December 2011Other non-current assets 115 – – 115Trade receivables 558 558 – –Other receivables 122 122 – –Sequana | 2012 Document de référence (English version) | 119

4Financial position – resultsNotes to the consolidated financial statementsNote 11 - Cash and cash equivalents(€ millions) 31/12/2012 31/12/2011Cash and cash equivalents 183 323CLOSING BALANCE 183 323Cash and cash equivalents for 2012 and 2011 only include debit bank balances and exclude term deposits.Note 12a - Share capitalIn the course of the year, there were a number of changes toSequana’s share capital and to the number of shares comprisingthe share capital.1) Capital increase of 30 April 2012In accordance with the terms of a share award plan approvedon 9 February 2010 and amended on 21 July 2011, a sharecapital increase was carried out on 30 April 2012, by creating473,742 shares for a nominal amount of €710,613. These shareswere awarded to French employees as certain performance conditionshad been met at 31 December 2011.This amount was deducted from the restricted reserves accountset up for this purpose.With effect from 30 April 2012, the Company’s share capitaltherefore increased from €74,317,503 to €75,028,116, comprising50,018,744 shares with a par value of €1.50 each.2) Capital increase of 9 July 2012On 4 June 2012, the Board of Directors of Sequana, acting inaccordance with the authorisation given at the Annual GeneralMeeting of 19 May 2011, voted to increase the Company’sshare capital by a nominal amount of €150,056,232 by issuing100,037,488 new shares, each with a par value of €1.50. Preemptivesubscription rights were maintained for existing shareholdersat a subscription ratio of two new shares for each sharepreviously held. The subscription period ran from 14 June to27 June 2012.The new share issue had been fully subscribed by the deliverysettlementdate on 9 July 2012 and 100,037,488 new shareswere duly created at a par value of €1.50 each. This increasedthe Company’s share capital from €75,028,116 to €225,084,348,comprising 150,056,232 shares with a par value of €1.50 each.3) Reverse stock splitOn 15 November 2012, Sequana carried out a reverse stock splitin accordance with the decision taken at the Annual GeneralMeeting held on 26 June 2012. The exchange ratio was six oldshares with a par value of €1.50 each for one new share with apar value of €9.00. The share capital remained unchanged at€225,084,348, however the number of shares comprising theshare capital has changed from 150,056,232 shares with a parvalue of €1.50 each to 25,009,372 shares with a par value of€9 each.At 31 December 2012, Sequana’s share capital amounted to€225,084,348, divided into 25,009,372 fully paid-up shares, eachwith a par value of €9.Note 12b - Stock optionsThe Company has granted stock options to certain of its employeesand corporate officers in accordance with the authorisationsgiven by shareholders at the Annual General Meetings of19 May 1998, 21 May 2003 and 3 May 2005. The exercise priceof the options was set at no discount to the stock market price forthe period. Under the terms of these plans, the shares cannot bepurchased or sold before the end of the four-year lock-up periodapplicable for tax purposes. The options expire eight years afterthe grant date.None of the aforementioned stock options were exercised ineither 2011 or 2012 and, at the present time, the exercise priceof the options is considerably higher than the current share priceand it is highly unlikely that the options will be exercised.The Board of Directors of Sequana has taken the measures necessaryto preserve the rights of beneficiaries in relation to outstandingstock options in light of the capital increase of 9 July 2012and the reverse stock split of 15 November 2012, and the exerciseprice and number of options under the plans of 3 May 2005 and10 May 2006 have been adjusted accordingly.120 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Details of the outstanding stock option plans are provided in the table below:Date of Management Board or Board of Directors’ meeting 15/05/2003 18/06/2004 03/05/2005 10/05/2006Date of AGM 19/05/1998 21/05/2003 03/05/2005 03/05/2005Initial number of existing/newly-issued shares to be allocated on exercise of the options 420,000 55,000 515,000 90,000Exercise period from: 15/05/2005 18/06/2006 03/05/2009 (1) 10/05/2010 (1)to: 15/05/2011 18/06/2012 03/05/2013 10/05/2014Initial exercise price (in €) 16.90 20.47 23.50 25.46Adjusted exercise price at 31 December 2012 (in €) (2) 14.47not adjustedin 2012Analysis of movements17.53not adjustedin 2012€56.52 €61.20Total numberof sharesoutstandingNumber of shares at 1 January 2011 104,530 68,028 626,556 109,476 908,590Options exercised – – – – 0Options forfeited (104,530) – – – (104,530)Number of shares at 31 December 2011(options on shares with a par value of €1.50)0 68,028 626,556 109,476 804,060Options exercised – – – – 0Options forfeited(options on shares with a par value of €1.50)Number of shares at 31 December 2012not adjusted for the changes to share capital in 2012Number of shares at 31 December 2012adjusted for the changes to share capital in 2012(options on shares with a par value of €9)– 68,028 – 60,820 (128,848)0 0 626,556 48,656 675,2120 0 226,813 17,628 244,441(1) The 3 May 2005 and 10 May 2006 plans vest in tranches over a period of three years, at a rate of one-third per year of presence in the Company.(2) The adjusted exercise price includes adjustments made following dividend payments deducted from reserves as well as an adjustment carried out following the purchase –or potential purchase – by all of the Company’s shareholders of Sequana shares at a price below the quoted stock market price (November 2006 public buyback offer).The 2005 and 2006 programmes were also adjusted for the aforementioned changes to share capital in 2012.All of these stock options have been measured and recognised in full in the consolidated accounts since 31 December 2009.Options outstanding at beginning of year(options on shares with a par value of €1.50)Numbers of shares2012 2011Weighted average price(in €)Numbers of sharesWeighted average price(in €)804,060 20.44 908,590 19.76Options exercised – – – –Options forfeited(options on shares with a par value of €1.50)Options outstanding at end of year(options on shares with a par value of €9)Options exercisable at year-end(options on shares with a par value of €9)(128,848) 19.72 (104,530) 14.47244,441 56.86 804,060 20.44244,441 56.86 804,060 20.44Sequana | 2012 Document de référence (English version) | 121

4Financial position – resultsNotes to the consolidated financial statementsNote 12c - Share award plansNo share award plans were implemented in any Group entities in2012 or in 2011.On 9 February 2010 and 19 April 2010, the Board of Directorsof Sequana and the Chief Executive Officer acting on the Board’sinstructions, respectively, decided to set up a performance shareplan involving the allocation of 1,921,000 Sequana shares to169 beneficiaries. The plan aims at rewarding and fostering loyaltyamong key Group executives and managerial-grade staff, and givingthem a stake in Sequana’s future earnings and value creation.Only Sequana shares may be awarded within the scope of thisplan. In approving the plan, the Board of Directors availed ofthe authorisation granted to it by the Annual General Meetingof 11 May 2007.All shares granted under this plan – regardless of the beneficiary– are subject to presence and performance conditions linked tothe Group’s 2010-2013 three-year business plan. The vesting criteriafor the different grantees have been tailored to the performanceof the grantees’ specific business segment and not merelyto the performance of the Group as a whole.Depending on the beneficiary’s position within the Group and thebusiness to which he or she is assigned, performance criteria arebased (i) equally on Sequana’s consolidated EBITDA (50%) andits consolidated net debt (50%), or (ii) on Sequana’s consolidatedEBITDA (30%), its consolidated net debt (30%), and EBITDAreported by the beneficiary’s division or business (40%).The shares are awarded out of new shares issued by Sequanathrough the capitalisation of reserves, profit or issue premiums.Grantees acquire beneficial ownership of the shares and haveentitlement to any dividends paid by Sequana from the first dayof the period in which the shares are issued.If the performance conditions have been met at 31 December 2011,a portion of the shares vest on 30 April 2012 (first tranche). Thisportion shall represent up to two-thirds of the total number ofshares awarded. The remaining shares will vest on 30 April 2013(second tranche), provided that the performance conditions havebeen met at 31 December 2012.Provided that the specified performance conditions have beenmet, the shares will vest between 30 April 2012 and 30 April 2014,depending on the tax situation of the beneficiaries. A two-yearlock-up period running from the vesting date may also applydepending on the beneficiaries’ tax situation, during which theshares are not transferable.On 10 March 2011, the sale of Arjowiggins Arches SAS andArjowiggins Deutschland GmbH (decor and abrasive paperswithin Arjowiggins’ Industrial Solutions division) to the SwedishMunskjö group significantly altered the Group’s structure.Consequently, pursuant to the terms of the share award plan, theBoard of Directors’ meeting of 21 July 2011 decided to amendthe performance conditions as well as certain other conditionsaffected by the sale.Moreover, the vesting process was accelerated for the portion ofshare awards to be granted to the remaining employees of theSolutions division as the aforementioned sale makes it impossibleto measure the contribution of these remaining employees to theperformance of the Group as a whole.As the consolidated net debt performance criterion had been metat 31 December 2011, each grantee (aside from those mentionedpreviously for whom the vesting process was accelerated) wasawarded two-thirds of their total allocation under the plan, multipliedby the applicable weighting of the consolidated net debtcriterion (between 30% and 50%, depending on the entity).Consequently, on 30 April 2012, 473,742 Sequana shares wereawarded to 73 grantees, resident in France and employees ofFrench entities. The amount corresponding to the increase inshare capital was deducted from the restricted reserves accountset up for this purpose. Shares will be awarded to non-Frenchgrantees working for entities outside France on 30 April 2014,provided they are still employees of the Group on that date (asidefrom grantees whose vesting entitlements have been maintainedin spite of the fact that their entity/division is no longer part of theGroup). At 31 December 2012, there were 77 such non-Frenchgrantees, corresponding to 32,733 shares (127,437 shares beforethe adjustments described below).Following the capital increase (July 2012) and the reverse stocksplit (November 2012), the number of outstanding share awardswas adjusted to preserve grantee entitlements. These adjustmentsdid not give rise to any change in the corresponding expenseunder IFRS 2.Based on a review of performance conditions at 31 December 2012,which determines whether the second tranche of shares will vestor not, the Group estimates that the reported EBITDA targetwill only be met by the Arjowiggins Medical/Hospital segment,giving rise to the creation of 1,849 new shares (7,200 beforeadjustment) on 30 April 2013, provided the three grantees concernedare still employees of the Group on that date. All of theremaining shares covered by the plan will be forfeited.In accordance with IFRS 2, estimates of performance conditionsare reviewed at each reporting date and the impact of any changesare recognised in “Personnel expenses” with a correspondingadjustment to equity.Based on an estimate of the cost of the share award plans at31 December 2012, an expense of €0.5 million was booked in“Personnel expenses” for the estimated commitment for 2012based on the new plan parameters.122 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4The performance share plan implemented in 2010 is detailed in the table below:Grant dateInitial number of shares granted At 31 December 2012Numberof beneficiariesNumbers of sharesNumberof beneficiariesNumbers of sharesPer-share fair value(in €)Total cost Amount recognisedof plan at in personnel expenses31/12/2012in 201209/02/2010 168 1,906,000 80 34,582 5.66 – 5.00 €2.8 million €0.5 million19/04/2010 1 15,000 – – – – –Per-share fair value was calculated based on (i) the share price at the grant date; (ii) expected dividend returns; (iii) forecast share priceat the vesting date; (iv) the probability that Group performance conditions would be met; and (v) the interest rate used to calculate thenon-transferability discount.Note 12d - Treasury sharesShare buyback programmes have been authorised every year by Annual General Meetings since 2003. The purposes and terms and conditionsof these programmes were set out in the resolutions of these meetings.On 21 June 2006, a liquidity contract was set up covering an initial maximum amount of €4 million, and increased to €8 million on21 January 2008. The purpose of this contract is to improve both the liquidity of the Sequana share and the regularity of its quotationson the Eurolist market of NYSE Euronext Paris. On 28 April 2011, the Group amended the liquidity contract negotiated with OddoCorporate Finance and reduced the maximum amount to €6 million.At 31 December 2012, the 109,035 Sequana shares (par value of €9 each) held by the Company under the liquidity contract – representing€0.9 million – were recognised as a deduction from equity (325,003 shares [par value of €1.50 each] at 31 December 2011, representing€1.1 million). Net losses of €0.8 million in 2012 and of €2.7 million in 2011 on disposal of treasury shares were recognisedin retained earnings.Note 12e - Cumulative translation adjustmentThis caption can be analysed as follows:(€ millions) US Dollar Pound sterling Other currencies (1) TotalAt 1 January 2011 (3) (76) 31 (48)Movements during the year (1) 3 (15) (13)At 31 December 2011 (4) (73) 16 (61)Movements during the year – 4 2 6At 31 December 2012 (4) (69) 18 (55)(1) In 2012, mainly the Brazilian real, the Chilean peso and the Polish zloty.Note 12f - Dividends paidNo dividend was paid by Sequana to its shareholders in 2011 and 2012, subject to shareholder approval at the Annual General Meetingof 27 June 2013.Sequana | 2012 Document de référence (English version) | 123

4Financial position – resultsNotes to the consolidated financial statementsNote 13 - Earnings per shareThe reconciliation between basic earnings per share and diluted earnings per share is as follows:2012Net loss(in € millions)Weighted average numberof shares during the yearLoss per share(in €)Net loss attributable to owners (119) 20,405,216 (5.85)Impact of stock options (1) – – –Impact of share award plans – – –Net loss attributable to owners – diluted (119) 20,405,216 (5.85)2011Net loss(in € millions)Weighted average numberof shares during the yearLoss per share(in €)Net loss attributable to owners (77) 12,473,881 (6.18)Impact of stock options (1) – – –Impact of share award plans – – –Net loss attributable to owners – diluted (77) 12,473,881 (6.18)(1) Based on the average Sequana share price for 2011 and 2012, non-dilutive instruments correspond to the stock option plans described in Note 12b. At 31 December 2012,they represented a total number of 244,441 potential non-dilutive shares (2011: 1,005,222 shares).The average diluted and undiluted number of shares outstanding is calculated as follows:2012 2011Number of shares at 31 December (see Note 12a) 25,009,372 49,545,002Number of shares at 31 December after the reverse stock split (3) 25,009,372 8,257,500Weighted impact of the changes over the period (4) (8,700,893) 78,957Weighted impact of treasury shares over the period (see Note 12d) (6,884) (48,164)Application of coefficient linked to the conditions of the capital increase (5) 4,103,621 4,185,588Weighted average number of shares - undiluted 20,405,216 12,473,881Impact of share award plans (2) – –Weighted average number of shares - diluted 20,405,216 12,473,881(2) The impact of share award plans has not been included at 31 December 2012 or 31 December 2011 due to their anti-dilutive effect at these dates.(3) The reverse stock split which took place in November 2012 (described in Note 12a) has been applied retroactively at 1 January 2011 and to all movements sincethat date to ensure the comparability of the average number of shares outstanding for the two periods used in the calculation of earnings per share.(4) The two capital increases described in Note 12a have been treated as follows in the calculation of the average number of shares:- the shares issued on 30 April 2012 by deduction from a reserves account with no impact on cash. These shares were included in the entire period from 1 January 2011to 31 December 2012;- the shares issued as part of the share capital increase of 9 July 2012 were weighted on a time-proportion basis.(5) In accordance with IAS 33, the diluted and undiluted number of shares outstanding in 2011 and up to 9 July 2012 has been restated to reflect the impact of a share issueprice that was less than the market price at the date of the share capital increase, i.e., 13 June 2012, with pre-emptive subscription rights maintained for existing shareholders.Note 14 - Non-controlling interestsThe Group has not had any material non-controlling interests since 2010.124 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Note 15 - ProvisionsAnalysis by type of provision(€ millions)Current portionNon-current portion31/12/2012 31/12/2011 31/12/2012 31/12/2011Restructuring costs 19 10 5 13Litigation and environmental contingencies 3 9 8 5Pensions and other post-employment benefits 9 12 133 115Other provisions (1) 10 5 18 13CLOSING BALANCE 41 36 164 146(1) “Other provisions” mainly comprise a provision of €8 million for accrued rent due on miscellaneous premises and warehouses, partially or completely vacantat 31 December 2012. They also include a provision related to the sale of Arjowiggins’ carbonless paper business in 2009 amounting to €6 million (2011: €9 million).The balance consists of a number of different non-material amounts.Expected maturity of non-current provisions31 December 2012 31 December 2011(€ millions)1 to 5 years More than 5 years 1 to 5 years More than 5 yearsRestructuring costs 5 – 7 6Litigation and environmental contingencies 6 2 3 2Pensions and other post-employment benefits 17 116 5 110Other provisions 15 3 8 5CLOSING BALANCE 43 121 23 123Movements in provisions in 2012(€ millions) Opening balance AdditionsReversals Reversals(utilised provisions) (surplus provisions)Changes in scopeof consolidation Other (1) Closing balanceRestructuring costs 23 23 (16) (2) (1) (3) 24Litigation and environmental contingencies 14 3 (5) – – (1) 11Pensions and other post-employment benefits 127 12 (15) – (1) 19 142Other provisions 18 11 (7) – – 6 28TOTAL 182 49 (43) (2) (2) 21 205Impact on income statement captionsAdditions to and reversals of provisions(recurring operating income)– 13 (5) – – – –Other operating income and expenses – 36 (38) (2) – – –(1) This column comprises (i) a negative amount of €1 million corresponding to translation adjustments; (ii) a positive €24 million corresponding to actuarial gains and lossesrecognised through equity in accordance with IAS 19; and (iii) miscellaneous adjustments for a negative amount of €2 million.Sequana | 2012 Document de référence (English version) | 125

4Financial position – resultsNotes to the consolidated financial statementsMovements in provisions in 2011(€ millions) Opening balance AdditionsReversals Reversals(utilised provisions) (surplus provisions)Changes in scopeof consolidation Other (1) Closing balanceRestructuring costs 22 25 (21) (1) (1) (1) 23Litigation and environmental contingencies 18 2 (5) (1) – – 14Pensions and other post-employment benefits 111 6 (16) (18) (11) 55 127Other provisions 22 2 (5) - - (1) 18TOTAL 173 35 (47) (20) (12) 53 182Impact on income statement captionsAdditions to and reversals of provisions(recurring operating income)– 8 (11) (18) – – –Other operating income and expenses – 27 (36) (2) – – –(1) This column comprises (i) a positive amount of €2 million corresponding to translation adjustments; (ii) a positive €52 million corresponding to actuarial gains and lossesrecognised through equity in accordance with IAS 19; and (iii) miscellaneous adjustments for a negative amount of €1 million.Investigation into anti-trust practices in the envelope sectorSince September 2010, both the EU and national competitionauthorities have been investigating horizontal cartel arrangementsin the envelope sector. Antalis’ Spanish envelope productionplant and Hispapel, a Spanish marketing entity in whichit has a non-controlling interest, have been inspected by theSpanish competition authorities.Two successive reports issued by the Spanish CompetitionAuthority’s investigations department in 2012 concluded thatanti-trust practices existed on the envelope market in Spain andon the export market. The reports allege that Antalis EnvelopesManufacturing SL and Antalis International (in its capacity asparent company only) engaged in such practices, however thereports also recommended that the two entities should be treatedleniently and that the applicable sanctions be reduced by between30% and 50% due to the group’s cooperation with the authoritiesin the conduct of their investigations.On 15 October, the Spanish Competition Authority handeddown a decision in which it found that Antalis EnvelopesManufacturing SL had engaged in horizontal cartel arrangementson the export market for envelopes as part of Hispapel andordered it to pay a fine of €0.5 million. This amount includes areduction of 40% (the initial fine was for €0.7 million) in recognitionof Antalis’ cooperation with the Spanish authorities in helpingto determine the truth of the matter. The joint responsibilityof Antalis International was not invoked. Antalis EnvelopesManufacturing SL joined the appeal launched by other companieswho had received fines in order to protect its interests, withoutcontesting the fine, which it paid on 3 December 2012.As of 31 December 2012, the Spanish Competition Authorityhad not handed down a decision concerning the Spanish domesticmarket for envelopes on which Antalis Envelopes ManufacturingSL generated the bulk of its sales. A decision is expected in thefirst-half of 2013. Chapter 3 of this Registration Document alsodescribes the progress of this case, and any recent events whichhave taken place between the approval of the financial statementsby the Group’s Board of Directors and the date the documentis filed with the French financial markets regulator (Autorité desmarches financiers – AMF).126 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Note 16 - Employee benefitsPreliminary remark: The four-year information required under IAS 19 has not been provided in this note for 2010 and 2009 but is containedin the 2010 Registration Document which is incorporated by reference into this report.Change in the projected benefit obligation(€ millions)Pension benefitobligations2012 2011Other long-termbenefitsTotalPension benefitobligationsOther long-termbenefitsProjected benefit obligation at start of year 1,192 2 1,194 1,087 5 1,092Service cost 12 - 12 11 - 11Interest cost 54 - 54 55 - 55Employee contributions 2 - 2 2 - 2Curtailments and settlements (1) - (1) (13) - (13)Changes to plan - - - (19) - (19)Acquisitions/disposals - - - (9) (3) (12)Actuarial (gains) and losses 100 - 100 99 - 99Benefits paid (59) - (59) (52) - (52)Other (translation adjustments) 16 - 16 31 - 31Projected benefit obligation at end of year 1,316 2 1,318 1,192 2 1,194Projected benefit obligation at end of year:Partially or totally funded 1,276 – 1,276 1,157 – 1,157Unfunded 40 2 42 35 2 37Change in plan assets (1)(€ millions)Pension benefitobligations2012 2011Other long-termbenefitsTotalPension benefitobligationsOther long-termbenefitsFair value of plan assets at start of year 1,193 – 1,193 1,075 – 1,075Expected return on plan assets 55 – 55 55 – 55Employer contributions 33 – 33 32 – 32Employee contributions 2 – 2 2 – 2Acquisitions/disposals – – – (1) – (1)Settlements – – – (7) – (7)Benefits paid (59) – (59) (52) – (52)Actuarial gains and (losses) 39 – 39 56 – 56Other (translation adjustments) 20 – 20 33 – 33Fair value of plan assets at end of year 1,283 – 1,283 1,193 – 1,193Actual return on plan assets 7.89% – – 10.29% – –Composition of plan assets (%)Equities 32.32% – – 32.03% – –Bonds 53.00% – – 55.28% – –Other 14.68% – – 12.69% – –(1) These assets do not include any property occupied or asset used by the Group or any equity or debt instrument of the Sequana Group.TotalTotalSequana | 2012 Document de référence (English version) | 127

4Financial position – resultsNotes to the consolidated financial statementsFinancial surplus or deficit(€ millions)Pension benefitobligations2012 2011Other long-termbenefitsTotalPension benefitobligationsOther long-termbenefitsFinancial surplus or deficit (33) (2) (35) 2 (3) (1)Ceiling on amount of plan assets (15) – (15) (11) – (11)Net amount recognised (48) (2) (50) (9) (3) (12)Breakdown by geographical areaUnited Kingdom 65 – 65 76 – 76Other European Union countries (62) (2) (64) (40) (2) (42)Switzerland (1) – (1) 4 (1) 3North America (47) – (47) (46) – (46)Other countries (3) – (3) (3) – (3)TotalReconciliation of financial surplus/(deficit) with the figures reported in the statementof financial position for employee benefits(€ millions) 2012 2011Provisions for pension and other employee benefit obligations (see Note 15) (142) (127)Other assets related to employee benefits (see Note 10) 91 114Amounts for subsidiaries not subject to IAS 19 on grounds of non-materiality or outside the scope of application of IAS 19 1 1NET AMOUNT RECOGNISED (50) (12)Analysis of amounts recognised in the statement of comprehensive income(€ millions)Items recognised in the statement of comprehensive income during the yearPension benefitobligations2012 2011TotalPension benefitobligationsActuarial (gains) and losses (1) 61 61 43 43Surplus cap impact 4 4 (5) (5)TOTAL 65 65 38 38(1) The €61 million in net actuarial losses for 2012 consists of €100 million in actuarial losses on the projected benefit obligation and €39 million in actuarial gains on planassets. In 2011, there were net actuarial losses of €43 million, comprising actuarial losses on the projected benefit obligation of €99 million and €55 million in actuarial gainson plan assets.(€ millions)Cumulative actuarial (gains) and losses recognised in equityPension benefitobligations2012 2011TotalPension benefitobligationsAt 1 January 84 84 41 41Actuarial (gains) and losses arising during the year 61 61 43 43At 31 December 145 145 84 84TotalTotal(€ millions)Analysis of experience (gains) and losses arising during the yearPension benefitobligations2012 2011TotalPension benefitobligationsExperience (gains) and losses – projected benefit obligation 28 28 18 18Experience (gains) and losses – plan assets (39) (39) (56) (56)Total (11) (11) (38) (38)Total128 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Analysis of net expense(€ millions)Pension benefitobligations2012 2011Other long-termbenefitsTotalPension benefitobligationsOther long-termbenefitsService cost 12 – 12 11 – 11Interest cost 54 – 54 55 – 55Expected return on plan assets (55) – (55) (55) – (55)Past service cost – – – (19) – (19)Amortisation of actuarial (gains) and losses – – – – – –Impact of settlements and curtailments (1) – (1) (6) – (6)TOTAL NET EXPENSE 10 – 10 (14) – (14)TotalAssumptions usedTo determine the benefit obligation at 31 DecemberPension benefitobligations2012 2011Other long-termbenefitsPension benefitobligationsOther long-termbenefitsDiscount rate including inflation 3.98% 2.83% 4.60% 4.27%Expected rate of increase in salaries 3.39% 2.00% 3.48% 1.95%Expected rate of return on plan assets 4.04% – 4.71% –Rate of increase in pension benefits 2.63% – 2.88% –Rate of inflation of medical costs 7.75% – 7.60% –To determine the expense for the yearDiscount rate including inflation 4.60% 4.27% 5.23% 4.56%Expected rate of increase in salaries 3.48% 1.95% 3.86% 2.07%Expected rate of return on plan assets 4.71% – 5.35% –Rate of increase in pension benefits 2.88% – 2.34% –Rate of inflation of medical costs 7.60% – 6.80% –Breakdown of assumptions used by geographical area2012 UK Other EU countries Switzerland Norway North AmericaDiscount rate including inflation 4.31% 3.00% 2.00% 3.50% 4.00%Expected rate of increase in salaries 4.13% 2.55% 1.50% 3.50% –Expected rate of return on plan assets 4.31% 3.00% 2.00% 3.50% 4.00%Rate of increase in pension benefits 2.67% 2.00% – – 2.00%2011 UK Other EU countries Switzerland Norway North AmericaDiscount rate including inflation 4.75% 4.75% 2.75% 2.75% 4.50%Expected rate of increase in salaries 4.09% 2.87% 1.50% 4.00% –Expected rate of return on plan assets 4.56% 4.38% 3.63% 5.40% 8.00%Rate of increase in pension benefits 2.95% 2.00% – – 2.00%Sequana | 2012 Document de référence (English version) | 129

4Financial position – resultsNotes to the consolidated financial statementsSensitivity of assumptionsOn all employee benefit obligations(€ millions)Benchmarkdiscount rate -0.50%Benchmarkdiscount rateBenchmarkdiscount rate +0.50%Fair value of benefit obligation at 31 December 2012 1,426 1,316 1,215Service cost for 2013 14 12 11On UK and US employee benefit obligations only(€ millions)Benchmarkdiscount rate -0.50%Benchmarkdiscount rateBenchmarkdiscount rate +0.50%Fair value of benefit obligation at 31 December 2012 1,005 1,070 1,143Service cost for 2013 5 6 6Sensitivity of healthcare benefit obligationsto a 1% increase/decrease in medical costsA 1% increase/decrease in medical costs would not have a materialimpact on the Group’s benefit obligations at 31 December 2012or on the service cost for 2013.Estimated contributions for 2013The amount of contributions payable by the Group in respect ofpension benefit obligations for 2013 is estimated at €36 million,of which €32 million relates to the UK.Impacts of the transition to the amended IAS 19The amended IAS 19 published in June 2011 was adopted by theEuropean Union in June 2012 and is effective from 2013 at thelatest. Accordingly, Sequana must apply the new rules introducedby the amended standard as from 2013.Since application of the amended IAS 19 is retrospective, IAS 8requires first-time application as of the start of the earliest priorperiod presented, i.e., 1 January 2012 in the 2013 consolidatedfinancial statements.The application of the amended IAS 19 would have had the followingimpacts on the 2012 consolidated financial statements:■■at 1 January 2012, the recognition of any existing unrecognisedpast service cost against equity would have resulted in a loss of€0.7 million;■■changes to the method of calculating the return on planassets would have resulted in an additional expense of around€6.7 million in the income statement, offset by gains for thesame amount in equity;■■no material impact would have resulted from expensing taxesand administration costs since the main expense items hadalready been provisioned/recognised in accordance with theamended standard.Actuarial gains and losses must be recognised directly in equity(other comprehensive income) under the amended standard.Since this method was already applied by Sequana prior to thestandard’s publication, this change would have had no impact onthe consolidated financial statements.Return on plan assetsUnder the amended IAS 19, the expected return on plan assetsused to calculate pension cost for 2013 is equal to the discount rate.Impact of the application of IFRIC 14In accordance with IFRIC 14, as of 31 December 2012:■■The Group booked an additional provision for an onerousobligation on the McNaughton Papers and Modo Merchantsdefined benefit pension plans in the UK for which no surpluswill accrue to the employer. Based on the present value of theprojected funding requirements for the two pension plan deficits,€11.7 million was booked for McNaughton Papers and€3.4 million for Modo Merchants.Discount ratesDiscount rates for each monetary zone were determined basedon yields at 31 December 2012 on high quality corporate bondsrated AA or above, with maturities that correspond to the averagematurities of the Group’s obligations in each zone.130 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Obligations under defined benefit plansPension benefit obligations cover the payment of pensions, supplementarypensions and lump-sum payments on retirement.The Group’s main pension benefit obligations concern the UnitedKingdom, the United States, France and Switzerland. Thesecountries represent 93% of the Group’s total employee benefitobligations.In the United Kingdom, the principal defined benefit obligationsarise under four pension plans:■■the Arjo UK Pension Scheme (AWS), which covers certainemployees of Antalis in the UK (depending on their location).It was closed to new entrants in 2005, and was replaced by adefined contribution plan;■■the Wiggins Teape Scheme (WTPS), which now only coversformer employees of the UK subsidiaries of Antalis andArjowiggins (early retirees or retirees);■■the Antalis Pension Scheme (APS), which covers currentemployees of the UK subsidiaries of Antalis and Arjowiggins;■■the James McNaughton and Modo Merchants pension plans,which cover former employees (early retirees or retirees) of thesubsidiaries of the sub-group James McNaughton.In the United States, the principal benefit obligations of theGroup subsidiary Appleton Coated LLC arise under two postemploymentbenefit plans:■■defined benefit pension plans (three plans);■■post-employment healthcare plans (three plans).In France, the two main defined benefit plans are:■■the RCR supplementary defined benefit plan for certain managersof Arjowiggins. This plan has been closed to new entrantssince 1981; and■■the lump-sum retirement payment plan.In Switzerland, the main plan is the Pensionskasse, a definedbenefit plan covering Antalis’ Swiss-based employees.The Sequana Group’s UK subsidiaries have defined benefit plansin place. More specifically, the Wiggins Teape Pension Scheme(WTPS) is managed by a board of three trustees. Each year, thetrustees recalculate the plan funding deficit based on the advice ofan actuary and they may unilaterally request additional employercontributions for the purpose of eliminating the shortfall overtime.The trustees may also require employers to provide guaranteeswhen they consider this appropriate and Sequana, Antalis andArjowiggins provided joint and several guarantees in respect ofthe WTPS and APS plans (see Note 31).In accordance with IFRS, provisions have been recorded to coverthe full amount of the Group’s obligations relating to the UK pensionfund, determined using the actuarial assumptions describedabove. For the purposes of the financial statements, the outstandingbalance of the additional contribution requested by the trusteesis included in the annual calculation of the pension provision.Note 17 - Debt17a - Breakdown of debt by maturity(€ millions) Less than 1 year 1 to 5 years More than 5 years TotalShort-term bank borrowings and overdrafts 9 – – 9Other bank borrowings 28 663 – 691Finance lease obligations 4 9 3 16Other 5 2 – 7AT 31 DECEMBER 2012 46 674 3 723Short-term bank borrowings and overdrafts 20 – – 20Other bank borrowings 882 7 5 894Finance lease obligations 3 9 7 19Other 1 – – 1AT 31 DECEMBER 2011 906 16 12 934Sequana | 2012 Document de référence (English version) | 131

4Financial position – resultsNotes to the consolidated financial statements17b - Breakdown of debt by interest rate(€ millions) Below 3%Between3% and 4%Between4% and 5%Between5% and 7.5% Over 7.5% TotalShort-term bank borrowings and overdrafts 5 3 1 – – 9Other bank borrowings 24 661 – 1 5 691Finance lease obligations 2 – 14 – – 16Other 7 – – – – 7AT 31 DECEMBER 2012 38 664 15 1 5 723Short-term bank borrowings and overdrafts 12 7 – 1 – 20Other bank borrowings 858 – 29 7 – 894Finance lease obligations 4 – 14 – 1 19Other 1 – – – – 1AT 31 DECEMBER 2011 875 7 43 8 1 93417c - Analysis of debt by main currencies(€ millions) EUR GBP USD Other TotalShort-term bank borrowings and overdrafts 3 – 6 – 9Other bank borrowings 681 – 2 8 691Finance lease obligations 15 – – 1 16Other 1 – 5 1 7AT 31 DECEMBER 2012 700 – 13 10 723Short-term bank borrowings and overdrafts 6 1 9 4 20Other bank borrowings 782 61 – 51 894Finance lease obligations 18 – – 1 19Other 1 – – – 1AT 31 DECEMBER 2011 807 62 9 56 934a/ Change in contractual terms of use applicableto credit and liquidity linesThe availability of the renewed credit lines is contingent on eachborrower complying with several covenants that will be tested ona regular basis and are described below. The income and cash flowindicators used for the covenants are all calculated over a rolling12-month period. Those indicators not already included in theconsolidated financial statements are defined as follows:EBITDA: recurring operating income before depreciation andamortisation and excluding movements in provisions.Free cash flow: sum of EBITDA, changes in working capital,capital expenditure, impacts on net debt of other operatingincome and expenses, taxes, amounts received in respect of thecapital increase and one-off contributions to underfunded pensionplans.The Group complied with all of the ratios specified by these covenantsat the three test dates in 2012 (30 June, 30 September and31 December).ArjowigginsOn 30 April 2012, the syndicated credit facility signed in 2007by Arjowiggins and due to expire in July 2012 was extended fora further two-year period through to 30 June 2014 for its initialamount (€400 million).Changes in the contractual terms and conditions set out in theextended agreement concern compliance with the following covenantsin particular:■■Consolidated net debt/consolidated EBITDA (leverage):at 30 June 2012 < 6.15at 30 September 2012 < 5.85at 31 December 2012 < 4.50at 31 March 2013 < 4.50at 30 June 2013 < 3.75at 30 September 2013 < 4.25at 31 December 2013 < 3.50at 31 March 2014 < 3.60■ ■ Consolidated EBITDA/consolidated net interest expenseexcluding deferred interest expense (interest cover):Tested half yearly. Must be ≥ 3.0.132 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4■■Consolidated free cash flow/consolidated net interest expense(debt service cover):Tested annually. Must be ≥ 1.1.■ ■ Minimum level of consolidated equity excluding changes forthe period attributable to translation adjustments, actuarialgains and losses and fair value adjustments:Tested half yearly as of 31 December 2012, and the minimumlevel of consolidated equity must be ≥ €10 million.■■Maximum level of capital expenditure:at 31 December 2012at 31 December 2013at 31 December 2014€50 million€50 million€45 millionIn order to reflect changes in interest rates since 2008 that hadnot been factored into the previous agreement, the interest marginon euro-denominated drawdowns was reset at 4.1%. A portionof the interest due has been partially deferred until theexpiration date in June 2014 as follows: 2.5% of interest deferredfor 2012; 2.0% for 2013; and 1.0% for 2014. The recognised interestexpense for 2012 (€6.5 million) will only be paid on expiry ofthe agreement.AntalisOn 30 April 2012, the syndicated credit facility signed in 2007 byAntalis and due to expire in October 2012 was extended for a furthertwo-year period through to 30 June 2014 for an amount of€560 million. A portion of this facility is repayable in €20 milliontranches, in 2012, 2013 and 2014.After depreciation of the 2012 tranche, this credit facility wasreduced to €540 million at 31 December 2012.Guarantees and collateral arrangements remain unchanged, particularlythe pledge of trade receivables.The extended 30 April 2012 agreement also stipulates that Antalismust comply with the following financial covenants:■■Consolidated net debt/EBITDA (leverage):at 30 June 2012 < 3.50at 30 September 2012 < 5.00at 31 December 2012 < 3.25at 31 March 2013 < 4.75at 30 June 2013 < 3.25at 30 September 2013 < 4.00at 31 December 2013 < 2.50at 31 March 2014 < 3.75■■Consolidated net debt/equity (gearing):Tested half yearly. Must be ≤1.1.■■Consolidated recurring operating income/net interest expense(interest cover):at 30 June 2012 ≥ 3.00at 31 December 2012 ≥ 2.50at 30 June 2013 ≥ 2.75at 31 December 2013 and thereafter ≥ 3.00In order to reflect changes in interest rates since 2008 that had notbeen factored into the previous agreement, the interest margin oneuro-denominated drawdowns was reset at between 2.35% and4.0%, depending on the average consolidated net debt/EBITDAratio.SequanaOn 30 April 2012, the bilateral credit line granted to Sequana bya top-ranking bank was extended for a further two-year periodthrough to 30 June 2014 for an amount of €36 million.Annual amortisation payments of €1.2 million were scheduledfor 2012 and 2013.The agreement also stipulates that Sequana must comply with thefollowing covenants:■■Consolidated net debt/EBITDA (leverage):at 30 June 2012 < 6.00at 31 December 2012 < 5.00at 30 June 2013 < 4.75at 31 December 2013 < 4.00■■Consolidated net debt/equity (gearing):at 30 June 2012 ≤ 1.3at 31 December 2012 ≤ 1.2at 30 June 2013 ≤ 1.2at 31 December 2013 ≤ 1.1■■Consolidated EBITDA/net interest expense excluding deferredinterest expense (interest cover):Tested half yearly. Must be ≥ 3.0.In order to reflect changes in interest rates that had not been factoredinto the previous agreement, the interest margin was resetat 4.5%.Sequana also has an overdraft facility of up to €5 million witha top-ranking bank. This facility was confirmed and renewedthrough to 30 June 2014. Annual amortisation payments of€0.12 million were scheduled for 2012 and 2013.Under the terms of the agreement extending this facility, theGroup’s consolidated equity must be above €110 million.The interest rate on amounts drawn down was reset at 3%.b/ Accounting impacts of the refinancingThe renewal of these credit lines was accounted for as an extinguishmentof debt since:■■the method of calculating interest has been substantiallymodified;■■new bank covenants have been introduced or existing bankcovenants have been substantially modified.Accordingly, outstanding amounts repayable by Arjowiggins upto July 2012 and Antalis up to October 2012 were recogniseddirectly in financial income and expense at 30 April for a totalamount of €1.4 million.Sequana | 2012 Document de référence (English version) | 133

4Financial position – resultsNotes to the consolidated financial statementsThe renewal and operating costs associated with the facilities areaccounted for as follows in the consolidated financial statements:■■all costs directly attributable to the facilities (€13.6 million)were capitalised (as part of the amortised cost) and are taken tothe income statement on a straight-line basis over the contractualterm of the liability as ongoing liquidity financing. Thisresulted in an expense of €4 million in 2012;■■recurring brokers’ fees, along with drawdown and commitmentfees are recognised in the income statement as and when theyarise and are not capitalised.As the transaction was accounted for as an extinguishment andsimultaneous renewal of a liability, the Group was able to maintainthe hedging relationship for interest rate derivatives hedgingdrawdowns on its former credit lines. These derivatives had allexpired at 31 December 2012.Note 18 - Financial instruments18a - Breakdown of statement of financial position captions by IAS 39 financial instrument category(€ millions) Note31/12/2012 Valuation by category of instrument (1)CarryingamountFairvalueFinancialassets at fairvalue throughprofit or lossAvailable-forsalefinancialassetsLoans andreceivablescarried at Held-to maturityamortised cost investmentsFinancialliabilitiescarried atamortised costDerivativeinstrumentsNon-current financial assets 8 13 13 7 – 6 – –Other non-current assets 10 99 99 – – 99 – – –Trade receivables 10 523 523 – – 523 – – –Other receivables 10 120 120 – – 120 – – –Current financial assets 8 8 8 – 8 – – –Cash and cash equivalents 11 183 183 183 – – – – –Long-term debt 17 677 677 – – – – 677 –Other non-current liabilities 20 3 3 – – – – 2 1Short-term debt 17 46 46 – – – – 46 –Trade payables 20 622 622 – – – – 622 –Other payables 20 244 244 – – – – 245 –(1) Instruments are broken down depending on the different valuation techniques used, such as the levels used in IFRS 7:• Level 1 (direct reference to market prices): only applicable to cash and cash equivalents at fair value through profit or loss;• Level 2 (valuation technique based on observable data): applicable to all of the Group’s other financial assets and liabilities, which may or may not be derivatives,and which must be measured at fair value; it consists of all derivative instruments used by the Group and assets and liabilities at fair value through profit or loss excluding cash.(€ millions) Note31/12/2011 Valuation by category of instrument (1)CarryingamountFairvalueFinancialassets at fairvalue throughprofit or lossAvailable-forsalefinancialassetsLoans andreceivablescarried at Held-to maturityamortised cost investmentsFinancialliabilitiescarried atamortised costDerivativeinstrumentsNon-current financial assets 8 12 12 6 – – 6 – –Other non-current assets 10 115 115 – – 115 – – –Trade receivables 10 558 558 – – 558 – – –Other receivables 10 122 122 – – 120 – – 2Current financial assets 8 11 11 2 – 8 1 – –Cash and cash equivalents 11 323 323 323 – – – – –Long-term debt 17 28 28 – – – – 28 –Other non-current liabilities 20 2 2 – – – – 2 –Short-term debt 17 906 906 – – – – 906 –Trade payables 20 631 631 – – – – 631 –Other payables 20 236 236 – – – – 233 3(1) Instruments are broken down depending on the different valuation techniques used, such as the levels used in IFRS 7:• Level 1 (direct reference to market prices): only applicable to cash and cash equivalents at fair value through profit or loss;• Level 2 (valuation technique based on observable data): applicable to all of the Group’s other financial assets and liabilities, which may or may not be derivatives, and whichmust be measured at fair value; it consists of all derivative instruments used by the Group and assets and liabilities at fair value through profit or loss excluding cash.134 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Methods and assumptions used to measure financialinstrumentsThe best indicator of the fair value of a contract is the price thatwould be agreed upon by a buyer and a seller acting under arm’slength conditions. This is generally the transaction price at thetrade date. The contract is subsequently measured using observablemarket data that provide the most reliable indicator of fairvalue.The fair value of derivative instruments is determined as follows:■■interest rate swaps are measured by discounting contractualcash flows to present value;■■options are measured using option pricing models such as theBlack & Scholes method that use quoted prices from an activemarket and/or prices supplied by outside financial institutions;■■forward currency contracts are measured by discounting thedifferential future cash flows to present value;■■commodity derivatives are valued as follows:• futures traded on an organised market are marked to market;• swaps and forward contracts traded over the counter: futurecash flows are discounted to present value;• options are measured using mathematical option pricingmodels.The fair value of debt is measured using the amortised costmethod.Trade receivables and payables are measured at their carryingamount. Discounting “Trade payables” and “Trade receivables”balances to present value does not materially impact their fairvalue due to the very short payment and settlement terms applied.The information used for the financial instruments recorded in fairvalue in assets/liabilities is provided by external counterparties.18b - Treasury management - Financial instrumentsAnalysis of debtConsolidated debt – which represented a gross amount of €723 million at 31 December 2012 (31 December 2011: €934 million) – is financedon an individual basis within the Group’s holding companies and subsidiaries. Consolidated net debt totalled €538 million at end-2012 (end-2011: €609 million) and is carried in the following statement of financial position captions:(€ millions) 31/12/2012 31/12/2011Debt (Note 17) 723 934Cash and cash equivalents (Note 11) (183) (323)Other marketable securities (Note 8) (2) (2)NET DEBT 538 609Analysis by business segment:(€ millions) 31/12/2012 31/12/2011Antalis 245 226Arjowiggins 275 314Holding companies 18 69NET DEBT 538 609Analyses by maturity and by currency are provided in Note 17.The following section provides details of current financingarrangements for each entity.ArjowigginsArjowiggins’ gross debt amounted to €351 million at the end of2012 (end-2011: €435 million). Of this total, 94.1% representeddrawdowns on the €400 million confirmed and syndicated creditline described in Note 17.At 31 December 2012, the Group had drawn down €330 million ofthis credit facility and the average outstanding amount over theyear was €389 million. The weighted average maturity of drawdownsin 2012 was 32 days.In addition to this renegotiated confirmed credit facility,Arjowiggins SAS’ pool of banks has granted it unconfirmedoverdraft facilities of up to €52 million. These facilities had notbeen availed of at 31 December 2012.In 2012, Arjowiggins also received financing through its deconsolidatingfactoring programmes (see below).At 31 December 2012, the group had raised a net amount of€79 million under the programme which helped to reduce its netdebt. The amount raised in 2011 was €97 million.Sequana | 2012 Document de référence (English version) | 135

Financial position – resultsNotes to the consolidated financial statements 4Note 18c - Risk management – interest rate risk, foreign exchange risk, equity price risk,commodity price risk, credit risk and liquidity riskFair value of financial instrumentsIn order to hedge against fluctuations in interest rates, exchange rates and commodity prices, the Sequana Group uses derivatives. Someof these qualify for hedge accounting as cash flow hedges. At 31 December 2012, these derivatives are carried in assets and liabilitiesfor the following fair value amounts:(€ millions) Current assets Non-current assets Current liabilities Non-current liabilities Total fair valueInterest rate derivatives – – – (0.5) (0.5)Exchange rate derivatives – – (0.3) – (0.3)Commodity derivatives – – – – –TOTAL – – (0.3) (0.5) (0.8)At 31 December 2012, the fair value of these derivatives was split between equity accounts and the income statement as follows:(€ millions) Fair value through equity Fair value through profit or loss Total fair valueInterest rate derivatives (0.5) – (0.5)Exchange rate derivatives 0.7 (1.0) (0.3)Commodity derivatives – – –TOTAL 0.2 (1.0) (0.8)At 31 December 2012, the fair value of derivatives that qualify as cash flow hedges recognised through other comprehensive income wasoffset by a net asset of €0.2 million, compared to a net liability of €5.6 million at 31 December 2011.This total change in fair value of €5.8 million was recognised directly in equity.Risk managementInterest rate riskThe Group manages the finances of each subsidiary, along with the related interest rate risk, on a centralised basis tailored to each individualentity.The Group is exposed to interest rate risk on its debt as its primary sources of financing are at floating rates of one, two or three monthsin the currency concerned (Euribor for the euro and Libor for the US dollar and pound sterling). Derivatives are used to manage thisexposure (mainly swaps and collars).The following table shows the notional amounts and fair values of the Group’s portfolio of interest rate derivatives at 31 December 2012:MaturityFair valuethrough equityFair valuethrough profit or lossTotal fair valueTypeBuyer/seller position< 1 year between 1 and 2 years (€ millions) (€ millions)Pay leg (fixed rate) – €200m – – –Swap € – – (0.5) – (0.5)Receive leg(floating rate)– €200m – – –TOTAL – – (0.5) – (0.5)All of the derivatives in the table are eligible for hedge accounting. The ineffective portion of the interest rate hedges is not material.In 2012, a negative amount of €3.8 million was recycled from equity to profit or loss as a result of interest rate hedging.Sequana | 2012 Document de référence (English version) | 137

4Financial position – resultsNotes to the consolidated financial statementsFixed versus floating rate debtConsolidated debt (as defined by the Group) can be broken down between fixed and floating rate debt as follows (not including theimpact of hedging):(€ millions) 31/12/2012 31/12/2011Floating rate debt 694 928Fixed rate debt 29 6TOTAL (EXCLUDING ACCRUED INTEREST) 723 934Consolidated debt including the impact of hedging can be broken down between fixed and floating rate debt as follows:(€ millions) 31/12/2012 31/12/2011Floating rate debt 494 649Floating rate debt hedged by collars – 50Fixed rate debt 229 285TOTAL (EXCLUDING ACCRUED INTEREST) 723 934The Group has hedged 27.7% of its consolidated gross debt and 28.8% of its floating rate consolidated gross debt against interest ratefluctuations at 31 December 2012.In 2012, the average cost of bank borrowings, including the impact of these derivatives and other derivatives expired during the yearwas 3.7%.Interest rate sensitivity analysisThe interest rate sensitivity analysis included all floating rate flows from non-derivative and derivative instruments and it was assumedthat the amounts of debt and financial instruments at 31 December 2012 and at 31 December 2011 are constant over the year. For thepurposes of the analysis, all other variables, particularly exchange rates, are deemed to remain constant.A 0.5% increase or decrease in interest rates at the end of the reporting period would have the following positive (negative) impacts onequity and profit or loss (pre-tax impact).At 31 December 2012:(€ millions) Fair value sensitivitySensitivityof annual interest rate expenseType of instrumentImpact on fair valuein statement offinancial positionImpact of a 0.5% decreaseImpacton profit or lossImpact on equityImpact on fair valuein statement offinancial positionImpact of a 0.5% increaseImpacton profit or lossImpact on equityImpactof a 0.5% decreaseImpactof a 0.5% increaseDebt – – – – – – 0.7 (3.4)Factoring – – – – – – 0.4 (0.4)Derivatives (1.4) – (1.4) 1.4 – 1.4 (1.0) 1.0TOTAL (1.4) – (1.4) 1.4 – 1.4 0.1 (2.8)At 31 December 2011:(€ millions) Fair value sensitivitySensitivityof annual interest rate expenseType of instrumentImpact on fair valuein statement offinancial positionImpact of a 0.5% decreaseImpacton profit or lossImpact on equityImpact on fair valuein statement offinancial positionImpact of a 0.5% increaseImpacton profit or lossImpact on equityImpactof a 0.5% decreaseImpactof a 0.5% increaseDebt – – – – – – 4.6 (4.6)Factoring – – – – – – 0.5 (0.5)Derivatives (0.6) – (0.6) 0.6 – 0.6 (0.6) 0.6TOTAL (0.6) – (0.6) 0.6 – 0.6 4.5 (4.5)138 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Foreign exchange riskThe Group’s foreign exchange risk arises on (i) inter-companyfinancing transactions between the Antalis and Arjowigginsgroups and their subsidiaries, and (ii) commercial transactionscarried out by subsidiaries in foreign currencies. It hedges thisrisk through the use of currency options and forward currencycontracts.The foreign exchange impacts of these derivatives should be offsetby gains or losses in the income statement. The exposure onfinancing transactions between the groups and their subsidiariesis relatively limited.As regards operating activities, Antalis’ exposure to foreignexchange risk concerns subsidiaries outside of the eurozonewhose trade receivables and payables may not be denominated intheir domestic currencies, especially subsidiaries in Asia, SouthAfrica and certain Central European countries which set up theirown currency hedges.The Antalis holding company is only exposed to foreign exchangerisk on the management fees it bills to its subsidiaries which ithedges by selling currency forward. The principal exposureshedged for the holding company are positions in the followingcombinations of currencies: EUR/GBP, EUR/USD, EUR/CZK,EUR/PLN, EUR/ZAR, USD/ZAR. Antalis does not use hedgeaccounting to measure its positions and all changes in fair valueare recognised in profit or loss.Arjowiggins’ exposure to foreign exchange risk mainly ariseson the paper pulp purchases (usually billed in US dollars) andexports of the European subsidiaries. The main currency combinationsconcerned are EUR/USD and EUR/GBP for subsidiariesin the eurozone, and GBP/USD for the UK subsidiaries. TheArjowiggins holding company sets up hedges on behalf of thesubsidiaries when they place orders.In addition, in the last quarter of 2012, Arjowiggins sold forwarda portion of the 2013 forecast sales of the operational subsidiaries,as it had done in 2011. It uses hedge accounting to measurethese instruments.The main components (> €1 million) in the Group’s portfolio of exchange rate derivatives at end-2012, consisting of forward purchaseand sales and European currency options (puts and calls) are presented in the following table:TypeCurrency soldCurrencypurchasedNominal amount(in millions of currency units)MaximummaturityFair valuethrough equityFair valuethrough profitor lossTotalfair valueForward EUR USD 29.7 USD 30/09/2013 0.5 (0.9) (0.4)Forward EUR GBP 7.5 GBP 28/02/2013 – – –Forward USD GBP 17.8 GBP 28/06/2013 0.2 0.1 0.3Options ZAR USD 2.5 USD 15/03/2013 – – –Options USD ZAR 42.9 ZAR 15/03/2013 – (0.1) (0.1)Forward ZAR USD 9.2 USD 15/05/2013 – (0.1) (0.1)Forward ZAR EUR 5.6 EUR 15/04/2013 – – –Forward MYR USD 1.8 USD 19/04/2013 – – –Forward CNY USD 1.4 USD 19/04/2013 – – –Options PLN EUR 5.5 EUR 30/01/2013 – – –Forward PLN EUR 16.8 EUR 31/01/2013 – – –Forward CZK EUR 5.5 EUR 30/01/2013 – – –Options CZK EUR 1.1 EUR 19/02/2013 – – –Forward EUR CHF 15.3 CHF 07/01/2013 – – –Forward DKK EUR 4.0 EUR 31/01/2013 – – –Forward SEK EUR 1.9 EUR 31/01/2013 – – –TOTAL (IN € MILLIONS) 0.7 (1.0) (0.3)At 31 December 2012, the total fair value of these hedges was a negative€0.3 million, recognised in profit or loss in a negative amountof €1.0 million and in equity in a positive amount of €0.7 million.A negative amount of €1.7 million was recycled from equity toprofit or loss during the period in relation to currency hedges.Foreign currency sensitivity analysisForeign currency sensitivity analyses at 31 December 2012 focusedon fluctuations in EUR/GBP, EUR/USD, and GBP/USD rates,as these are the currency combinations in which the Group hassold forward a portion of 2013 sales. The Group’s exposure tofluctuations in other currency combinations was deemed too dispersedto be broken down.For the purposes of the analyses, all other variables, particularlyinterest rates, are deemed to remain constant.Sequana | 2012 Document de référence (English version) | 139

4Financial position – resultsNotes to the consolidated financial statementsExposure to fluctuations in the EUR/GBP exchange rate at 31 December 2012(€ millions)Type of asset/liabilityNominal amountCurrencyof financialinstrumentFunctionalcurrencyof entityconcernedImpacton fair value10% increase in GBPagainst the euroImpacton profit or lossImpacton equityImpacton fair value10% decrease in GBPagainst the euroImpacton profit or lossImpacton equityFinancial receivables 96.6 GBP EUR 9.7 9.7 – (9.7) (9.7) –Trade receivables (4.4) GBP EUR (0.4) (0.4) – 0.4 0.4 –Debt 110.1 GBP EUR (11.0) (11.0) – 11.0 11.0 –Trade payables (14.2) GBP EUR 1.4 1.4 – (1.4) (1.4) –Derivatives (7.5) GBP EUR 0.9 0.9 – (0.9) (0.9) –TOTAL 0.6 0.6 – (0.6) (0.6) –Exposure to fluctuations in the EUR/GBP exchange rate at 31 December 2011(€ millions)Type of asset/liabilityNominal amountCurrencyof financialinstrumentFunctionalcurrencyof entityconcernedImpacton fair value10% increase in GBPagainst the euroImpacton profit or lossImpacton equityImpacton fair value10% decrease in GBPagainst the euroImpacton profit or lossImpacton equityFinancial receivables 94.8 GBP EUR 9.5 9.5 – (9.5) (9.5) –Trade receivables (4.8) GBP EUR (0.5) (0.5) – 0.5 0.5 –Debt 110.1 GBP EUR (11.0) (11.0) – 11.0 11.0 –Trade payables (11.0) GBP EUR 1.1 1.1 – (1.1) (1.1) –Derivatives 54.6 GBP EUR (5.3) (0.5) (4.8) 5.3 0.5 4.8TOTAL (6.2) (1.4) (4.8) 6.2 1.4 4.8Exposure to fluctuations in the EUR/USD exchange rate at 31 December 2012(€ millions)Type of asset/liabilityNominal amountCurrencyof financialinstrumentFunctionalcurrencyof entityconcernedImpacton fair value10% increase in USDagainst the euroImpacton profit or lossImpacton equityImpacton fair value10% decrease in USDagainst the euroImpacton profit or lossImpacton equityFinancial receivables 20.7 USD EUR 2.1 2.1 – (2.1) (2.1) –Trade receivables 4.3 USD EUR 0.4 0.4 – (0.4) (0.4) –Debt 9.5 USD EUR (1.0) (1.0) – 1.0 1.0 –Trade payables 52.0 USD EUR (5.2) (5.2) – 5.2 5.2 –Derivatives (29.7) USD EUR 2.2 2.2 (0.4) (2.2) (2.2) 0.4TOTAL (1.5) (1.5) (0.4) 1.5 1.5 0.4Exposure to fluctuations in the EUR/USD exchange rate at 31 December 2011(€ millions)Type of asset/liabilityNominal amountCurrencyof financialinstrumentFunctionalcurrencyof entityconcerned140 | Sequana | 2012 Document de référence (English version)Impacton fair value10% increase in USDagainst the euroImpacton profit or lossImpacton equityImpacton fair value10% decrease in USDagainst the euroImpacton profit or lossImpacton equityFinancial receivables 16.0 USD EUR 1.6 1.6 – (1.6) (1.6) –Trade receivables 4.8 USD EUR 0.5 0.5 – (0.5) (0.5) –Debt 3.6 USD EUR (0.4) (0.4) – 0.4 0.4 –Trade payables 45.7 USD EUR (4.6) (4.6) – 4.6 4.6 –Derivatives (17.1) USD EUR 1.7 2.9 (1.2) (1.7) (2.9) 1.2TOTAL (1.1) 0.1 (1.2) 1.1 (0.1) 1.2

Exposure to fluctuations in the GBP/USD exchange rate at 31 December 2012(€ millions)Type of asset/liabilityNominal amountCurrencyof financialinstrumentFunctionalcurrencyof entityconcernedImpacton fair value10% increase in USDagainst the GBPImpacton profit or lossFinancial position – resultsNotes to the consolidated financial statements 4Impacton equityImpacton fair value10% decrease in USDagainst the GBPImpacton profit or lossImpacton equityFinancial receivables 1.4 USD GBP 0.1 0.1 – (0.1) (0.1) –Trade receivables 4.8 USD GBP 0.5 0.5 – (0.5) (0.5) –Debt – USD GBP – – – – – –Trade payables 0.3 USD GBP – – – – – –Derivatives 28.3 USD GBP (2.1) (0.6) (1.5) 2.1 0.6 1.5TOTAL (1.5) – (1.5) 1.5 – 1.5Exposure to fluctuations in the GBP/USD exchange rate at 31 December 2011(€ millions)Type of asset/liabilityNominal amountCurrencyof financialinstrumentFunctionalcurrencyof entityconcernedImpacton fair value10% increase in USDagainst the GBPImpacton profit or lossImpacton equityImpacton fair value10% decrease in USDagainst the GBPImpacton profit or lossImpacton equityFinancial receivables 0.8 USD GBP 0.1 0.1 – (0.1) (0.1) –Trade receivables 4.2 USD GBP 0.4 0.4 – (0.4) (0.4) –Debt 0.3 USD GBP (0.0) (0.0) – 0.0 0.0 –Trade payables (2.4) USD GBP 0.2 0.2 – (0.2) (0.2) –Derivatives 32.8 USD GBP (3.2) (0.5) (2.7) 3.2 0.5 2.7TOTAL (2.5) 0.2 (2.7) 2.5 (0.2) 2.7Equity price riskThe Group has extremely limited exposure to equity risk.Commodity and energy price risksArjowiggins’ activities expose it to risks arising from fluctuationsin the prices of paper pulp and energy which can occur extremelyrapidly, and it sets up hedges in agreement with Sequana, basedon forecast prices.As in previous years, Arjowiggins used fixed price swaps that enabledit to hedge a portion of its paper pulp requirements throughto end-2012. Arjowiggins had entered into swaps on long fibres(NBSK) and short fibres (BHKP), all of which had expired at31 December 2012 and were not renewed due to the trends anticipatedby the group in short- and medium-term paper pulp prices.An amount of €2.3 million was recycled from equity to profit orloss during the period in relation to commodity price hedges. Theimpact of the ineffective portion of the hedge in profit or loss isnot material.Credit riskCredit risk represents the risk that a customer or creditor willbreach a contractual obligation and cause the Group to incur afinancial loss. This risk primarily arises in relation to marketablesecurities and trade receivables.Counterparty risks on investments and derivativesThe Group’s financial investments are either used solely to investexcess cash drawn down under bank credit facilities or to put upcollateral for its subsidiaries. These investments primarily correspondto demand or term deposits for currencies bearing interest(USD, GBP), money market investments with the Group’sbanking partners for non-interest bearing currencies (especiallythe euro) and very limited investments in units in money marketfunds. The financial institutions that manage the investmentshave a long-term rating of at least A+ issued by Standard & Poor’sor a government guarantee, and the Group uses the same counterpartiesfor its derivative instruments.However it did not hold any such instruments at 31 December 2012.At 31 December 2012, one bank represents around 76% of theGroup’s foreign currency derivatives portfolio, its maximumconcentration.The Group’s policy is only to grant financial guarantees to whollyownedsubsidiaries.Sequana | 2012 Document de référence (English version) | 141

4Financial position – resultsNotes to the consolidated financial statementsCustomer credit riskIn view of the Group’s structure, customer credit risk managementis primarily carried out on a local and decentralised basis inboth Arjowiggins and Antalis. In 2006, Arjowiggins took out agroup insurance policy with Coface for all of its European subsidiariescovering domestic and export default risk in all of its hostcountries except the United States and China. Antalis’ credit riskinsurance contracts are taken out locally; it does not take out anymaterial contracts at group level, either through a Coface policyor another group credit policy.Customer credit risk is assessed at the level of each sub-groupbased on the size of each sub-group’s portfolio of trade receivables.The data in the following table is presented before the eliminationof inter-company transactions (mainly from Arjowiggins’books) and there is no material impairment of receivables or customerrisk within the Group.The Group’s policy is to classify receivables as past due when paymentis still outstanding 30 days after the invoice settlement date.Provisions for past due receivables are recorded on a case-by-casebasis taking into account past experience with the customer concernedand the amount outstanding.Statistical provisions may also be recorded for all receivables basedon their age.At 31 December 2012, the Sequana Group’s trade receivables representeda net value of €523 million compared to €558 million oneyear earlier. This corresponds to a gross amount of €557 million,less a €34 million provision for impairment in value (in 2011, theseamounts were €593 million and €35 million, respectively), representinga provision rate of 6.0% of the consolidated gross tradereceivables portfolio (6.0% in 2011). Consequently, the cost of baddebts in absolute terms was down slightly on 2011 while it remainedstable in terms of the proportion of the trade receivables portfoliotaken as a whole.(€ millions)Past dueBalance at31/12/2012 Not yet due 0-30 days 31-60 days 61-90 days > 90 daysDisputedreceivablesTrade receivables 556.9 438.7 73.2 11.2 3.8 6.4 23.6Provisions for impairment of trade receivables (33.6) – – (0.8) (3.3) (5.9) (23.6)Trade receivables, net 523.3 438.7 73.2 10.4 0.5 0.5 –Net receivables as a % of gross receivables 94.0% 100.0% 100.0% 92.9% 13.0% 7.3% 0.0%Net receivables as a % of total receivables portfolio 83.8% 14.0% 2.0% 0.1% 0.1%At 31 December 2012, 16.2% of total outstanding net receivables were past due and not covered by a provision for impairment, downfrom 18.4% at end-2011.Liquidity riskMaturities of cash flows relating to financial liabilitiesThe following table analyses the maturities of the future cash outflows for financial liabilities from the last drawdown dates, with principaland interest payments given separately. It also includes forecast cash flows from derivatives.At 31 December 2012, given the financing conditions described in Note 18b, the maturities of future cash outflows break down as follows:(€ millions) Type of financial liability Derivative instrumentsType of financial liabilityBankborrowings142 | Sequana | 2012 Document de référence (English version)Short-termborrowingsLeaseobligations Other Total Interest rate Commodity CurrencyCash flows due within one yearAccumulated interest (26.5) (0.3) (0.7) – (27.5) (0.3) – (0.3)Principal (27.5) (9.5) (4.0) (5.2) (46.2) – – –Cash flows due between one and two yearsAccumulated interest (13.2) – (0.6) – (13.8) (0.2) – –Principal (662.4) – (2.3) (1.7) (666.4) – – –Cash flows due between two and three yearsAccumulated interest – – (0.5) – (0.5) – – –Principal (0.8) – (2.3) – (3.1) – – –Cash flows due between three and four yearsAccumulated interest – – (0.4) – (0.4) – – –Principal – – (2.4) – (2.4) – – –Cash flows due between four and five yearsAccumulated interest – – (0.3) – (0.3) – – –Principal – – (2.5) – (2.5) – – –Cash flows due in more than five yearsAccumulated interest – – (0.3) – (0.3) – – –Principal – – (2.7) (0.1) (2.8) – – –TOTALAccumulated interest (39.7) (0.3) (2.8) – (42.8) – – –Principal (690.7) (9.5) (16.2) (7.0) (723.4) – – –

Financial position – resultsNotes to the consolidated financial statements 4At 31 December 2011:(€ millions) Type of financial liability Derivative instrumentsType of financial liabilityBankborrowingsShort-termborrowingsLeaseobligations Other Total Interest rate Commodity CurrencyCash flows due within one yearAccumulated interest (12.2) (0.6) (0.9) – (13.7) (3.5) 1.1 1.4Principal (882.7) (20.1) (4.0) (0.5) (907.3) – – –Cash flows due between one and two yearsAccumulated interest (0.8) – (0.7) – (1.5) – – –Principal (1.5) – (3.2) – (4.7) – – –Cash flows due between two and three yearsAccumulated interest (0.7) – (0.6) – (1.3) – – –Principal (1.5) – (2.5) – (4.0) – – –Cash flows due between three and four yearsAccumulated interest (0.5) – (0.5) – (1.0) – – –Principal (1.5) – (2.5) – (4.0) – – –Cash flows due between four and five yearsAccumulated interest (0.4) – (0.3) – (0.7) – – –Principal (1.5) – (2.6) – (4.1) – – –Cash flows due in more than five yearsAccumulated interest (0.6) – (0.3) – (0.9) – – –Principal (5.1) – (4.6) – (9.7) – – –TOTALAccumulated interest (15.2) (0.6) (3.3) – (19.1) – – –Principal (893.8) (20.1) (19.4) (0.5) (933.8) – – –Note 19 - Deferred taxes19a - Breakdown by period of reversal(€ millions) Less than 1 year (1) More than 1 year TOTALPosition at 31 December 2012Deferred tax assets 1 6 7Deferred tax liabilities (5) (18) (23)NET POSITION AT YEAR-END (4) (12) (16)Position at 31 December 2011Deferred tax assets – 16 16Deferred tax liabilities (7) (49) (56)NET POSITION AT YEAR-END (7) (33) (40)(1) Offsetting entries between deferred tax assets and liabilities are allocated first to deferred taxes that reverse in less than one year.Sequana | 2012 Document de référence (English version) | 143

4Financial position – resultsNotes to the consolidated financial statements19b - Deferred tax assets – movements during the year(€ millions)Provisionfor employee benefitsLosscarryforwardsOther itemsand offsets (1)At 1 January 2011 15 27 (6) 36(Expense) income for the year – (17) 6 (11)Changes in scope of consolidation – – (1) (1)Translation adjustments – (1) (9) (10)Other movements, net (5) 1 6 2AT 31 DECEMBER 2011 10 10 (4) 16(Expense) income for the year 2 3 5 10Taxes on items recognised directly in equity 3 – (6) (3)Changes in scope of consolidation – – – –Translation adjustments – – – –Other movements, net – – (16) (16)AT 31 DECEMBER 2012 15 13 (21) 7(1) Offsets between deferred tax assets and liabilities are recorded at tax group level.Total19c - Deferred tax liabilities – movements during the year(€ millions)Provisionfor employee benefitsProperty, plantand equipmentTax depreciationand provisionsOther itemsand offsets (1)At 1 January 2011 (20) (33) (32) 16 (69)(Expense) income for the year (6) 6 2 (7) (5)Taxes on items recognised directly in equity (1) – 1 – –Changes in scope of consolidation – 21 – – 21Translation adjustments (1) – – (1) (2)Other movements, net (3) (10) 6 6 (1)AT 31 DECEMBER 2011 (31) (16) (23) 14 (56)(Expense) income for the year 1 10 1 (4) 8Taxes on items recognised directly in equity 8 – – 5 13Changes in scope of consolidation – – – (3) (3)Translation adjustments (1) – – – (1)Other movements, net (1) (2) (2) 21 16AT 31 DECEMBER 2012 (24) (8) (24) 33 (23)(1) Offsets between deferred tax assets and liabilities are recorded at tax group level.Total19d - Current and deferred taxes related to items recognised directly in equity(€ millions)Actuarial gainsand lossesFair valueof financial instruments Other items TotalAt 31 December 2012 11 (1) – 10At 31 December 2011 (1) 1 – –144 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 419e - Analysis of current tax losses and tax credits for which no deferred tax assets have been recognised (1)(€ millions)Current tax losses (by originatingcountry)At 31 December 2012Expiry (in base tax amounts)Less than 1 year Between 1 and 4 years More than 4 years Unlimited Total taxable baseEstimated potentialsavingsFrance – – – 266 266 92Germany – – – 12 12 4United States – – 107 – 107 42United Kingdom – – – 44 44 10The Netherlands 1 16 49 – 66 17Czech Republic 9 6 1 – 16 3Spain – 1 28 – 29 9Poland – 1 4 – 5 1Belgium – – – 25 25 9Denmark – – – 23 23 6Turkey – 2 – – 2 1Ireland – – – 4 4 1Other countries – 4 5 21 30 3TOTAL AT 31 DECEMBER 2012 10 30 194 395 629 198At 31 December 2011France – – – 198 198 68Germany – – – 12 12 4United States – – 103 – 103 40United Kingdom – – – 44 44 11The Netherlands – 11 41 – 52 13Czech Republic 1 12 1 – 14 3Spain 1 – 27 – 28 8Poland 18 – – – 18 3Belgium – – – 22 22 8Denmark – – – 14 14 4Turkey 4 1 1 – 6 1Brazil – – – 5 5 1Other countries – – 14 12 26 6TOTAL AT 31 DECEMBER 2011 24 24 187 307 542 170(1) These items correspond to tax loss carryforwards excluding specific regimes applicable to asset disposals.Deferred tax assets are only recognised for tax loss carryforwards when their recovery is probable in the following financial year or inthe medium term (three to five years), based on earnings forecasts determined by reference to medium-term business plans for the companiesconcerned.Sequana | 2012 Document de référence (English version) | 145

4Financial position – resultsNotes to the consolidated financial statements19f - DisputesTax dispute between Boccafin and the French tax authoritiesFollowing a tax audit covering 2005 and 2006, the French taxauthorities claimed that Boccafin – formerly Permal Group – whichwas a limited partnership with share capital at that time, was notpart of the Sequana tax group and issued tax reassessment noticesfor income tax and long-term capital gains generated mostly on thedisposal of Permal shares.Following a number of exchanges, the tax authorities reiteratedtheir position at the end of 2010 and issued an assessment for thecorresponding amounts.In early 2011, the tax authorities cancelled income tax payable byBoccafin under the parent-subsidiary regime for a total amount of€13.2 million. They also upheld Sequana’s request for cancellationof income tax already paid for Boccafin at tax group level for a furtheramount of €23.4 million (excluding interest on arrears).The cost of the tax reassessment for Sequana, net of the aforementionedcancellations, would be approximately €63.6 million,including principal, late payment interest and VAT through toend-December 2012.Boccafin and its legal advisors consider these reassessments to beunfounded. They believe that the arguments they have put forwardto prove that Boccafin belonged to the Sequana tax group in 2005are sufficiently solid to ensure a favourable outcome to any subsequentdispute.In October 2011, Boccafin filed an application to initiate proceedingsin order to challenge the tax authorities’ arguments that it wasnot part of the Sequana tax group.In response, the tax authorities filed their statement of defence inJune 2012, to which Boccafin replied in August 2012.Boccafin and its legal advisors believe that this latest statement ofdefence does not offer any new information that calls into questionthe company’s position, and this position is therefore reiterated inits reply.Accordingly, the company’s expectations as to the outcome of theseproceedings remained unchanged at 31 December 2012.Note 20 - Other liabilities(€ millions) 31/12/2012 31/12/2011OTHER NON-CURRENT LIABILITIES 3 2Employee-related liabilities 1 2Capital expenditure grants 1 –Derivative instruments 1 –TRADE PAYABLES 622 631OTHER PAYABLES 244 236Current tax payables 8 4Indirect tax payables 52 43Employee-related liabilities 93 90Payables arising on acquisition of assets 5 8Customer advances 17 12Capital expenditure grants – 1Derivative instruments – 3Other payables 70 75Maturity of other liabilities(€ millions) Total Less than 1 year 1 to 5 years More than 5 yearsAt 31 December 2012Other non-current liabilities 3 – 3 –Trade payables 622 622 – –Other payables 245 245 – –At 31 December 2011Other non-current liabilities 2 – 2 –Trade payables 631 631 – –Other payables 236 236 – –146 | Sequana | 2012 Document de référence (English version)

Note 21 - Other operating incomeFinancial position – resultsNotes to the consolidated financial statements 4(€ millions) 2012 2011Own work capitalised 12 (8)Royalties on licences and patents - 1Other revenues 21 22TOTAL 33 15Note 22 - Personnel expenses(€ millions) 2012 2011Personnel expensesSalaries (442) (431)Employee and employer social security contributions (117) (116)Share-based payments (IFRS 2) (1) (1) -Costs of temporary staff (20) (19)Actual costs of pension and other employee benefit obligations (5) (6)Other components of remuneration (16) (15)TOTAL (601) (587)(Additions to) reversals of provisions included in operating incomeProvisions for pension and other employee benefit obligations (8) 21TOTAL (609) (566)(1) This caption relates to the expense recognised in 2012 in respect of the free share plan described in Note 12. Other share-based payments such as company savings plans,incentives and profit-sharing arrangements existing in French companies, which may be invested in Sequana shares, are not material in relation to the Group as a whole.Note 23 - Remuneration paid to corporate officers(€ millions) 2012 2011Remuneration and other short-term benefitsCorporate officers (1.68) (2.43)of which, members of senior management (0.96) (1.82)Termination benefits – –Post-employment benefits – –Other long-term benefits – –Share-based payments (0.20) 0.30The remuneration set out above includes amounts received by Board members who are permanent representatives of other corporate entities.Sequana | 2012 Document de référence (English version) | 147

4Financial position – resultsNotes to the consolidated financial statementsNote 24 - Other operating income and expenses(€ millions) 2012 2011Other operating incomeGains on disposal of businesses (1) – 18Gains on disposal of property, plant and equipment and intangible assets – 5Reversals of asset impairment losses (2) 10 1Reversal of provisions for post-employment benefits 1 –Reversal of provisions for litigation – 1Other operating income – 3Sub-total 11 28Other operating expensesLosses on disposal of businesses (1) (3) (1)Losses on disposal of property, plant and equipment and intangible assets (1) –Impairment losses on goodwill in the Antalis group (2) (20) –Impairment losses on goodwill in the Arjowiggins group (2) – (18)Asset impairment losses (2) (43) (44)Net restructuring expenses (3) (52) (44)Provisions for other litigation (3) (1)Other items, net (4) (13) (12)Sub-total (135) (120)TOTAL (124) (92)(1) In 2012, this amount comprised the loss on the disposal of Arjowiggins’ Argentinean subsidiary, including cumulative translation losses carried in equity for €2 million.In 2011, this amount comprised gains on the sale of Antalis’ office supply business in Spain and Portugal and a €1 million loss on the sale of Papeteries Canson by Arjowiggins.(2) See Note 3 – Measurement of impairment losses.(3) In 2012, restructuring expenses concerned Antalis for an amount of €22 million (2011: €24 million) and Arjowiggins for an amount of €29 million (2011: €14 million).(4) Including, in 2012, additions to provisions for future rental payments on vacant warehouses or premises amounting to €8 million.148 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Note 25 - Net financial income (loss)(€ millions) 2012 2011Interest on current accounts 1 1Foreign exchange gains 27 75Sub-total – financial income (a) 28 76Foreign exchange losses (29) (76)Interest expense on financial liabilities (1) (35) (30)Other financial expenses (2) (2)Sub-total – financial expense (b) (66) (108)Cost of net debt (a) + (b) (38) (32)Interest income on other financial assets 1 1Other banking charges and financial commissions (2) (14) (9)Other financial income and expenses, net (13) (8)NET FINANCIAL LOSS (51) (40)(1) The renewed credit agreements for Antalis, Arjowiggins and Sequana dated 30 April substantially changed the terms and conditions and cost of using these financing lines(see Notes 17 and 18).(2) This caption comprises transaction fees included in the amortised cost of debt and representing an expense of €4 million.Note 26 - Foreign exchange gains and lossesForeign exchange gains and losses recognised in the income statement can be analysed as follows:(€ millions) 2012 2011Sales and other operating income (4) 1Purchases consumed and other operating expenses (3) 7Cost of net debt (2) (1)FOREIGN EXCHANGE GAINS (LOSSES) (9) 7The exchange rates of the main currencies used by the Group are as follows:(In €) 2012 2011Closing ratePound sterling 0.8161 0.8353US dollar 1.3194 1.2939Average ratePound sterling 0.8109 0.8679US dollar 1.2853 1.3918Sequana | 2012 Document de référence (English version) | 149

4Financial position – resultsNotes to the consolidated financial statementsNote 27 - Income tax benefit (expense)(€ millions) 2012 2011Current taxes (18) (19)Deferred taxes 18 (16)INCOME TAX EXPENSE – (35)The tax proof breaks down as follows:(€ millions) 2012 2011Operating loss (68) (3)Net financial loss (51) (40)Pre-tax loss of consolidated companies (119) (43)Standard tax rate in France 36.10% 36.10%Effective tax rate for the Group 0.00% -81.40%Theoretical tax expense (a) 43 16Actual tax expense (b) – (35)DIFFERENCE (B)-(A) (43) (51)This difference can be analysed as follows:Differences in tax rates (standard rate, reduced rate, other) (2) 3Permanent differences related to impairment losses recognised on goodwill (7) (7)Other permanent differences (9) 3Recognition/(non-recognition) of deferred tax assets (1) (25) (40)Cancellation of deferred tax assets (2) – (14)Tax saving on unrecognised prior-year tax losses 3 3Other movements (3) (3) 1DIFFERENCE (43) (51)(1) In 2012, these amounts represent the combined impact of impairment losses recognised on property, plant and equipment, tax losses and restructuring expensesin the Arjowiggins group totalling €13 million (2011: €28 million), and tax losses in the Antalis group totalling €10 million (2011: €6 million) and in the holding companyfor an amount of €2 million (2011: €6 million).(2) In 2011, most of this amount concerned the cancellation of deferred tax assets relating to Arjowiggins Appleton in the US for a negative amount of €9 million.(3) This item includes negative amounts of €3 million and €2 million for 2012 and 2011, respectively, relating to the levy based on companies’ “value added” (CVAE)(see Note 2B26).150 | Sequana | 2012 Document de référence (English version)

Note 28 - Analysis of consolidated cash flowsFinancial position – resultsNotes to the consolidated financial statements 4(€ millions) 2012 2011Depreciation, amortisation and provisionsGoodwill impairment losses 20 18Depreciation and amortisation of property, plant and equipment and intangible assets, net 99 112Net additions to (reversals of) other provisions 4 (32)NET ADDITIONS TO DEPRECIATION, AMORTISATION AND PROVISIONS 123 98Disposal (gains) and lossesSale of Antalis' office supply business in Spain and Portugal – (18)Disposals of property, plant and equipment and intangible assets 1 (5)Other disposals 3 –DISPOSAL (GAINS) AND LOSSES 4 (23)Change in operating working capitalInventories 14 21Trade receivables 49 21Trade payables (19) 24Other receivables (21) (14)Other payables 10 (13)CHANGE IN OPERATING WORKING CAPITAL 33 39Proceeds from disposals of financial assetsDisposal of AWA Ltd shares 3 –PROCEEDS FROM DISPOSALS OF FINANCIAL ASSETS 3 –Net impact of changes in scope of consolidationSale of Antalis' office supply business in Spain and Portugal – 26Arjowiggins - Arches & Dettingen (see Note 4b) – 70Arjowiggins Papeteries Canson – 4Acquisition of Ambassador (see Notes 1 and 4) (10) –Acquisition of Pack 2000 (see Notes 1 and 4) (15) –Acquisition of Abitek (see Notes 1 and 4) (13) –Other acquisitions (3) (3)NET IMPACT OF CHANGES IN SCOPE OF CONSOLIDATION (41) 97Sequana | 2012 Document de référence (English version) | 151

4Financial position – resultsNotes to the consolidated financial statementsNote 29 - Segment informationThe activities of the Sequana Group are:■■manufacture of technical and creative paper through Arjowiggins, which is wholly owned;■■distribution of paper and packaging products through Antalis, which is wholly owned.29a - Business segment analysis of the 2012 income statement(€ millions) Arjowiggins AntalisSalesHolding companiesand eliminationsExternal sales 1,162 2,690 – 3,852Inter-segment sales 257 5 (262) –TOTAL SALES 1,419 2,695 (262) 3,852RECURRING OPERATING INCOME (LOSS) 14 56 (14) 56OPERATING INCOME (LOSS) (52) (1) (15) (68)Net financial loss – – – (51)Income tax benefit (expense) – – – –NET INCOME (LOSS) FROM CONSOLIDATED COMPANIES – – (119)Net income (loss) from discontinued operations – – – –NET INCOME (LOSS) – – – (119)Attributable to owners – – – (119)Total29b - Business segment analysis of the 2011 income statement(€ millions) Arjowiggins AntalisSalesHolding companiesand eliminationsExternal sales 1,191 2,753 – 3,944Inter-segment sales 274 6 (280) –TOTAL SALES 1,465 2,759 (280) 3,944RECURRING OPERATING INCOME (LOSS) 22 83 (16) 89OPERATING INCOME (LOSS) (53) 72 (22) (3)Net financial loss – – – (40)Income tax benefit (expense) – – – (35)NET INCOME (LOSS) FROM CONSOLIDATED COMPANIES – – – (78)Net income (loss) from discontinued operations – 1 – 1NET INCOME (LOSS) – – – (77)Attributable to owners – – – (77)Total152 | Sequana | 2012 Document de référence (English version)

29c - Other disclosures by business segment at 31 December 2012Financial position – resultsNotes to the consolidated financial statements 4(€ millions) Arjowiggins AntalisAssetsHolding companiesand eliminationsSegment assets (1) 945 1,267 2 2,230Investments in associates 2 3 – 5Assets held for sale 15 1 – 16Unallocated assets – – – 239TOTAL ASSETS – – 2,474LiabilitiesSegment liabilities (1) 340 509 11 860Unallocated liabilities – – – 960TOTAL EQUITY AND LIABILITIES – – – 1,820Cash flowsExpenditure on acquisitions of property, plant and equipment and intangible assets 36 19 3 58Depreciation and amortisation for the period 42 24 – 66Additions to provisions for impairment losses 41 24 – 65Reversals of provisions for impairment losses (10) (1) – (11)Other additions to (reversals of) provisions 2 3 (1) 4DEPRECIATION, AMORTISATION AND PROVISIONS, NET 75 50 (1) 124Other non-cash items (excluding depreciation and amortisation) 3 1 1 5Cumulative cash flows from (used in) operating activities 10 30 (14) 26Cumulative cash flows from (used in) investing activities 25 (27) (89) (91)Cumulative cash flows from (used in) financing activities (41) (133) 110 (64)(1) See definition of segment assets and liabilities in Note 2B29 “Segment reporting”.29d - Other disclosures by business segment at 31 December 2011Total(€ millions) Arjowiggins AntalisAssetsHolding companiesand eliminationsSegment assets (1) 1,054 1,281 2 2,337Investments in associates 2 3 – 5Assets held for sale – – – –Unallocated assets – – – 369TOTAL ASSETS 2,711LiabilitiesSegment liabilities (1) 330 525 10 865Unallocated liabilities – – – 1,176TOTAL EQUITY AND LIABILITIES 2,041Cash flowsExpenditure on acquisitions of property, plant and equipment and intangible assets (46) (25) (2) (73)Depreciation and amortisation for the period 45 23 – 68Additions to provisions for impairment losses 61 2 – 63Reversals of provisions for impairment losses (1) – – (1)Other additions to (reversals of) provisions (21) (13) 2 (32)DEPRECIATION, AMORTISATION AND PROVISIONS, NET 84 12 2 98Other non-cash items (excluding depreciation and amortisation) 10 5 (4) 11Cumulative cash flows from (used in) operating activities 19 48 (17) 50Cumulative cash flows from (used in) investing activities 36 3 (1) 38Cumulative cash flows from (used in) financing activities (42) (39) 15 (66)(1) See definition of segment assets and liabilities in Note 2B29 “Segment reporting”.TotalSequana | 2012 Document de référence (English version) | 153

4Financial position – resultsNotes to the consolidated financial statements29e - Geographical segment disclosures at 31 December 2012 (1)(€ millions) Sales Segment assetsEuropean UnionAcquisitions of PPE& intangible assetsFrance 647 590 34United Kingdom 683 528 4Italy 42 10 1Other EU countries 1,252 590 5Total European Union 2,624 1,718 44Other European countries 286 99 2United States 287 88 3Rest of the world 655 325 6TOTAL 3,852 2,230 55(1) Sales are presented based on the geographical location of the target market and segment assets and acquisitions of property, plant and equipment and intangible assetsare presented based on the geographical location of the assets.29f - Geographical segment disclosures at 31 December 2011 (1)(€ millions) Sales Segment assetsEuropean UnionAcquisitions of PPE& intangible assetsFrance 512 552 35United Kingdom 657 535 7Italy 49 11 –Other EU countries 1,477 698 16Total European Union 2,695 1,796 58Other European countries 306 106 3United States 289 128 4Rest of the world 654 307 8TOTAL 3,944 2,337 73(1) Sales are presented based on the geographical location of the target market and segment assets and acquisitions of property, plant and equipment and intangible assetsare presented based on the geographical location of the assets.Note 30 - Related-party transactionsTransactions with non-consolidated investees and associates are not material. However, when such transactions occur, they are generally basedon arm’s length terms.At 31 December 2012, the Group had not entered into any transactions with its principal shareholders (Fonds Stratégique d’Investissement[FSI], Exor SA, DLMD, Allianz group) or with any of its subsidiaries or senior executives.However, it should be recalled that in 2012 Sequana received a €30 million shareholder advance from Exor SA, Allianz France, Allianz Vieand Allianz IARD. This was repaid at the time of the July 2012 capital increase.There were no transactions with related parties during the financial years ended on 31 December 2010 and 31 December 2011.154 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Note 31 - Off-balance sheet commitments(€ millions) 31/12/2012 31/12/2011UNUSED CREDIT FACILITIES 233 168COMMITMENTS GIVEN 1,289 1,250Discounted bills not yet due – –Guarantees (1) 630 606Pledges – 4Other guarantees given (2) 245 239Commitments to purchase property, plant and equipment and intangible assets 1 3Forward purchases of goods for resale and commodities (3) 162 132Other commitments given (4) 251 266COMMITMENTS RECEIVED 156 126Guarantees 4 4Forward sales of goods for resale and commodities (3) 151 121Other commitments received 1 1(1) This item primarily concerns Antalis and corresponds to guarantees given on the sale of receivables and on the disposal of warehouses.(2) Concerns a counter-guarantee given by Sequana of the guarantee provided by Arjowiggins and Antalis in relation to the pension benefit funding obligationsof the UK subsidiaries that are members of the Wiggins Teape Pension Scheme (WTPS) and the Antalis Pension Scheme (APS). The amount is calculated as the lowerof 113% of the fund’s buy-out deficit as estimated at 31 December each year or GBP 164 million for WTPS and GBP 36 million for APS. In excess of this amount,the guarantee may only be enforced subject to approval of the Board of Directors of Sequana. The guarantees expire on 31 March 2023 and on 8 January 2024, respectively,for WTPS and APS, and may be renewed.This situation has resulted from the transfer in 2011 of virtually all of the working members of WTPS to the Antalis Pension Scheme (APS). Based on the pension fundregulations, the contribution requirements for employer entities, the guarantees and counter guarantees given to the trustees by the employer entities and Sequana,respectively, the overall amount of the guarantees currently given by the Group remains capped at GBP 200 million (€245 million).(3) Mainly forward purchases and sales of paper pulp.(4) These mainly include:- a joint and several guarantee given to Exeltium SAS for an amount of €155 million to cover the obligations of Arjowiggins Papiers Couchés in relation to the electricityprocurement requirements of the Arjowiggins Graphic division up to 13 January 2026;- a guarantee covering the obligations of Arjowiggins Sourcing Ltd to a supplier within the scope of a procurement contract for an amount of USD 4 million (€3 million)and covering the period up to 15 July 2013;- a guarantee covering the obligations of Arjo Wiggins Insurance Ltd within the scope of optional reinsurance of Group insurance agreements for an amount of €3 millionup to 30 June 2013;- guarantees given by Antalis International and its UK subsidiaries concerning their employee pension benefit obligations vis-à-vis Antalis Pension Scheme (APS),Arjo UK Group Pension Scheme, James McNaughton Paper Group Limited Pension and Insurance Scheme and Modo Merchants Pension Scheme totalling €65 millionat 31 December 2012 and 31 December 2011.Maturities of off-balance sheet commitments at 31 December 2012(€ millions) Total Less than 1 year 1 to 5 years More than 5 yearsUnused credit facilities 233 23 210 –Commitments given 1,289 611 106 572Commitments received 156 97 59 –Maturities of off-balance sheet commitments at 31 December 2011(€ millions) Total Less than 1 year 1 to 5 years More than 5 yearsUnused credit facilities 168 168 – –Commitments given 1,250 542 111 597Commitments received 126 79 47 –Sequana | 2012 Document de référence (English version) | 155

4Financial position – resultsNotes to the consolidated financial statementsOperating leases: future minimum payments (principal)(€ millions) Total Less than 1 year 1 to 5 years More than 5 yearsAt 31 December 2012 247 60 129 58At 31 December 2011 271 57 137 77These operating leases mainly concern storage depots.At 31 December 2012, future minimum payments under operating leases broke down as €184 million at fixed rates and €62 million atfloating rates, compared with €200 million and €71 million, respectively, at year-end 2011.Total lease payments recorded in the 2012 income statement amounted to €75 million (2011: €73 million), including €44 million forleased warehouses (2011: €44 million), €14 million for other property leasing arrangements (2011: €12 million), and €17 million forrental costs (2011: €17 million).Other commitmentsSellers’ warranties concerning consolidated entitiesDescriptionSignature dateDisposal of Arjo Wiggins Appleton Ltd (1) 15/05/2009Amount (in millionsof currency units)Amount(in € millions)Pension plan commitments GBP 6 7 IndefiniteTax risks USD 45 34 31/12/2015Disposal of Arjowiggins Arches SAS and Arjo Wiggins Deutschland GmbH (2)Guarantees given to Munksjö France 26/02/2011 40 25/02/2018Guarantees given to Munksjö Germany 26/02/2011 1 25/02/2021Disposal of Papeteries Canson to Hamelin groupSellers’ warranty 30/06/2011 1.5 30/06/2016(1) Guarantees given to the buyer of Arjo Wiggins Appleton Limited (AWA Ltd):When it sold AWA Ltd, Sequana specifically excluded any seller warranties in respect of the Fox River environmental dispute in the US, or any risks arising out of theagreement to sell Appleton Papers Inc. on 5 July 2001 and the undertakings concerning the Low Fox River environmental dispute dating from 9 November 2001.The guarantees that were given relate only to the entities’ normal business, tax risks and pension benefit obligations to approximately ten former employees undertakenby AWA Ltd prior to the sale. As indicated in the previous table, apart from the pension benefit obligations, all of these guarantees are for capped amounts and periodsof limited duration. Sequana has recognised provisions for the pension benefit obligations in its consolidated financial statements since 2009.(2) Counter-guarantee of Arjowiggins’ commitments given by Sequana in favour of Munksjö: the tax and environmental guarantees expire in seven years and the competitionguarantees in five years.Collateral provided for financing contractsThe following collateral was put up by Sequana (a) to guarantee its obligations as borrower in respect of (i) a loan agreement with Natixis signedon 30 April 2012 and (ii) a confirmed overdraft facility agreement for €5,000,000 with BNPP signed on 30 April 2012 and (b) to guaranteeArjowiggins’ obligations as borrower in respect of a syndicated loan agreement with a pool of banks initially signed on 25 July 2007 and subsequentlyamended on 30 April 2012:- pledge by Sequana of Antalis shares pursuant to the terms of a securities pledge agreement dated 30 April 2012 along with the correspondingpledge statement;- pledge of receivables held by Sequana on Antalis in connection with inter-company loans and current accounts, pursuant to the terms of areceivables pledge agreement dated 30 April 2012.Sequana has also pledged receivables it holds on Antalis in connection with inter-company loans and current accounts pursuant to the terms ofa receivables pledge agreement dated 30 April 2012. This pledge is to guarantee Arjowiggins’ obligations as borrower in respect of a syndicatedloan agreement with a pool of banks initially signed on 25 July 2007 and subsequently amended on 30 April 2012.Other operating contingent liabilitiesTo the best of the Company’s knowledge, no Group company has omitted to report any material commitment.Maturity156 | Sequana | 2012 Document de référence (English version)

Note 32 - HeadcountFinancial position – resultsNotes to the consolidated financial statements 4The Group’s average headcount breaks down as follows for fully consolidated companies:Number of employees 2012 2011Breakdown by businessArjowiggins 5,118 5,223Antalis 6,043 6,023Other companies 55 63TOTAL 11,216 11,309Breakdown by geographical areaFrance 2,956 3,062United Kingdom 1,811 1,765Italy 49 49Other EU countries 3,300 3,422Other European countries 489 496United States 714 725Rest of the world 1,897 1,790TOTAL 11,216 11,309Breakdown by categoryManagers 101 100Production employees 4,647 4,733Distribution employees 2,936 2,872Other employees 3,532 3,604TOTAL 11,216 11,309Sequana | 2012 Document de référence (English version) | 157

4Financial position – resultsNotes to the consolidated financial statementsNote 33 - Subsequent eventsIn the first quarter of 2013, the Group began discussions withits banks with a view to renewing its credit lines due to expire on30 June 2014.A number of agreements in principle were finalised on 26 March 2013as a result of these discussions, extending (i) Arjowiggins’ syndicatedfacility signed in 2007 and renewed in 2012; and (ii) Sequana’s confirmedcredit line and overdraft facility, through to 30 November 2015.The complete legal documentation should be finalised by the end ofApril 2013.As part of these agreements, Arjowiggins obtained certainchanges in the contractual terms and conditions of the facilities,in particular as regards covenants. These covenants can be summarisedas follows:Consolidated net debt/EBITDA (leverage):at 31 March 2013 < 8.00at 30 June 2013 < 8.25at 30 September 2013 < 7.50at 31 December 2013 < 6.00at 31 March 2014 < 6.25at 30 June 2014 < 4.75at 30 September 2014 < 5.50at 31 December 2014 < 4.25at 31 March 2015 < 4.75at 30 June 2015 < 3.50at 30 September 2015 < 3.75Maximum level of capital expenditure:at 31 December 2013€35 millionat 31 December 2014€35 millionat 31 December 2015€35 millionThe covenant stipulating the minimum level of equity wasdeleted, while the debt service cover covenant will not be testedat 31 December 2013.Interest on drawdowns in euros remains unchanged at 4.10%.Part of this 4.10% interest is deferred until the expiry of theagreement in November 2015 as follows: 2.50% deferred in 2013,2.00% in 2014, and 1.00% in 2015.The covenants stipulated in Sequana’s bilateral credit line agreementwere amended as follows:Consolidated net debt/EBITDA (leverage):at 30 June 2013 < 7.00at 31 December 2013 < 4.75at 30 June 2014 < 4.25at 31 December 2014 < 4.00at 30 June 2015 < 3.50Discussions with Antalis’ banks to renew the company’s 2007 syndicatedcredit facility extended in 2012 through to 30 June 2014will begin in the second quarter of 2013 and an agreement shouldbe finalised by the end of the year.Note 34 - Statutory Auditors’ feesThe fees charged by the Company’s Statutory Auditors and by the members of their networks over the past two financial periods aresummarised in the following table:PricewaterhouseCoopers AuditConstantin Associés(€ millions, net of taxes)AuditStatutory audit engagement, audit and certification of the individual companyand consolidated financial statementsAmount % Amount %2012 2011 2012 2011 2012 2011 2012 2011Issuer 0.2 0.3 6% 9% 0.2 0.2 20% 18%Fully consolidated subsidiaries 2.5 2.3 78% 66% 0.7 0.7 70% 64%Other reviews and services related to the statutory audit engagementIssuer 0.2 0.5 6% 14% 0.1 0.2 10% 18%Fully consolidated subsidiaries 0.2 0.1 6% 3% – – 0% 0%Sub-total 3.1 3.2 96% 91% 1.0 1.1 100% 100%Other services provided by the audit firm networks to fully consolidated subsidiariesLegal, tax and labour law 0.1 0.3 4% 9% – – 0% 0%Other services (if >10% of total audit fees) – – 0% 0% – – 0% 0%Sub-total 0.1 0.3 4% 9% – – 0% 0%TOTAL 3.2 3.5 100% 100% 1.0 1.1 100% 100%158 | Sequana | 2012 Document de référence (English version)

Note 35 - Scope of consolidationFinancial position – resultsNotes to the consolidated financial statements 4Fully consolidated companiesCountry % ownership interest % controlARJOWIGGINSARJOWIGGINS SAS France 100 100AGENA N.V. Belgium 100 100APPLETON COATED LLC United States 100 100APPLETON COATED PAPERS HOLDINGS INC. United States 100 100ARJOBEX AMERICA United States 100 100ARJOBEX LIMITED United Kingdom 100 100ARJOBEX SAS France 100 100ARJOWIGGINS CHARTHAM LIMITED United Kingdom 100 100ARJOWIGGINS CZECH REPUBLIC KONCERNOVY PODNIK SRO Czech Republic 100 100ARJOWIGGINS HKK 1 LTD Hong Kong 100 100ARJOWIGGINS HKK 3 LTD Hong Kong 100 100ARJOWIGGINS IVYBRIDGE LIMITED United Kingdom 100 100ARJOWIGGINS LE BOURRAY SAS France 100 100ARJOWIGGINS HEALTHCARE SAS France 100 100ARJOWIGGINS PAPER TRADING (SHANGHAI) COMPANY LTD China 100 100ARJOWIGGINS PAPIERS COUCHES SAS France 100 100ARJOWIGGINS (QUZHOU) SPECIALITY PAPERS CO. LTD China 100 100ARJOWIGGINS RIVES SAS France 100 100ARJOWIGGINS SECURITY BV The Netherlands 100 100ARJOWIGGINS SECURITY SAS France 100 100ARJOWIGGINS SECURITY LIMITED Hong Kong 100 100ARJOWIGGINS SERVICES LIMITED United Kingdom 100 100ARJOWIGGINS SOURCING LTD United Kingdom 100 100ARJOWIGGINS HEALTHCARE S.R.O Czech Republic 100 100ARJO WIGGINS CARBONLESS PAPERS EUROPE LIMITED United Kingdom 100 100ARJO WIGGINS ERMSTAL GMBH & CO. KG Germany 100 100ARJO WIGGINS ESPAÑA SA Spain 99.96 99.97ARJO WIGGINS FEINPAPIER GMBH Germany 99.99 100ARJO WIGGINS FINE PAPERS HOLDINGS LIMITED United Kingdom 100 100ARJO WIGGINS FINE PAPERS LIMITED United Kingdom 100 100ARJO WIGGINS GERMANY HOLDINGS LIMITED United Kingdom 100 100ARJO WIGGINS ITALIA SRL Italy 100 100ARJO WIGGINS LIMITADA Brazil 100 100ARJO WIGGINS LIMITED United Kingdom 100 100ARJO WIGGINS MEDICAL, INC United States 100 100ARJO WIGGINS SARL Switzerland 100 100ARJO WIGGINS SVENSKA AB Sweden 99.99 100ARJO WIGGINS UK HOLDINGS LIMITED United Kingdom 100 100ARJO WIGGINS USA, INC United States 100 100ARJOWIGGINS MIDDLE EAST FZE United Arab Emirates 100 100DALUM PAPIR AS Denmark 100 100Sequana | 2012 Document de référence (English version) | 159

4Financial position – resultsNotes to the consolidated financial statementsCountry % ownership interest % controlGEP S.P.A. Italy 85.57 85.57GREENFIELD SAS France 100 100GUARRO CASAS SA Spain 99.93 99.93IDEM LIMITED United Kingdom 100 100NEWTON FALLS LLC United States 100 100PERFORMANCE PAPERS LIMITED United Kingdom 100 100PRIPLAK SAS France 100 100SIGNOPTIC TECHNOLOGIES SAS France 100 100THE WIGGINS TEAPE GROUP LIMITED United Kingdom 100 100TORDERA SA Panama 99.93 100ANTALISANTALIS ABITEK LTDA Chile 100 100LOGISTICA ABITEK LTDA Chile 100 100ABITEK SA Chile 100 100ANTALIS INTERNATIONAL SAS France 100 100AMBASSADOR ANTALIS PACKAGING LTD United Kingdom 100 100ANTALIS AB Sweden 100 100ANTALIS AG Switzerland 100 100ANTALIS AS Estonia 100 100ANTALIS AS Denmark 100 100ANTALIS AS Norway 100 100ANTALIS, A.S. Slovakia 100 100ANTALIS ASIA PACIFIC PTE LTD Singapore 100 100ANTALIS AUSTRIA GMBH Austria 100 100ANTALIS BOLIVIA SRL Bolivia 100 100ANTALIS BOTSWANA (PTY) LIMITED Botswana 100 100ANTALIS BV The Netherlands 100 100ANTALIS BULGARIA EOOD Bulgaria 100 100ANTALIS DO BRAZIL PRODUTOS PARA INDUSTRIA GRAFICA LTDA Brazil 100 100ANTALIS DOO LJUBLJANA Slovenia 100 100ANTALIS ENVELOPES MANUFACTURING, SL Spain 100 100ANTALIS GMBH Germany 100 100ANTALIS GROUP HOLDINGS LIMITED United Kingdom 100 100ANTALIS GROUP (PRIVATE UNLIMITED COMPANY) United Kingdom 100 100ANTALIS HOLDINGS LIMITED United Kingdom 100 100ANTALIS HUNGARY KFT Hungary 100 100ANTALIS IBERIA SA Spain 100 100ANTALIS MCNAUGHTON IRELAND LIMITED United Kingdom 100 100ANTALIS JAPAN CO LTD Japan 100 100ANTALIS MCNAUGHTON LIMITED United Kingdom 100 100ANTALIS NV/SA Belgium 100 100ANTALIS OFFICE LIMITED United Kingdom 100 100ANTALIS OVERSEAS HOLDINGS LIMITED United Kingdom 100 100160 | Sequana | 2012 Document de référence (English version)

Financial position – resultsNotes to the consolidated financial statements 4Country % ownership interest % controlANTALIS OY Finland 100 100ANTALIS PACKAGING ITALIA SRL Italy 100 100ANTALIS PERU SA Peru 100 100ANTALIS POLAND SPOLKA ZOO Poland 100 100ANTALIS PORTUGAL SA Portugal 100 100ANTALIS SA Romania 100 100ANTALIS SA HOLDINGS United Kingdom 100 100ANTALIS SNC France 100 100ANTALIS SOUTH AFRICA LIMITED South Africa 100 100ANTALIS SRO Czech Republic 100 100ANTALIS VERPACKUNGEN GMBH Germany 100 100ANTALIS VERPACKUNGEN GMBH Austria 100 100ANTALIS 2000 AS Denmark 100 100ANTALIS (HONG KONG) LIMITED Hong Kong 100 100ANTALIS (MALAYSIA) SDN BHD Malaysia 100 100ANTALIS (PROPRIETARY) LTD South Africa 100 100ANTALIS (SHANGHAI) TRADING CO. LIMITED China 100 100ANTALIS (SINGAPORE) PTE LTD Singapore 100 100ANTALIS (THAILAND) LIMITED Thailand 90 90ARJOWIGGINS CREATIVE PAPERS SAS France 100 100ARJO WIGGINS FINE PAPERS PTY LTD Australia 100 100AS ANTALIS Latvia 100 100BRANOPAC CZ S.R.O. Czech Republic 100 100BRANOPAC PACKAGING BV Czech Republic 100 100ANTALIS PACKAGING BV The Netherlands 100 100ESPECIALIDADES DEL PAPEL DE COLOMBIA LTDA (ESPACOL LTDA) Colombia 100 100G2M LOGISTICS LIMITED United Kingdom 100 100GMS DISTRIBUIDORA GRAFICA SA Chile 100 100GMS PRODUCTOS GRAFICOS LIMITADA Chile 100 100GST GRAPHIC SERVICES TEAM LIMITADA Brazil 99.88 99.88GRAPHIC SUPPLIES LIMITED United Kingdom 100 100INTERPAPEL SA Mexico 100 100INVERSIONES ANTALIS HOLDINGS LIMITADA Chile 100 100JAMES MCNAUGHTON GROUP LIMITED United Kingdom 100 100MACRON GMBH Germany 100 100MAP MERCHANT GROUP LIMITED United Kingdom 100 100MAP MERCHANT HOLDINGS BV The Netherlands 100 100MAP MERCHANT HOLDINGS GMBH Germany 100 100MAP MERCHANT SWEDEN AB Sweden 100 100MCNAUGHTON GRAPHICAL PAPER LIMITED United Kingdom 100 100MCNAUGHTON PAPER LIMITED United Kingdom 100 100MCNAUGHTON PAPER IRELAND LIMITED Ireland 100 100MCNAUGHTON PAPER N I LIMITED United Kingdom 100 100MCNAUGHTON PRINTALL LIMITED United Kingdom 100 100MCNAUGHTON PUBLISHING PAPERS LTD United Kingdom 100 100OOO MAP MERCHANT RUSSIA Russia 100 100Sequana | 2012 Document de référence (English version) | 161

4Financial position – resultsNotes to the consolidated financial statementsCountry % ownership interest % controlOY MAP MERCHANT AB Finland 100 100PACK 2000 VERPACKUNGSSYSTEM GMBH Germany 100 100PAPER MANAGEMENT SERVICES LIMITED United Kingdom 100 100SIMGE ANTALIS KAGIT SANAYI VE TICARET SA Turkey 100 100TALK PAPER LIMITED United Kingdom 100 100UAB ANTALIS Lithuania 100 100ZAO MAP UKRAINE Ukraine 100 100HOLDING COMPANIES AND OTHER ACTIVITIESSEQUANA SA France – –AP GESTION ET FINANCEMENT SAS France 100 100ARJO WIGGINS APPLETON HOLDINGS United Kingdom 100 100ARJO WIGGINS APPLETON INSURANCE LIMITED Guernsey 100 100ARJO WIGGINS EUROPE HOLDINGS United Kingdom 100 100ARJO WIGGINS NORTH AMERICA INVESTMENTS United Kingdom 100 100ARJO WIGGINS US HOLDINGS United Kingdom 100 100AWA FINANCE United Kingdom 100 100BOCCAFIN SAS France 100 100SEQUANA CAPITAL UK LIMITED United Kingdom 100 100SEQUANA RESSOURCES & SERVICES SAS France 100 100Equity-accounted companiesCountry % ownership interest % controlARJOWIGGINSBSECURE LTD Israel 30 30SECUSYSTEM LTD Israel 30 30ANTALISDIMAGRAF SA Argentina 30 30QUIMIGRAF SA Argentina 30 30162 | Sequana | 2012 Document de référence (English version)

Financial position – resultsStatutory Auditors’ report on the consolidated financial statementsStatutory Auditors’ report on the consolidated financial statementsFor the year ended 31 December 2012This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English speaking readers. The StatutoryAuditors’ report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the opinion on theconsolidated financial statements and includes an explanatory paragraph discussing the Auditors’ assessments of certain significant accounting and auditing matters. Theseassessments were considered for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance onindividual account captions or on information taken outside of the consolidated financial statements.This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.4Sequana8 rue de Seine92100 Boulogne‐BillancourtFranceTo the Shareholders,In compliance with the assignment entrusted to us by yourAnnual General Meeting, we hereby report to you, for the yearended 31 December 2012, on:■■the audit of the accompanying consolidated financial statementsof Sequana;■■the justification of our assessments;■■the specific verification required by law.These consolidated financial statements have been approved bythe Board of Directors. Our role is to express an opinion on thesefinancial statements based on our audit.I – Opinion on the consolidated financial statementsWe conducted our audit in accordance with professional standardsapplicable in France. Those standards require that we planand perform the audit to obtain reasonable assurance aboutwhether the consolidated financial statements are free of materialmisstatement. An audit involves performing procedures, usingsampling techniques or other methods of selection, to obtainaudit evidence about the amounts and disclosures in the consolidatedfinancial statements. An audit also includes evaluating theappropriateness of accounting policies used and the reasonablenessof accounting estimates made, as well as the overall presentationof the consolidated financial statements. We believe thatthe audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion.In our opinion, the consolidated financial statements give a true andfair view of the assets and liabilities and of the financial position ofthe Group at 31 December 2012 and of the results of its operationsfor the year then ended in accordance with International FinancialReporting Standards as adopted by the European Union.Without qualifying our opinion, we draw your attention toNotes 1, 17 and 33 to the consolidated financial statements whichdescribe the terms and conditions of the Group’s refinancing.II – Justification of our assessmentsAs indicated in Note 2.B3, the estimates used in preparing theconsolidated financial statements at 31 December 2012 were madein a climate of ongoing economic uncertainty where forecastingthe business outlook is extremely difficult. It is in this contextthat, in accordance with the requirements of Article L. 823-9 ofthe French Commercial Code (Code de commerce) relating to thejustification of our assessments, we bring to your attention thefollowing matters:As part of our assessment of the accounting principles applied bythe Company, and based on the information provided to date, wehave verified that Notes 1, 17 and 33 to the consolidated financialstatements contain the appropriate disclosures on the Company’sfinancial position and its agreements with banks relating to theterms and conditions of its credit facility agreements.The Company has reviewed the recoverable amounts of its goodwilland property, plant and equipment in accordance with themethods described in Notes 2.B6, 2.B8 and 3 to the consolidatedfinancial statements. As part of our assessment of the estimatesmade, we have assessed the methods used to implement theimpairments tests and cash flow forecasts as well as the relatedassumptions and ensured that the notes to the consolidated financialstatements provide appropriate disclosures.Note 2.B3 describes other judgements and significant estimatesused by management concerning pension and other post-employmentbenefits and obligations measured by external actuaries,and provisions for contingencies. Our work consisted of examiningthe data used, assessing the assumptions used, reviewing,on a test basis, the calculations performed by the Company, andverifying that the information disclosed in Notes 15 and 16 to theconsolidated financial statements is appropriate.These assessments were made as part of our audit of the consolidatedfinancial statements taken as a whole, and therefore contributed to theopinion we formed which is expressed in the first part of this report.III – Specific verificationAs required by law and in accordance with professional standardsapplicable in France, we have also verified the information presentedin the Group’s management report.We have no matters to report as to its fair presentation and itsconsistency with the consolidated financial statements.PricewaterhouseCoopers AuditCatherine SabouretNeuilly-sur-Seine, 30 April 2013The Statutory AuditorsConstantin AssociésMember of Deloitte Touche Tohmatsu LimitedJean-Paul SéguretSequana | 2012 Document de référence (English version) | 163

4Financial position – resultsNotes to the parent company financial statementsParent company financial statements for the year ended31 December 2012The parent company financial statements for the year ended 31 December 2010 and the related Statutory Auditors’ report are incorporatedby reference into this report.Statement of financial positionAssets(€ millions) Notes 31/12/2012 31/12/2011Property, plant and equipment 3 2Investments (a) 3 1,711 1,640Total fixed assets 1,714 1,642Operating receivables (b) 2 1Other receivables (b) 7 7Cash and cash equivalents 4 7 1Total current assets 16 9TOTAL ASSETS 1,731 1,651(a) Short-term portion of net investments – –(b) Of which, due in less than one year 9 8Equity and liabilities(€ millions) Notes 31/12/2012 31/12/2011Share capital 225 74Additional paid-in capital 95 95Legal reserve 24 24Other reserves 1,431 1,432Retained earnings (losses) (79) 252Net income (loss) for the year (28) (331)Total equity 5 1,667 1,546Provisions 8 7Debt (c) 6 39 85Operating payables 7 6Tax and social security liabilities 10 6Other payables – 1Debt (d) 56 98TOTAL EQUITY AND LIABILITIES 1,731 1,651(c) Of which, bank borrowings and overdrafts 26 41(d) Of which, due in less than one year 32 98164 | Sequana | 2012 Document de référence (English version)

Income statementFinancial position – results4Notes to the parent company financial statements(€ millions) Notes 2012 2011Services rendered 3 0Other operating income 3 2Total operating income 6 2Purchases consumed (16) (10)Taxes other than income taxes (2) 0Personnel expenses (8) (7)Other operating expenses (1) (1)Total operating expenses (27) (18)Operating loss 7 (21) (16)Financial income 9 31Financial expenses (2) (3)Net financial income 8 7 28Income (loss) before non-recurring items and tax (14) 12Non-recurring income 15 8Non-recurring expenses (33) (354)Net non-recurring loss 9 (18) (346)Loss before tax (32) (334)Income tax benefit 10 4 3NET LOSS (28) (331)Sequana | 2012 Document de référence (English version) | 165

4Financial position – resultsNotes to the parent company financial statementsNotes to the parent company financial statements167 Note 1 Significant events of the year167 Note 2 Basis of preparation169 Note 3 Investments169 Note 4 Cash and cash equivalents170 Note 5 Statement of changes in equity170 Note 6 Debt (see Note 15 to the parent companyfinancial statements)170 Note 7 Operating loss171 Note 8 Net financial income171 Note 9 Non-recurring income and expenses172 Note 10 Income tax expense172 Note 11 Statement of cash flows173 Note 12 Remuneration of corporate officers173 Note 13 Related companies173 Note 14 Off-balance sheet commitments175 Note 15 Treasury management –financial instruments176 Note 16 List of subsidiaries and associatesat 31 December 2012176 Note 17 Subsequent events166 | Sequana | 2012 Document de référence (English version)

Note 1 - Significant events of the yearFinancial position – results4Notes to the parent company financial statementsValuation of investments in subsidiariesThe following information concerning the value in use of theCompany’s subsidiaries at 31 December 2012 – as defined inNote 2 – Basis of presentation – is based on valuations performedby the Company.a) Operating subsidiariesThe value in use of Arjowiggins SAS shares was less than the carryingamount of the investment, resulting in the recognition of aprovision for impairment losses of €30 million.The value in use of Antalis shares was greater than the carryingamount of the investment, resulting in the reversal of impairmentlosses previously recognised of €13 million.b) Non-operating subsidiaryNon-materialRefinancing of the Group:On 30 April 2012, the Group and its banks finalised the renewalof Sequana’s confirmed credit facility through to 30 June 2014.The main contractual terms and conditions of these facilitiesand details of any drawdowns and repayments are disclosed inNote 15 “Treasury management – Financial instruments”.Capital increaseOn 13 June 2012, Sequana announced that it was increasing itscapital by an amount of €150 million (€146 million after deductingthe related transaction costs). The subscription period for thecapital increase closed on 27 June 2012. The Group’s main shareholderssubscribed to a total of €51 million, including €30 millionin shareholder loans (arranged on 30 April 2012 within the scopeof the renewed financing agreements) which have been convertedinto equity.Fonds Stratégique d’Investissement (FSI) has now become theCompany’s largest shareholder by subscribing to €45 millionworth of capital.The newly-created shares were issued on 9 July 2012 and a total of€150 million in share capital was paid up in full.On 15 November 2012, Sequana carried out a reverse stock split.The exchange ratio was six old shares with a par value of €1.50 eachfor one new share with a par value of €9.00.The amount of the share capital remained unchanged but it nowcomprises 25,009,372 shares with a par value of €9 each.Note 2 - Basis of preparationThe parent company financial statements are prepared in accordancewith French generally accepted accounting principles basedon the General Chart of Accounts.The basic method used to value items recorded in the books ofaccount is the historical cost method.The usual accounting conventions have been applied in compliancewith the principle of prudence and:■■the going concern principle,■■the consistency principle, and■■the accrual basis principle.Accounting policiesa) Property, plant and equipmentProperty, plant and equipment are stated at cost.They are depreciated by the straight-line method over their estimateduseful lives.b) Investments in subsidiaries and associatesInvestments in subsidiaries and associates are stated at the lowerof cost and value in use.Valuation of operating subsidiaries and associatesEnterprise value is the sole basis used for determining the fairvalue of investments and it is calculated by discounting futurecash flows to present value.Enterprise value is then calculated as value in use less the correspondingnet debt. Any impairment losses are recognisedthrough profit or loss.Previously recognised impairment losses are reversed in theincome statement when the value in use of the investmentsexceeds their carrying amount.Valuation of non-operating holding companiesThe value in use of holding companies is assessed based on theCompany’s equity in their revalued net assets, or on consolidatedvalue in the case of sub-groups.Sequana | 2012 Document de référence (English version) | 167

4Financial position – resultsNotes to the parent company financial statementsc) Treasury sharesA liquidity contract has been set up with Oddo CorporateFinance to improve the liquidity of the Sequana share and theregularity of its quotations without distorting the workings of themarket. Treasury shares acquired within the scope of the liquiditycontract are recognised at cost and a provision for impairmentis booked if their carrying amount is less than the average shareprice during the last month prior to the reporting date. Any profitor loss on the disposal of treasury shares is recognised in nonrecurringincome or expense.d) Pension benefit obligationsThe projected benefit obligation payable to current and formeremployees is calculated based on assumptions regarding increasesin salaries, retirement age and mortality rates and then discountedto present value. Provisions are recognised in liabilitieswith matching entries in profit or loss.e) Stock optionsStock options are recognised as a capital increase when theoptions are exercised in an amount corresponding to the exerciseprice paid by the option holders. Any difference between the issueprice of the shares concerned and their par value is recognised asan issue premium.f) Tax regimeIn accordance with articles 223-A et seq. of the French GeneralTax Code, Sequana has elected to file a consolidated tax returnand may freely determine the scope of the tax Group.In 2012, the tax group comprised 18 companies that are over95%-owned by Sequana, either directly or indirectly.Subsidiaries that are members of the tax group calculate andaccount for their income taxes on a stand-alone basis. Any taxsavings arising from the tax losses of members of the tax groupare directly recognised in Sequana’s income statement and nocash repayment is made. Any impacts arising from the tax regimeare recognised at the level of the parent company.List of subsidiaries in the tax group in 2012Sequana Ressources & Services – Arjowiggins SecuritySolutions – Arjowiggins SAS – Arjobex – Arjowiggins Rives –Arjowiggins Healthcare – Arjowiggins Security – ArjowigginsPapiers Couchés – Arjowiggins Le Bourray – Priplak – AntalisInternational – Antalis SNC – Antalis Finance – AP Gestionet Financement – Boccafin – Arjowiggins Creative Papers –Greenfield – Signoptic Technologies.168 | Sequana | 2012 Document de référence (English version)

Notes to the statement of financial positionFinancial position – results4Notes to the parent company financial statementsNote 3 - Investments(€ millions) 31/12/2011 Increase Decrease 31/12/2012Investments in subsidiaries and associates(Note 16 to the parent company financial statements)2,438 88 – 2,526Other 2 – – 2GROSS VALUE 2,440 88 – 2,528Provisions (800) (30) 13 (817)CARRYING AMOUNT 1,640 58 13 1,711“Other” concerns treasury shares held within the scope of the liquidity agreement with Oddo Corporate Finance for an amount of€0.8 million and security deposits given, also for an amount of €0.8 million. At 31 December 2012, the Company held 109,305 treasuryshares with a historical value of €0.8 million and it reversed impairment losses previously recognised for an amount of €0.2 millionbased on the average Sequana share price for December.Movements in investments in 2012(€ millions)Carrying amount at 31 December 2011 1,640Investments in subsidiaries and associatesEquity interests acquired:• Arjowiggins SAS 63• Antalis International 25(Additions to) reversals of provisions for impairment in value of shares:• Arjowiggins SAS (30)• Antalis International 13Treasury shares: (see Note 12d to the consolidated financial statements) –CARRYING AMOUNT AT 31 DECEMBER 2012 1,711Equity interests in Arjowiggins SAS and Antalis International were acquired as part of Sequana’s €150 million capital increase of 9 July 2012.Note 4 - Cash and cash equivalentsThe increase in cash and cash equivalents mainly reflects the €6.2 million cash balance in the Natixis bank account at 31 December 2012following the increase in capital.Sequana | 2012 Document de référence (English version) | 169

4Financial position – resultsNotes to the parent company financial statementsNote 5 - Statement of changes in equityReserves(€ millions)Numbersof sharesSharecapitalAdditionalpaid-incapitalLegal Tax-regulatedreserves reservesOtherreservesUntaxedprovisionsRetainedearnings(losses)Net income(loss)for the yearTotalEquity at 31 December 2010before appropriation of net income 49,545,002 74 95 24 6 1,425 1 – 272 1,897- Appropriation of net incometo retained earnings– – – – – – – 252 (252) –Dividend paid for 2010 – – – – – – – – (20) (20)Net loss for 2011 – – – – – – – – (331) (331)Equity at 31 December 2011before appropriation of net loss 49,545,002 74 95 24 6 1,425 1 252 (331) 1,546- Appropriation of net incometo retained earnings– – – – – – – (331) 331 –Capital increase 100,037,488 150 – – – – – – – 150Share award plans 473,742 1 – – (1) – – – – –Reverse stock split(cancellation of old shares) (150,056,232) – – – – – – – – –Reverse stock split(allocation of new shares) 25,009,372 – – – – – – – – –Net loss for 2012 – – – – – – – – (28) (28)Equity at 31 December 2012before appropriation of net loss 25,009,372 225 95 24 5 1,425 1 (79) (28) 1,668Recommended appropriation:- Appropriation of net loss to retainedearnings – – – – – – – (28) 28 –Equity at 31 December 2012after appropriation of net loss 25,009,372 225 95 24 5 1,425 1 (107) – 1,668During the first-half of 2012, two successive capital increases were carried out as part of a share award plan for amounts of €706,000 and€5,000. These amounts were deducted from the restricted reserves account set up for this purpose.Note 6 - Debt (see Note 15 to the parent company financial statements)This item includes current accounts with Sequana subsidiaries amounting to €12 million, €2 million in bank overdrafts, bank borrowingsof €24 million and a €1 million loan contracted from one of the Company’s subsidiaries. In 2011, these amounts were €43 million,€5 million, €36 million and €1 million, respectively.The year-on-year decrease of €31 million in current account balances held with subsidiaries mainly resulted from the repayment of the€30 million balance with Arjowiggins SAS at end-April.The interest rate on the average €43 million of outstanding debt owed by Sequana in 2012 was 3.44%, excluding commissions.Note 7 - Operating lossThis item is mainly composed of overhead costs of the Sequana holding company.170 | Sequana | 2012 Document de référence (English version)

Note 8 - Net financial incomeFinancial position – results4Notes to the parent company financial statements(€ millions) 2012 2011Financial income- Interim and annual dividends from subsidiaries (1) 8 31- Other financial income 1 –TOTAL 9 31(1) In 2012 this item included €8 million paid by Antalis. In 2011 it included €15 million paid by Antalis, €15 million paid by Arjowiggins and €1 million paidby Arjowiggins Insurance Ltd (UK).(€ millions) 2012 2011Financial expensesInterest on borrowings (see Note 6) 1 –Other financial expenses 1 3TOTAL 2 3Note 9 - Non-recurring income and expensesNon-recurring income and expenses break down as follows:(€ millions) 2011Additions to provisions for impairment of investments:• Arjowiggins SAS (342)• Sequana Ressources & Services (1)Reversals of provisions for impairment of investments:• Antalis International 4Losses on treasury shares (2)Refinancing costs – phase 1 (3)Other (2)TOTAL (346)(€ millions) 2012Additions to provisions for impairment of investments:• Arjowiggins SAS (30)Reversals of provisions for impairment of investments:• Antalis International 13Losses on treasury shares (2)Gains on treasury shares 1TOTAL (18)Sequana | 2012 Document de référence (English version) | 171

4Financial position – resultsNotes to the parent company financial statementsNote 10 - Income tax expense(€ millions) Income before tax Group tax benefit Net income (loss)Recurring (14) – (14)Non-recurring (18) 4 (14)TOTAL (33) 4 (29)Excluding Group relief, the theoretical tax charge in 2012 would have been nil.The tax consolidation regime gave rise to net tax savings of €4 million for Sequana in 2012 (€3 million in 2011).At 31 December 2012, the Company’s available tax loss carryforwards amounted to €266.1 million.Other disclosuresNote 11 - Statement of cash flows(€ millions) 2012 2011Net loss (29) (331)Elimination of additions to (reversals of) depreciation, amortisation and provisions 18 339Elimination of gains and losses on disposals of fixed assets – –Gross operating cash flow (11) 8Change in operating working capital requirements 3 4Net cash generated from (used in) operating activities (8) 12Equity interests acquired (88) –Disposal of investments – –Net cash generated from (used in) investing activities (88) –Dividends paid – (20)Capital increase 150 –Net cash generated from (used in) financing activities 150 (20)INCREASE (DECREASE) IN NET DEBT 54 (8)Net debt at start of year (84) (76)Net debt at end of year (30) (84)INCREASE (DECREASE) IN NET DEBT 54 (8)Reconciliation between net debt in the statement of financial position and net debt at year-endMarketable securities and cash 9 1Debt (39) (85)Net debt at end of year (30) (84)172 | Sequana | 2012 Document de référence (English version)

Note 12 - Remuneration of corporate officersFinancial position – results4Notes to the parent company financial statementsTotal remuneration paid in 2012 to corporate officers amounted to €1.68 million (2011: €2.43 million), including €0.78 million for membersof the Board of Directors (2011: €0.66 million) and €0.9 million for Company executives (2011: €1.77 million).Note 13 - Related companies(€ millions) 2012 2011Assets and liabilitiesOperating and other receivables 2 1Debt 12 43Operating payables 2 –Net financial incomeIncome from investments in subsidiaries and associates 8 31Note 14 - Off-balance sheet commitments(€ millions) 2012 2011Commitments given (1)Interest /exchange rate swaps – 1Reinsurance commitments 3 3First call guarantee 5 –Guarantee 0 12Joint and several guarantee (2) 158 155UK pension benefit obligations (3) 245 239TOTAL 411 410Commitments receivedInterest rate swaps – –Confirmed bank credit facilities 28 36TOTAL 28 36(1) The expiry dates of the Group’s commitments are provided in points 2 and 4 of Note 31 to the consolidated financial statements.(2) A joint and several guarantee given to Exeltium SAS for an amount of €155 million to cover the obligations of Arjowiggins Papiers Couchés in relation to the electricityprocurement requirements of the Arjowiggins Graphic division through 13 January 2026, and a guarantee granted to Itochu Europe PLC for Arjowiggins Sourcing Ltd’sobligations under a supply agreement for an amount of USD 4 million through 15 July 2013;(3) Concerns a counter-guarantee given by Sequana of the guarantee provided by Arjowiggins and Antalis in relation to the pension benefit obligations of the UK subsidiariesthat are members of the Wiggins Teape Pension Scheme (WTPS) and the Antalis Pension Scheme (APS). The amount is calculated at the lower of 113% of the fund’sbuy-out deficit as estimated at 31 December each year or GBP 164 million for WTPS and GBP 36 million for APS. In excess of this amount, the guarantee may onlybe enforced subject to approval of the Board of Directors of Sequana. The guarantees expire on 31 March 2023 and on 8 January 2024, respectively, for WTPS and APS,and may be renewed.This situation has resulted from the transfer in 2011 of virtually all of the working members of WTPS to the Antalis Pension Scheme (APS). Based on the pension fundregulations, the contribution requirements for employer entities, and the guarantees and counter guarantees given to the trustees by the employer entities and Sequana,respectively, the overall amount of the guarantees currently given by the Group remains capped at GBP 200 million (€245 million).Sequana | 2012 Document de référence (English version) | 173

4Financial position – resultsNotes to the parent company financial statementsSellers’ warrantiesDescriptionDisposal of Arjo Wiggins Appleton Ltd (1)Signature dateAmount(in millions of currency units)Amount(in € millions)Tax risks 15/05/2009 USD 45 35 31/12/2015Pension benefit obligations 15/05/2009 GBP 6 7 IndefiniteMaturitySale of Arjowiggins Arches SAS and Arjowiggins Deutschland GmbH (2)Guarantees of Arjowiggins' obligations: 26/02/2011- given to Munksjö France 40 25/02/2018- given to Munksjö Germany 1 25/02/2021(1) Guarantees given to the buyer of Arjo Wiggins Appleton Limited (AWA Ltd)When it sold AWA Ltd, Sequana specifically excluded any seller warranties in respect of the Fox River environmental dispute in the US, or any risks arising outof the agreement to sell Appleton Papers Inc. on 5 July 2001 and the undertakings concerning the Low Fox River environmental dispute dating from 9 November 2001.The guarantees that were given relate only to the entity’s normal business, tax risks and pension benefit obligations to approximately ten former employees undertakenby AWA Ltd prior to the sale. As indicated in the table, apart from the pension benefit obligations, all of these guarantees are for capped amounts and periods of limitedduration. Since 2009, Sequana has recognised provisions for the pension benefit obligations in its consolidated financial statements.(2) Counter-guarantee given to Munksjö in connection with the sale of Arjowiggins Arches and Arjowiggins DeutschlandCounter-guarantee of Arjowiggins’ commitments given by Sequana in favour of Munksjö: the tax and environmental guarantees expire in seven years and the competitionguarantees in five years. The other guarantees which were given to the Munksjö group when Arjowiggins’ decor division was sold have expired.Collateral posted in respect of financing agreementsThe following collateral was put up by Sequana (a) to guarantee its obligations as borrower in respect of (i) a loan agreement with Natixissigned on 30 April 2012 and (ii) a confirmed overdraft facility agreement for €5,000,000 with BNPP signed on 30 April 2012 and (b)to guarantee Arjowiggins’ obligations as borrower in respect of a syndicated loan agreement with a pool of banks initially signed on25 July 2007 and subsequently amended on 30 April 2012:■■pledge by Sequana of Antalis shares pursuant to the terms of a securities pledge agreement dated 30 April 2012 along with the correspondingpledge statement;■■pledge of receivables held by Sequana on Antalis in connection with inter-company loans and current accounts, pursuant to the termsof a receivables pledge agreement dated 30 April 2012.Sequana has also pledged receivables it holds on Antalis in connection with inter-company loans and current accounts pursuant to theterms of a receivables pledge agreement dated 30 April 2012. This pledge is to guarantee Arjowiggins’ obligations as borrower in respectof a syndicated loan agreement with a pool of banks initially signed on 25 July 2007 and subsequently amended on 30 April 2012.174 | Sequana | 2012 Document de référence (English version)

Financial position – results4Notes to the parent company financial statementsNote 15 - Treasury management – financial instrumentsDebtAt 31 December 2012, net debt recorded in the parent companyfinancial statements stood at €32 million, compared with€84 million at end-2011. Movements in net debt during theyear are analysed in the statement of cash flows (see Note 11 –Statement of cash flows).Liquidity and maturity of debtSequana’s gross debt was €24.2 million at 31 December 2012(down from €36.4 million in 2011) and is financed by a confirmedcredit facility with a top-ranking bank. It was signed inJune 2006 for an initial five-year period and extended throughFebruary 2012 based on amendments signed in June andSeptember 2011.On 30 April 2012, this bilateral credit line was extended for afurther two-year period through to 30 June 2014 for an amountof €36 million.The agreement provides for amortisation payments of €1.2 millionin 2012 and 2013 and additional repayments in the eventthat Sequana carries out any capital increases. €11 million waspaid down on this credit line following the July 2012 increase incapital. At 31 December 2012, the line had been drawn down infull for its maximum amount of €24.2 million.The agreement also stipulates that Sequana must comply withseveral financial covenants that will be tested on a regular basisand are described below. The income and cash flow indicatorsused for the covenants are all calculated over a rolling 12-monthperiod. These ratios are defined in the “Preliminary remarks” sectionof chapter 1 and in the “Liquidity risk” section of chapter 3:■■Consolidated net debt/consolidated EBITDA (leverage):at 30 June 2012 < 6.00at 31 December 2012 < 5.00at 30 June 2013 < 4.75at 31 December 2013 < 4.00■■Consolidated net debt/consolidated equity (gearing):at 30 June 2012 ≤ 1.3at 31 December 2012 ≤ 1.2at 30 June 2013 ≤ 1.2at 31 December 2013 ≤ 1.1■■Consolidated EBITDA/consolidated net interest expense excludingdeferred interest expense (interest cover):Tested half yearly. Must be ≥ 3.0.The Company complied with all of the ratios specified by thesecovenants at the test dates in 2012 (30 June and 31 December).Interest on amounts drawn down is calculated at the variableEuribor rate plus an annual margin of 4.5%Sequana has also negotiated overdraft facilities of up to €5 millionwith another top-ranking bank, of which €1.6 million hadbeen used at end-December 2012. This facility was confirmedand renewed through to 30 June 2014. The agreement providesfor amortisation payments of €0.12 million in 2012 and 2013and additional repayments in the event that Sequana carries outany capital increases. €1.5 million was paid down following theJuly 2012 capital increase. At 31 December 2012, the maximumpermissible overdraft was €3.4 million.Under the terms of the agreement extending this facility, theCompany’s consolidated equity must be above €110 million.The interest rate on amounts drawn down was reset at 3%.In order to ensure the stability of its credit facilities, whetherdrawn or undrawn, the Company’s policy is to strictly limitcovenants in financing contracts that enable lenders to requirechanges to the contracts’ financial terms. In particular, ratingtrigger clauses are excluded.Risk management(interest rates, foreign currency)Option sales for purposes other than hedging are prohibited.Group policy is to not carry out transactions in financial marketsfor speculative purposes. Derivatives are put in place when theGroup is exposed – or almost certain to be exposed – to a particularrisk.Interest rate riskAlthough it is exposed to interest rate risk on its external debt,given the general pattern of falling interest rates that beganin 2008, Sequana has decided not to set up any interest ratehedges. This policy will be reviewed in the light of economicdevelopments.Foreign exchange riskSequana has contracted a one-year loan for an amount ofGBP 1,030,000 with its subsidiary, Arjo Wiggins AppletonInsurance Ltd, to fund cash pooling arrangements with itssubsidiaries.Sequana | 2012 Document de référence (English version) | 175

4Financial position – resultsNotes to the parent company financial statementsNote 16 - List of subsidiaries and associates at 31 December 2012Carrying amountof the investment(€ millions)SharecapitalEquity otherthan capitalbeforeappropriationof net income(loss) % ownership Gross NetOutstandingloans andadvancesgranted bythe CompanyGuaranteesgiven bythe Company2012net sales2012 netincome(loss)Dividendsreceived bythe Companyduringthe yearCommentsA) Detailed disclosures for investments with a carrying amount in excess of 1% of the Company’s share capital:1 – Subsidiaries (more than 50%-owned by the Company)Sequana Ressources & Services8, rue de Seine92100 Boulogne-Billancourt – FranceBoccafin SAS8, rue de Seine92100 Boulogne-Billancourt – FranceArjowiggins SAS32, avenue Pierre Grenier92100 Boulogne-Billancourt – FranceAntalis International SAS8, rue de Seine92100 Boulogne-Billancourt – FranceArjo Wiggins Appleton Insurance LtdMaison Trinity – Trinity SquareGY1 4AT St Peter Port Guernesey5 (1) 100.00 10 4 – – 8 – – –7 2 100.00 12 9 – – – – – –224 69 100.00 1,261 615 – – 7 (14) – –700 251 100.00 1,242 1,080 – – 52 32 8 –GBP1 million2 - Associates (10%- to 50%-owned by the Company)GBP1 million3 - Other investments (less than 10%-owned by the Company) – –B) Aggregate data concerning other subsidiaries and associates:1 - Subsidiaries not included in section A:a) French companies – –b) Foreign companies2 - Associates not included in section A:a) French companies – –b) Foreign companies – –TOTAL 2,526 1,709100.00 1 1 – – – – – –Note 17 - Subsequent eventsIn the first quarter of 2013, Sequana began discussions with its banks with a view to renewing its credit lines due to expire on 30 June 2014.On 26 March 2013, Sequana finalised the renewal in principle of its confirmed credit and overdraft facilities for a two-year periodthrough to 30 November 2015.The covenants stipulated in Sequana’s bilateral credit line agreement were amended as follows:Consolidated net debt/consolidated EBITDA (leverage):at 30 June 2013 < 7.00at 31 December 2013 < 4.75at 30 June 2014 < 4.25at 31 December 2014 < 4.00at 30 June 2015 < 3.50The complete legal documentation should be finalised by the end of April 2013.176 | Sequana | 2012 Document de référence (English version)

Securities portfolio at 31 December 2012Financial position – results4Notes to the parent company financial statements(€ millions) % owned NetSecurities with a carrying amount greater than or equal to €300,000French companies1,014,250 shares Sequana Ressources & Services 100.00 4704,406 shares Boccafin 100.00 913,730,000 shares Arjowiggins SAS 100.00 61577,776,190 shares Antalis International 100.00 1,080Foreign companies2,000,000 shares Arjo Wiggins Appleton Insurance Ltd - UK 100.00 1TOTAL 1,709Five-year financial summary2012 2011 2010 2009 2008I – Capital at year-endShare capital (€ millions) 225 74 74 74 74Number of ordinary shares outstanding 25,009,372 49,545,002 49,545,002 49,545,002 49,545,002II – Results of operations (€ millions)Net sales (1) 14 33 30 170 103Income before tax and non-cash expenses (depreciation, amortisation and provisions) (15) 6 (163) 65 43Income tax expense 3 2 3 7 17Net income (loss) (29) (331) 272 898 (638)Dividends distributed – – 20 17 –III – Per share data (in €)Income after tax but before non-cash expenses (depreciation, amortisation and provisions) (0.44) 0.15 (3.23) 1.46 1.22Net income (loss) (1.14) (6.67) 5.49 18.12 (12.88)Net dividend per share – – 0.40 0.35 –IV – Employee dataAverage number of employees during the year 18 20 21 22 21Total payroll (€ millions) 5 4 6 6 5Total employee benefits (€ millions) 3 2 3 2 1(1) Sales correspond to services rendered, income from the securities portfolio and other financial income.Sequana | 2012 Document de référence (English version) | 177

4Financial position – resultsStatutory Auditors’ report on the financial statementsStatutory Auditors’ report on the financial statementsFor the year ended 31 December 2012This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English speaking readers. The StatutoryAuditors’ report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the opinion on thefinancial statements and includes an explanatory paragraph discussing the Auditors’ assessments of certain significant accounting and auditing matters. These assessmentswere considered for the purpose of issuing an audit opinion on the financial statements taken as a whole and not to provide separate assurance on individual account captionsor on information taken outside of the financial statements.This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.Sequana8, rue de Seine92100 Boulogne‐BillancourtFranceTo the Shareholders,In compliance with the assignment entrusted to us by yourAnnual General Meeting, we hereby report to you, for the yearended 31 December 2012, on:■■the audit of the accompanying financial statements of Sequana;■■the justification of our assessments;■■the specific verifications and information required by law.These financial statements have been approved by the Board ofDirectors. Our role is to express an opinion on these financialstatements based on our audit.I - Opinion on the financial statementsWe conducted our audit in accordance with professional standardsapplicable in France. Those standards require that we planand perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement.An audit involves performing procedures, using samplingtechniques or other methods of selection, to obtain audit evidenceabout the amounts and disclosures in the financial statements.An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimatesmade, as well as the overall presentation of the financial statements.We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.In our opinion, the financial statements give a true and fair view ofthe assets and liabilities and of the financial position of the Companyat 31 December 2012 and of the results of its operations for the yearthen ended in accordance with French accounting principles.Without qualifying our opinion, we draw your attention toNotes 1, 15 and 17 to the financial statements which describe theterms and conditions of the Company’s refinancing.II - Justification of our assessmentsThe estimates used in preparing the financial statements at31 December 2012 were made in a climate of ongoing economicuncertainty where forecasting the business outlook is extremelydifficult. It is in this context that, in accordance with the requirementsof Article L. 823-9 of the French Commercial Code (Codede commerce) relating to the justification of our assessments, webring to your attention the following matters:As part of our assessment of the accounting rules and principlesapplied by the Company, and based on the informationprovided to date, we have verified that Notes 1, 15 and 17 tothe financial statements contain the appropriate disclosures onthe Company’s financial position and its agreements with banksrelating to the terms and conditions of its credit and overdraftfacility agreements.The Company estimates the value in use of its investments inaccordance with the method described in Note 2.B to the financialstatements. As part of our assessment of the accounting rulesapplied by the Company, we assessed the appropriateness of thismethod and ensured that it was correctly applied and that thenotes to the financial statements provide appropriate disclosures.Our work also consisted of assessing the data and assumptionsused by the Company and reviewing the calculations performed.These assessments were made as part of our audit of the financialstatements, taken as a whole, and therefore contributed to the opinionwe formed which is expressed in the first part of this report.III – Specific verifications and informationIn accordance with professional standards applicable in France, wehave also performed the specific verifications required by French law.We have no matters to report as to the fair presentation and theconsistency with the financial statements of the informationgiven in the management report of the Board of Directors, and inthe documents addressed to the shareholders with respect to thefinancial position and the financial statements.Concerning the information given in accordance with the requirementsof Article L. 225-102-1 of the French Commercial Coderelating to remuneration and benefits received by corporate officersand any other commitments made in their favour, we have verifiedits consistency with the financial statements, or with the underlyinginformation used to prepare these financial statements and, whereapplicable, with the information obtained by your Company fromcompanies controlling it or controlled by it. Based on this work,we attest to the accuracy and fair presentation of this information.In accordance with French law, we inform you that the required informationconcerning the identity of shareholders and holders of thevoting rights has been properly disclosed in the management report.PricewaterhouseCoopers AuditCatherine Sabouret178 | Sequana | 2012 Document de référence (English version)Neuilly-sur-Seine, 30 April 2013The Statutory AuditorsConstantin AssociésMember of Deloitte Touche Tohmatsu LimitedJean-Paul Séguret

Financial position – resultsStatutory Auditors’ special report on related-party agreements and commitmentsStatutory Auditors’ special reporton related-party agreements and commitments4Annual General Meeting for the approval of the financial statementsfor the year ended 31 December 2012This is a free translation into English of the Statutory Auditors’ special report on related-party agreements and commitments issued in French and is provided solely for theconvenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standardsapplicable in France.Sequana8, rue de Seine92100 Boulogne‐BillancourtFranceTo the Shareholders,In our capacity as Statutory Auditors of Sequana, we herebyreport to you on related-party agreements and commitments.It is our responsibility to report to shareholders, based on theinformation provided to us, on the main terms and conditions ofagreements and commitments that have been disclosed to us orthat we may have identified as part of our engagement, withoutcommenting on their relevance or substance or identifying anyundisclosed agreements or commitments. Under the provisionsof Article R. 225-31 of the French Commercial Code (Code decommerce), it is the responsibility of the shareholders to determinewhether the agreements and commitments are appropriate andshould be approved.Where applicable, it is also our responsibility to provide shareholderswith the information required by Article R. 225-31 of theFrench Commercial Code in relation to the implementation duringthe year of agreements and commitments already approved bythe Annual General Meeting.We performed the procedures that we deemed necessary inaccordance with professional standards applicable in France tosuch engagements. These procedures consisted in verifying thatthe information given to us is consistent with the underlyingdocuments.Agreements and commitments to be approvedby the Annual General MeetingAgreements and commitments authorised during the yearIn accordance with Article L. 225-40 of the French CommercialCode, we were informed of the following agreements and commitmentsauthorised by the Board of Directors.Shareholder loan agreement with Exor SA signed on27 April 2012As part of the Group’s refinancing and in anticipation of theJuly 2012 capital increase, Sequana signed a shareholder loanagreement with Exor SA for an amount of €21,182 million.The loan bears interest at 3-month Euribor rate plus 375 bpsuntil 30 June 2012 and at 3-month Euribor plus 562 bps from1 July 2012. Sequana recorded interest expenses of €83,940 inrespect of this shareholder loan which expired at the date of thecapital increase.Exor SA holds more than 10% of the voting rights of Sequanaand is represented on its Board of Directors by Tiberto RuyBrandolini d’Adda and Pierre Martinet.Shareholder loan agreement with the companiesof the Allianz group signed on 27 April 2012As part of the Group’s refinancing and in anticipation of theJuly 2012 capital increase, Sequana signed a shareholder loanagreement with Allianz France, Allianz Vie and Allianz IARDfor an amount of €8.876 million.The loan bears interest at 3-month Euribor rate plus 375 bpsuntil 30 June 2012 and at 3-month Euribor plus 562 bps from1 July 2012. Sequana recorded interest expenses of €35,173 inrespect of this shareholder loan which expired at the date of thecapital increase.Together, these three companies of the Allianz group hold over10% of the voting rights of Sequana and Allianz France is a directorof the Company.Agreement with Natixis to underwrite a future capitalincrease by the CompanySequana signed an agreement to underwrite a future capitalincrease with Société Générale and Natixis on 11 April 2012 and15 May 2012.Under this agreement, the portion of the capital increase nottaken up is underwritten by Société Générale and Natixis forup to €23.25 million in order to reach the minimum amountrequired by law for the capital increase to be carried out. Sequanapaid Natixis an underwriting fee of €900,000.Laurent Mignon is Chief Executive Officer of Natixis and adirector of Sequana.Refinancing agreements with Arjowigginsand Antalis International of 30 April 2012Sequana, Arjowiggins and Antalis International jointly signed agreementswith the lending banks to provide Arjowiggins and AntalisInternational with guarantees and collateral.These jointly signed agreements provide additional guarantees andcollateral for the banks, in particular pledges on Antalis Internationalsecurities and on Antalis International and Arjowiggins receivables,and the subordination of amounts owed by Sequana to Arjowiggins,Antalis International or to certain subsidiaries.These agreements also contained restrictions on the payment bythe subsidiaries of dividends or service commissions to Sequana orthe payment of a dividend by Sequana to its shareholders in 2012and 2013.Sequana | 2012 Document de référence (English version) | 179

4Financial position – resultsStatutory Auditors’ special report on related-party agreements and commitmentsSequana, Arjowiggins and Antalis International have one corporateofficer in common, Pascal Lebard, and Sequana holds more than 10%of Arjowiggins and Antalis International.Memorandum of understanding of 4 June 2012with Exor SA, DLMD, Allianz and Pascal LebardOn 4 June 2012, a Memorandum of understanding was signedbetween Sequana, Fonds Stratégique d’Investissement (FSI),Exor SA, Allianz France, Allianz Vie, Allianz IARD, DLMD,Pascal Lebard (in his own name), BNP Paribas Arbitrage, TheRoyal Bank of Scotland NV and The Royal Bank of Scotland Plc.The agreement defines the terms and conditions under which FSIand Sequana’s main shareholders would subscribe to the capitalincrease and provides for a number of changes to the Company’scorporate governance practices.Exor SA, DLMD and the Allianz group each hold over 10%of the voting rights of Sequana and each has one representativeon Sequana’s Board of Directors. In addition, Pascal Lebard is adirector and Chief Executive Officer of Sequana.Underwriting and placement agreement of 12 June 2012with NatixisOn 12 June 2012, Sequana signed an underwriting and placementagreement with Natixis and Société Générale to set out theterms and conditions for underwriting new share subscriptions aspart of the capital increase.Under this agreement, the portion of the capital increase nottaken up is covered by irrevocable subscription commitments bySociété Générale and Natixis for up to the full amount of theissue. Sequana paid Natixis an underwriting fee of €1,117,070.Laurent Mignon is Chief Executive Officer of Natixis and adirector of Sequana.Agreements and commitments previouslyapproved by the Annual General MeetingWe were not informed of any agreement or commitment that hadalready been approved by the Annual General Meeting whichremained in force during the year ended 31 December 2012.Neuilly-sur-Seine, 30 April 2013The Statutory AuditorsPricewaterhouseCoopers AuditCatherine SabouretConstantin AssociésMember of Deloitte Touche Tohmatsu LimitedJean-Paul Séguret180 | Sequana | 2012 Document de référence (English version)

Proposed allocation of net lossThe Company ended 2012 with a net loss of €28,556,084.58.The Board of Directors recommends allocating all of this amount to retained earnings.No dividend will be paid in respect of 2012.Financial position – resultsProposed allocation of net loss4Dividends paid over the last three years were as follows:Year 2011 2010 2009Number of dividend-bearing shares – 49,281,809 49,306,527Total dividend €0 €19,712,723.60 €17,257,284.45Net dividend per share (1) €0 €0.40 €0.35(1) Eligible for tax relief of 40%.Sequana | 2012 Document de référence (English version) | 181

4Financial position – resultsProposed allocation of net loss182 | Sequana | 2012 Document de référence (English version)

Chapter 5GENERAL INFORMATIONABOUT THE COMPANYInformation about the Company 184Corporate name and registered office 184Legal form and governing law 184Date of incorporation and term 184Corporate purpose 184Registration particulars 184Consultation of corporate documents 184Financial year 185Dividends 185General Meetings 185Notice of meetings 185Voting rights 185Shareholder identification 186Disclosure thresholds 186Information about the Company’s capital 187Changes in share capital in 2012and over the last five years 187Share awards 187Capital increase 187Reverse stock split 187Changes in share capital over the last five years 188Ownership structure and voting rights 188Voting rights – number and particulars 188Breakdown of share capital – changes in 2012and position at 31 December 2012 188Shareholder agreements 189Mandatory disclosure of changes in holdings 190Dealings in the Company’s shares 191Information likely to have an impact in the eventof a public offering 191Share buyback programmes 191Financial authorisations in force 192Potential share capital 193Stock options 193Free shares 194~Sequana | 2012 Document de référence (English version) | 183

5General information about the CompanyInformation about the CompanyInformation about the CompanyCorporate name and registered officeAt its meeting of 13 December 2011, the Company’s Board ofDirectors decided to transfer Sequana’s registered office from19 avenue Montaigne, 75008 Paris, France to 8 rue de Seine,Boulogne-Billancourt, France, with effect from 9 January 2012.Since that date the address and telephone number of the registeredoffice have been as follows:Sequana8 rue de Seine, 92100 Boulogne-Billancourt – FranceTel: +33 (0)1 58 04 22 00Legal form and governing lawSequana is a French joint stock company (société anonyme) governed by French commercial law, in particular the French CommercialCode (Code de commerce).Date of incorporation and termThe Company was incorporated on 29 October 1991 for a term expiring on 31 December 2050, unless extended or dissolved beforesuch time.Corporate purpose (Article 2 of the Articles of Association)The Company’s corporate purpose is as follows:■■investing, in any form whatsoever, in any type of industrial,commercial, property or financial company;■■acquiring, in any form whatsoever, shares, bonds, receivables,commercial paper, or other securities or property rights;■■managing the above interests, securities or property rights;■■carrying out financial operations of any nature, includinggranting loans to other companies within the Group and anyother treasury transactions such as guarantees or collateral;■■advising any person or company on financial and investingissues, and providing or receiving assistance and consultingservices on technical or administrative issues;■■and more generally, carrying out any commercial, industrial,financial, personal and/or real property transactions directly orindirectly related to the above-mentioned purposes or any similaror related purposes.Registration particularsSince 8 January 2012, Sequana has been registered with the Nanterre Trade and Companies Registry under number 383 491 446. Priorto that date, it was registered with the Paris Trade and Companies Registry.Consultation of corporate documentsIn accordance with the law, the Company’s corporate documentsand historical financial information – including the Articles ofAssociation – can be consulted at Sequana’s registered officelocated at 8 rue de Seine, 92100 Boulogne-Billancourt, France.Further information on the Sequana Group may be obtained freeof charge by writing to:Sequana, Secrétariat général, 8 rue de Seine,92517 Boulogne-Billancourt cedexSee also the Company’s website, www.sequana.com.184 | Sequana | 2012 Document de référence (English version)

General information about the CompanyInformation about the Company 5Financial yearThe Company’s financial year covers a twelve-month period from 1 January to 31 December.Dividends (Articles 12 and 22 of the Articles of Association)Each share entitles its holder to a proportion of the Company’sprofits and net assets equal to the proportion of capital representedby the share.At least 5% of profit for the year, less any losses brought forwardfrom prior years, is transferred to the legal reserve until suchtime as the legal reserve represents one-tenth of the share capital.Further annual transfers are made on the same basis if the legalreserve falls below one-tenth of the share capital.Distributable income is composed of profit for the year less any prioryear losses and amounts appropriated to reserves in compliance withthe law or the Articles of Association, plus any retained earnings.Shareholders in a General Meeting may decide to appropriate allor part of this amount to any discretionary reserves or to retainedearnings.The balance is then distributed among shareholders pro rata totheir shareholding.The Company’s shareholders may decide to pay a dividend outof distributable reserves, stipulating the reserve accounts fromwhich the dividend is to be deducted.The methods of payment for dividends are determined by shareholdersin a General Meeting or by the Board of Directors in theabsence of a decision by the shareholders.The General Meeting may offer shareholders the option of receivingall or part of the dividend in the form of cash, new shares inthe Company or other assets. The Board of Directors may alsooffer this option in relation to an interim dividend in compliancewith the law.General MeetingsNotice of meetings(Article 20 of the Articles of Association)General Meetings are called by the Board of Directors or, wherenecessary, by the Statutory Auditors or any duly authorisedperson. Only matters on the agenda may be discussed at thesemeetings.Irrespective of the number of shares held and in accordance withthe applicable law and regulations, all shareholders have the rightto participate in General Meetings, either in person, by proxy, orby casting a postal vote, subject to presentation of proof of identityand ownership of their shares.In accordance with the applicable law and regulations, shareholdersmay send their proxy/postal voting forms for Ordinaryor Extraordinary General Meetings either in paper format or, ifauthorised by the Board of Directors in the notice of meeting, inelectronic form.Postal and proxy votes will only be taken into account if receivedby the Company at least three days before the meeting. Thistimeframe may be shortened upon the decision of the Board ofDirectors. Electronic voting forms may, however, be received by theCompany until 3.00 p.m. CET on the day preceding the meeting.Shareholders who have indicated their intention to attend aGeneral Meeting or who have lodged postal or proxy votes maystill sell or transfer all or some of the shares to which said attendance,postal vote, or proxy relates. However, where any such saleor transfer takes place prior to midnight CET on the third businessday preceding the meeting, the Company will cancel oramend the related proxy, postal vote, admittance card or shareownership certificate accordingly.Voting rights(Article 21 of the Articles of Association)Currently, and since the Company was created, the voting rightsattached to the Company’s shares are based on the proportion ofcapital those shares represent, with each share carrying one vote.Consequences of the reverse stock split approved by theShareholders’ Meeting of 26 June 2012By way of derogation from the paragraph above, up to14 November 2014, any non-consolidated (i.e., pre-reverse split)Sequana shares (previously with a par value of €1.50) carry onevoting right, while any consolidated (i.e., post-reverse split) shareswith a par value of €9 carry six voting rights, such that the numberof voting rights attached to outstanding shares is based on theproportion of capital those shares represent.After this date, i.e., as from 15 November 2014, the distinctionbetween pre- and post-reverse split shares will no longer apply, andany one share in the Company will carry at least one voting right.Sequana | 2012 Document de référence (English version) | 185

5General information about the CompanyInformation about the CompanyDouble voting rights approved by the Annual General Meetingof 26 June 2012Pursuant to the decision of the Annual General Meeting of26 June 2012 (16 th resolution), as from 26 June 2014 double votingrights will be allocated to all registered and fully paid-up sharesregistered in the name of the same holder for at least two years.Double voting rights shall cease automatically with respect toany shares converted into bearer form or transferred, except asexpressly provided by law.In the event of a capital increase paid up by capitalising reserves,profits or issue premiums, double voting rights will, from the date ofissue, be allocated to shares awarded free of charge to eligible shareholdersbased on the number of old shares held in registered form.Shareholder identificationThe Company’s shares – which must be held in either registeredor bearer form – are recorded in shareholders’ accounts in accordancewith the applicable laws and regulations.The Company may ask to receive information, from any authorisedbody or intermediary, on the identity of its shareholders or holdersof other securities conferring voting rights in the Company,either immediately or in the future, the number of securities theyhold, and any restrictions on said securities, in accordance withand subject to the penalties provided by the legislation in force.In compliance with the applicable laws and regulations, any intermediaryregistered on behalf of a shareholder in accordance withArticle L. 228-1 of the French Commercial Code is required todisclose the identity of the person or entity in the name of whomit is acting, upon simple request by the Company or its representative,which may be made at any time.Disclosure thresholdsIn addition to the regulatory requirements concerning the statutorydisclosure thresholds in force (5%, 10%, 15%, 20%, 25%,33.3%, 50%, 66.6%, 90% and 95%), any individual or legal entitythat raises its interest in the Company, held directly or indirectly,through one or more of the legal entities that it controls withinthe meaning of Article L. 233-3 of the French CommercialCode, to 0.5% of the share capital, is required to disclose to theCompany by registered letter with return receipt requested thetotal number of shares owned. Said disclosure formalities mustbe carried out within five trading days of the date the threshold iscrossed and must be respected each time a shareholder’s interestis raised to above or reduced to below any 0.5% threshold, evenif the thresholds crossed are higher or lower than those providedfor by law. An intermediary registered as holding shares on behalfof a shareholder in accordance with the applicable laws and regulationsis required, without prejudice to the obligations of theshareholder concerned, to make the above-mentioned disclosureswith respect to all of the shares registered in the intermediary’saccount. In the case of fund management companies, said disclosureformalities must be carried out for all of the Company’sshares held by the funds that they manage.If a shareholder fails to comply with the above disclosure rules,the shares not disclosed pursuant to the law or the provisionsdescribed above will be stripped of voting rights for a periodof two years as from the date on which the omission is remedied.This sanction will only apply upon request by one or moreshareholders owning at least 5% of the Company’s capital, dulyrecorded in the minutes of a General Meeting.186 | Sequana | 2012 Document de référence (English version)

Information about the Company’s capitalGeneral information about the CompanyInformation about the Company’s capital 5Changes in share capital in 2012 and over the last five yearsThe various changes to the Company’s share capital in 2012 aredescribed below.Share award plan (30 April 2012)On 30 April 2012, 473,742 new shares with a par value of€1.50 each were created in connection with the 9 February2010 share award plan and awarded to eligible employees. TheCompany’s share capital was therefore increased from €74,317,503to €75,028,116, comprising 50,018,744 shares, each with a parvalue of €1.50.Capital increase (9 July 2012)On 4 June 2012, the Board of Directors of Sequana, acting inaccordance with the authorisation given by the Annual GeneralMeeting of 19 May 2011, voted to increase the Company’s sharecapital in order to accelerate the Group’s development plan andstrengthen its financial structure. The share capital was increasedby a nominal amount of €150,056,232 by issuing 100,037,488 newshares, each with a par value of €1.50. Pre-emptive subscriptionrights were maintained for existing shareholders at a subscriptionratio of two new shares for each share previously held. The subscriptionperiod ran from 14 June to 27 June 2012 inclusive.The new share issue had been fully subscribed by the deliverysettlementdate on 9 July 2012 and 100,037,488 new shareswere duly created and issued at a par value of €1.50 each. Thisincreased the Company’s share capital from €75,028,116 to€225,084,348, comprising 150,056,232 shares each with a parvalue of €1.50.Reverse stock split (15 November 2012)On 25 October 2012, the Board of Directors voted to launch thereverse stock split approved by the Annual General Meeting of26 June 2012. The reverse stock split would be based on the exchangeof one new share with a par value of €9 for six old shares with a parvalue of €1.50. Pursuant to the authorisation granted by shareholdersin this respect, the Board of Directors set 15 November 2012 asthe start date of the operation and observed that the reverse stocksplit would result in a total of 25,009,372 shares.As a result of the reverse stock split, since 15 November 2012the Company’s share capital, which had remained unchangedat €225,084,348 since 9 July 2012, has been made up of25,009,372 shares, each with a par value of €9, all fully paid-upand of the same class.At 31 December 2012, 128,886,720 old shares representing85.89% of the share capital had been tendered to the reverse stocksplit, and at 31 March 2013, over 99% of these had been consolidated.Non-consolidated (pre-reverse split) shares, listed on theNYSE Euronext delisted securities department will be delisted asof 15 May 2013 but will be able to be traded over the counter. Theymay be tendered to the reverse stock split until the end of a two-yearperiod starting 15 November 2012, i.e., until 14 November 2014inclusive. Pursuant to Article L. 228-6 of the French CommercialCode and the decision of the Board of Directors of 25 October2012, on expiry of said period, any new shares not claimed by thebeneficiaries shall be sold on the stock market. The net proceedsfrom the sale will be placed in an escrow account with a bank andmay be claimed by beneficiaries during a ten-year period. Oncethis ten-year period has expired, the sums accruing to beneficiarieshaving neither claimed nor exchanged their old shares for newshares prior to 15 November 2014, or claimed any cash paymentas described above between 15 November 2014 and 15 November2024, will be placed with Caisse des Dépôts and may be claimedby the beneficiaries during a 20-year period in accordance withthe 30-year statute of limitations, after which the funds shall bepaid over to the French State.The stock market particulars of this reverse stock split are providedin Chapter 1, under “Share performance and ownershipstructure” on page 19.There were no significant changes in the Company’s share capitalbetween 31 December 2012 and the date on which this registrationdocument was filed.However, since the rights of certain beneficiaries under the 2010share award plan vested during the year, and subject to the beneficiariesstill being employed by the Group at the vesting date, theshare capital should increase by 1,849 shares, representing a nominalamount of €16,641 on 30 April 2013, from €225,084,348 to€225,100,989. Following the creation of these 1,849 shares, theshare capital will comprise 25,011,221 shares, each with a parvalue of €9.Any changes in the share capital attached to shares are subject tothe applicable laws and regulations as the Company’s Articles ofAssociation do not contain any specific provisions in this respect.Changes in the voting rights attached to the shares, excluding thosesubject to applicable laws and regulations, are described below.Sequana | 2012 Document de référence (English version) | 187

5General information about the CompanyInformation about the Company’s capitalChanges in share capital over the last five yearsDate share capitalwas recordedby the Board (or dateof the transaction)Increase(in €)Number of sharescreatedNumber of sharesmaking upthe share capitalPar valueof shares(in €)Totalshare capital(in €)Position at 31 December 2007 19/03/2008 49,545,002 €1.50 €74,317,503Position at 31 December 2008 10/03/2009 49,545,002 €1.50 €74,317,503Position at 31 December 2009 09/02/2010 49,545,002 €1.50 €74,317,503Position at 31 December 2010 09/03/2011 49,545,002 €1.50 €74,317,503Position at 31 December 2011 18/01/2012 49,545,002 €1.50 €74,317,503Share award plan 30/04/2012 €710,613 473,742 50,018,744 €1.50 €75,028,116Capital increase 09/07/2012 €150,056,232 100,037,488 150,056,232 €1.50 €225,084,348Reverse stock split 15/11/2012 25,009,372 €9.00 €225,084,348Position at 31 December 2012 22/01/2013 25,009,372 €9.00 €225,084,348Ownership structureVoting rights – number and particularsThe number of voting rights attached to the Company’s shares isbased on the proportion of capital those shares represent. Onlytreasury shares do not carry any voting rights, in accordance withArticle L. 225-210 of the French Commercial Code.Until 14 November 2012, each share carried one voting right and thenumber of voting rights was therefore equal to the number of shares.As described in “Information about the Company – Votingrights”, from 15 November 2012, the date of the reverse stocksplit, and up to 14 November 2014, each post-reverse split sharewith a par value of €9 carries six voting rights and each prereversesplit share carries one voting right.Accordingly, since 15 November 2012, the 25,009,372 sharescomprising the Company’s share capital together carry150,056,232 voting rights.As from 26 June 2014, the number of votes attached to outstandingshares will no longer necessarily be based on the proportionof capital those shares represent, since double voting rights willbe granted to each registered share registered in the name ofthe same holder for at least two years. The introduction of doublevoting rights was approved by the Annual General Meetingof 26 June 2012, and is designed to improve the stability of theCompany’s ownership structure and provide a more significantrole in the Company for long-term shareholders.As from the end of the period for the reverse stock split,i.e., 15 November 2014, pre-reverse split shares will be strippedof their voting rights in Shareholders’ Meetings pursuant toArticle 6 of Decree No. 048-1683 of 30 October 1948 definingcertain characteristics of marketable securities, and all shares inthe Company will carry one voting right, except for registeredshares carrying double voting rights as discussed above.Ownership structure – changes in 2012and position at 31 December 2012Following subscriptions to the 9 July 2012 capital increase, theCompany’s ownership structure has changed. Since the dateof the capital increase, the state-controlled investment vehicle,Fonds Stratégique d’Investissement (FSI), has held 20.09% ofSequana’s capital, and the shareholdings of Exor SA, DLMDand Allianz have decreased.The table below shows the breakdown of the Company’s ownershipstructure at 31 December 2012 compared to the two previousfinancial years.There was no significant change in ownership structure between31 December 2012 and the date on which this registration documentwas filed.Currently, there are no double voting rights and the number ofvoting rights is proportional to the number of shares. No shareholdershold any special voting rights.188 | Sequana | 2012 Document de référence (English version)

General information about the CompanyInformation about the Company’s capital 5Numberof sharesFSI5,024,916Exor SA (3)4,685,844DLMD (3)3,338,717Allianz group2,554,803Pascal Lebard (3) 64,36131/12/2012 (1) 31/12/2011 31/12/2010% capital20.0918.7413.3510.220.26% votingrights (2)20.0918.7413.3510.220.26Numberof shares–13,993,22910,016,1535,863,29213,093% capital–28.2420.2211.830.03% votingrights (2)–28.2420.2211.830.03Numberof shares–13,993,22910,016,1535,863,29213,093Public 9,231,426 36.91 36.91 19,334,232 39.02 39.02 19,437,309 39.23 39.23Treasury shares 109,305 0.43 – 325,003 0.66 – 221,926 0.45 –% capitalTOTAL 25,009,372 100.00 49,545,002 100.00 49,545,002 100.00(1) Information is provided based on the number of new shares after the reverse stock split on 15 November 2012.(2) Proportion of voting rights theoretically held by each shareholder based on all voting shares and including shares stripped of voting rights, pursuant to Article 223-11of the AMF’s General Regulations.(3) Between 6 July 2007 and 4 June 2012, Exor SA, DLMD and Pascal Lebard were bound by a shareholder agreement to act in concert with regard to the Companyand held 48% of Sequana’s share capital and voting rights (see below).–28.2420.2211.830.03% votingrights (2)–28.2420.2211.830.03To the Company’s knowledge, no other shareholder owns (or hasowned since 2010), directly or indirectly, more than 5% of theCompany’s capital or voting rights.Sequana carried out a survey of shareholders who held Sequanashares in registered or bearer form at 31 July 2012, i.e., after thecapital increase. At end-July 2012, approximately 14,000 shareholderswere identified, accounting for over 96% of the Company’sshare capital. Based on this survey, out of the 37% of theCompany’s shares held by the public (39% at 31 December 2011),6% are held by private fund managers (8% at end-2011), 37% byindividual investors (29% at end-2011) and 42% by institutionalinvestors (57% at end-2011). The geographical origin of institutionalinvestors was as follows: approximately 45% were based inFrance (versus 38% at end-2011), 36% in North America (35% atend-2011) and 19% in continental Europe (20% at end-2011). Thepercentage of shareholders in the rest of the world was not material,as was the proportion of shareholders in Great Britain andIreland, who held less than 1% of the Company at 31 July 2012compared to 7% at 31 December 2011.To the Company’s knowledge, 4,148 shareholders held Sequanashares in registered form at 31 December 2012 (source:BNP Paribas Securities Services).No Sequana shares were held by any of its subsidiaries. A total of80,115 shares were held by employees and former employees of theGroup through units in mutual funds invested in Sequana sharesat 31 December 2012, representing 0.32% of the Company’s capital(see “Employee savings” in Chapter 6 on page 203).Shareholder agreementsShareholder agreement in force until 4 June 2012On 6 July 2007, Pascal Lebard, Exor SA and DLMD, a familyruncompany controlled and managed by Pascal Lebard, signed ashareholder agreement to act in concert vis-à-vis Sequana.Signed for an initial term of three years for the purpose of stabilisingthe Company’s ownership structure, the agreement wasrenewed on 21 July 2010 for a further period of one year, and thenautomatically renewed in 2011.When the agreement was renewed in 2010, the parties undertookto maintain their respective stakes in Sequana. They agreed notto enter into any transactions involving Sequana shares, directlyor indirectly, alone or in concert, that would require them, individuallyor collectively, to make a public offer for the rest of theCompany’s capital. The parties also agreed to inform each otherimmediately of any transfer or acquisition of Sequana shares theymay carry out.Pascal Lebard also agreed not to reduce his stake in DLMD,except in the event of transfer of shares to a family member. Theagreement was to become automatically null and void in the eventthat the total stake held by the parties in Sequana fell below15%, if the stake held by DLMD and Pascal Lebard fell below5%, or if the stake held by Exor SA fell below 10%.When the agreement was automatically renewed in 2011, theloans contracted by DLMD in 2007 from its banks and fromExor SA were restructured. The debt owed by DLMD to Exor SAwas extinguished by DLMD’s sale of 790,190 Sequana shares(1.59% of share capital) to Exor SA on 30 July 2010. As a result ofthis transaction, DLMD’s interest in Sequana fell from 21.81%to 20.22%, while Exor SA’s interest in the Company increasedfrom 26.65% to 28.24%.On 30 July 2010, DLMD granted each of its two banks actingindependently (Royal Bank of Scotland and BNP ParibasArbitrage) a four-year call option on all of the Sequana sharesit owned. The exercise price of these options was fully paidup in advance by setting it off against the entire debt owed byDLMD to BNP Paribas and Royal Bank of Scotland (RBS). Inthe event that all or some of the options are exercised, DLMDcan choose to settle either in shares or in cash, calculated basedon the Sequana share price. The exercise of the options on all ofthe Sequana shares to which they give rights would extinguishDLMD’s outstanding debt in full.The shareholder agreement also stipulated that the Board ofDirectors should have ten members, including three appointedon the recommendation of Exor SA (including the Chairman ofthe Board), two on the recommendation of DLMD (includingthe Chief Executive Officer) and five on the joint recommendationof Exor SA and DLMD.Sequana | 2012 Document de référence (English version) | 189

5General information about the CompanyInformation about the Company’s capitalThe agreement also contained provisions governing the compositionof the Board’s committees.Memorandum of understanding and shareholderagreement in force since 4 June 2012Memorandum of understandingOn 4 June 2012, a memorandum of understanding was signedby FSI, Exor SA, DLMD, Pascal Lebard and Allianz group,with BNP Paribas Arbitrage and Royal Bank of Scotland group.BNP Paribas Arbitrage and Royal Bank of Scotland group areparties to the agreement on account of the call options they holdon the Sequana shares owned by DLMD pursuant to an agreementto restructure DLMD’s debt entered into in 2010.Under the terms of the memorandum of understanding, whichdefines the terms and conditions for FSI’s acquisition of a stakein Sequana, Exor SA, DLMD, Pascal Lebard and Allianz groupundertook to subscribe to the capital increase by exercising all orpart of their pre-emptive subscription rights. Certain parties alsoundertook to transfer to FSI the rights allowing it to subscribe asof right to a number of shares conferring a minimum shareholdingin the Company.On 4 June 2012, Exor SA, DLMD and Pascal Lebard terminatedthe shareholder agreement that they had signed on 6 July 2007and renewed on 21 July 2010, thereby ending the agreement toact in concert as regards Sequana. The agreements signed byDLMD with Royal Bank of Scotland group and BNP ParibasArbitrage were restructured so that the call options granted byDLMD to the banks through to 30 July 2014 would be settledexclusively in Sequana shares for Royal Bank of Scotland andfor a gradually declining amount based on trends in the Sequanashare price. DLMD granted the banks acting independently calloptions on the new shares to be subscribed by DLMD at the timeof the capital increase carried out by Sequana. All or part of theseoptions may be exercised up to 30 July 2014 and the exercise priceis prepaid by the banks for the purposes of this subscription.Shareholder agreementAlso on 4 June 2012, an agreement was signed between FSI, ExorSA, DLMD, Pascal Lebard, Allianz group and BNP ParibasArbitrage and Royal Bank of Scotland (the banks are parties tothe agreement for the reasons set out above).This five-year agreement, which does not constitute an agreementto act in concert as regards Sequana, sets out the rules applicableto the parties in the event that they sell all or part of their sharesin the Company. In particular, the agreement grants a preferentialright to FSI, except if DLMD transfers the shares to its bankson exercise of the aforementioned call options, in which case thebanks would be required to comply with the commitments madeby DLMD under the agreement in terms of mandatory holdingrequirements and FSI’s right of first refusal. This right offirst refusal, valid throughout the term of the shareholder agreement,applies to the sale by Exor SA, DLMD or Allianz groupof any block of Sequana shares representing at least 5% of theCompany’s capital.Exor SA, DLMD, Pascal Lebard and Allianz group undertookto maintain their respective stakes in Sequana’s share capital until30 October 2013, subject to intragroup share transfers. However,since 9 January 2013, Exor SA, DLMD and Allianz group companiesare free to gradually sell their shareholdings on the market,provided that they retain a shareholding of at least 7.5% (Exor SA)or 5% (DLMD and Allianz group) until 30 October 2013, andthat they respect FSI’s right of first refusal as described above.Since the shareholder agreement between Exor SA, DLMD andPascal Lebard was terminated, signalling the end of the agreementto act in concert, Sequana can no longer be considered as acontrolled company. The agreement entered into on 4 June 2012does not constitute an agreement to act in concert since eachshareholder effectively acts on its own behalf. Further, while theshareholders are represented on Sequana’s Board of Directors,they are not entitled to any advantages and do not hold any significantinformation not held by other shareholders, besides thatreceived in their capacity as directors.Under the terms of the agreement, if the shareholding of one ofthe parties to the agreement represents less than 5% of Sequana’scapital, that party undertakes to forgo its representation on theCompany’s Board of Directors.Mandatory disclosure of changes in holdingsDuring 2012, Sequana received the following notifications disclosingchanges in holdings:Following the termination of the shareholder agreement dated4 June 2012, Exor SA, DLMD and Pascal Lebard disclosed thatthey had fallen below one third (33.33%), three tenths (30%), andfor DLMD and Pascal Lebard alone, one quarter (25%) of theCompany’s share capital and voting rights.Following the aforementioned capital increase carried out on9 July 2012, DLMD and Pascal Lebard disclosed that they haddirectly or indirectly gone below the thresholds of 20% and 15%of the Company’s share capital and voting rights, and togetherheld 13.61% of the Company’s share capital and voting rights.On 10 July 2012, after the entry into force of changes to thecall option agreement on Sequana shares held by DLMD,Royal Bank of Scotland informed the Company that as of9 July 2012, it could go above the legal 5% threshold and the statutorythresholds of between 0.5% and 7% of the Company’s sharecapital and voting rights.On 12 July 2012, FSI disclosed that following the capital increase,it had gone above the legal thresholds of between 5% and 20% andthe statutory thresholds of between 0.5% and 20% and that itheld 20.09% of the Company’s share capital and voting rights.On 13 July 2012, Exor SA disclosed that it had gone below thestatutory thresholds of between 27.5% and 19% and that it held18.74% of the Company’s share capital and voting rights.On 26 July 2012, Allianz group disclosed that on 9 July 2012 followingthe capital increase, it had gone below the statutory thresholdsof between 11.5% and 10.5% and that it held 10.21% of theCompany’s share capital and voting rights as of that date. It alsodisclosed that Allianz Vie had gone below the statutory thresholdsof between 6% and 5.5% and that it now held only 5.11% of theCompany’s capital and voting rights.190 | Sequana | 2012 Document de référence (English version)

General information about the CompanyInformation about the Company’s capital 5On 9 November 2012, UBS Investment Bank disclosed that ithad gone above the statutory threshold of 0.5% and that it held0.85% of the Company’s share capital, and that subsequently on21 November, it had gone below this 0.5% threshold and held0.03% of the Company’s share capital and voting rights.On 8 January 2013, Abu Dhabi Investment Authority disclosedthat it had gone above the statutory threshold of 0.5% and that itheld 0.5646% of the Company’s capital.Dealings in the Company’s shares by Sequanaexecutives, related parties and membersof their family (Article L. 621-18-2of the French Monetary and Financial Code)In accordance with Article 223-26 of the AMF’s GeneralRegulations providing for the disclosure of declarations made byexecutives, related parties and members of their family regardingdealings in the Company’s shares, readers are reminded that:■■On 26 June 2012, DLMD, a company managed and controlledby Pascal Lebard and director of Sequana, subscribed to sharesin the Company at a price of €1.50 per share, for a total amountof €15,024,231.■■On 9 July 2012, Pascal Lebard, Chief Executive Officer ofSequana, subscribed to shares in the Company at a price of€1.50 per share, for a total amount of €289,641.■■On 9 July 2012, Exor SA, a director of Sequana, subscribed toshares in the Company at a price of €1.50 per share, for a totalamount of €21,182,604.■■On 9 July 2012, Allianz France, a director of Sequana, subscribedto shares in the Company at a price of €1.50 per share,for a total amount of €300.■■On 9 July 2012, Allianz Vie, a company closely related toAllianz France, which is a director of Sequana, subscribed toshares in the Company at a price of €1.50 per share, for a totalamount of €6,643,755.■■On 9 July 2012, Allianz IARD, a company closely related toAllianz France, which is a director of Sequana, subscribed toshares in the Company at a price of €1.50 per share, for a totalamount of €7,553,796.Information likely to have an impactin the event of a public offeringIn the event of a public offering for the Company’s shares, boththe offerer and the Company must comply with relevant legislationand the guidelines published by the AMF.Sequana’s Articles of Association do not contain any specific ruleslikely to have an impact in the event of a public offering, apartfrom the Company’s entitlement to trade in its own shares undercertain conditions, even during the period in which a public offeringis made. The authorisation previously granted to the Board ofDirectors to trade in the Company’s shares in such circumstanceswas renewed by the Annual General Meeting of 26 June 2012(8 th resolution) and the Annual General Meeting of 27 June 2013will be called upon to renew this authorisation in its 13 th resolution.Stock option and share award plans include provisions wherebythe rights of grantees may be modified in the event of a publicoffering for or delisting of the Company’s shares. Certain financeagreements include an early repayment clause that can be triggeredin the event of a change in control of the Company.Share buyback programmesIn the 17 th resolution of the Combined General Meeting of19 May 2011, the shareholders granted an 18-month authorisationto the Board of Directors and, by delegation, any otherduly authorised person, to buy back Sequana shares representinga maximum of 10% of the Company’s capital. In the 12 th resolutionof the Combined General Meeting of 26 June 2012, theaforementioned authorisation was terminated in respect of theunused portion, and replaced by a new 18-month authorisationgranted to the Board of Directors and, by delegation, any otherduly authorised person, to buy back Sequana shares representinga maximum of 10% of the Company’s capital.To improve the liquidity of the Sequana share and the frequency ofits quotations on the Eurolist market of NYSE Euronext, Sequanaset up a liquidity contract in 2006. This contract is performed incompliance with the code of ethics published by the French financialmarkets association, AMAFI. Since March 2009, the liquiditycontract has been managed by Oddo Corporate Finance. Atotal of €8 million was allocated to the contract by Sequana in2010. An amendment to the liquidity contract was signed withOddo Corporate Finance on 26 April 2011, reducing the amountallocated to the contract to €6 million.All share buyback transactions in 2012 were carried out withinthe scope of the liquidity contract.Between 1 January and 14 November 2012, 1,857,628 Sequanashares with a par value of €1.50 were purchased at an averagegross volume-weighted price of €2.78. In the same period,1,523,926 Sequana shares were sold at an average gross volumeweightedprice of €3.10.Between 15 November and 31 December 2012, 356,146 Sequanashares with a par value of €9 were purchased at an averagegross volume-weighted price of €8.40. In the same period,356,626 Sequana shares were sold at an average gross volumeweightedprice of €8.35.The total amount of the negotiation fees for this period totalled€35,000.At 31 December 2012, Sequana held 109,305 treasury shares(each with a par value of €9), representing 0.43% of the Company’scapital and a market value of €900,673.20. All of these shareswere acquired in connection with the liquidity contract.Sequana | 2012 Document de référence (English version) | 191

5General information about the CompanyInformation about the Company’s capitalFinancial authorisations in forceThe following financial authorisations are currently in force:AUTHORISATIONS TO ISSUE SHARES AND/OR OTHER SECURITIESDate of authorisationAuthorisation to issue shares and/or securities carrying rights to shares or to debt securities,with pre-emptive subscription rights for existing shareholders EGM of 19/05/2011Authorisation to issue shares and/or securities carrying rights to shares or to debt securities,without pre-emptive subscription rights for existing shareholders EGM of 19/05/2011Maximum nominalamount authorised (1)Expiry dateof authorisationShares:€200 millionDebt securities:€600 million 18/07/2013Shares:€200 millionDebt securities:€600 million 18/07/2013Authorisation to increase the number of shares and/or securities issued in the eventof a share capital increase with or without pre-emptive subscription rights for existingshareholders pursuant to the above authorisations EGM of 19/05/2011 15% of the issue 18/07/2013Authorisation to issue shares and/or securities carrying rights to shares, without pre-emptivesubscription rights for existing shareholders, by means of a public offering and/or privateplacement and at a price set by the Board of Directors EGM of 19/05/2011 10% of capital 18/07/2013Authorisation to issue shares and/or securities carrying rights to shares in the Companyas payment for shares tendered to a public exchange offer EGM of 19/05/2011Shares:€200 millionDebt securities:€600 million 18/07/2013Authorisation to issue shares and/or securities carrying rights to shares as considerationfor contributions in kind granted to the Company EGM of 19/05/2011 10% of capital 18/07/2013Authorisation to increase the Company’s capital by capitalising premiums, reserves,profit or other eligible items EGM of 19/05/2011EMPLOYEE-RELATED AUTHORISATIONSTotal amounts availablefor capitalisation 18/07/2013Issue of shares and/or securities carrying rights to shares of the Company,reserved for employees who are members of an employee savings plan EGM of 19/05/2011 2% of capital (2) 18/07/2013Issue of shares and/or securities carrying rights to shares of the Company,reserved for employees of foreign subsidiaries of the Sequana Group EGM of 26/06/2012 2% of capital (3) 25/12/2013Authorisation to grant stock options EGM of 19/05/2010 6% of capital (4) 18/07/2013Authorisation to award free shares EGM of 19/05/2010 6% of capital (5) 18/07/2013AUTHORISATION TO IMPLEMENT A SHARE BUYBACK PROGRAMME OGM of 26/06/2012 10% of capital 25/06/2013 (6)AUTHORISATION TO REDUCE THE COMPANY’S CAPITAL EGM of 26/06/2012 10% of capital 25/06/2013 (6)(1) The Annual General Meeting of 19 May 2011 capped the aggregate maximum amount of any capital increases to be carried out in accordance with these authorisations –excluding shares issued to members of an employee savings plan and employees of foreign subsidiaries – at €200 million, and set an aggregate ceiling of €600 millionfor the issue of debt securities. This limit does not apply to the authorisation granted to the Board of Directors in order to increase the capital by capitalising premiums,reserves, profit or other eligible items.(2) The total number of shares and securities issued to employees of foreign subsidiaries is included in this ceiling.(3) The total number of shares and securities issued to employees who are members of an employee savings plan is included in this ceiling.(4) The total number of share awards is included in this ceiling.(5) The total number of stock subscription or purchase options granted by the Board is included in this ceiling.(6) Authorisation expiring on the date of the Annual General Meeting called to approve the financial statements for the year ended 31 December 2012.192 | Sequana | 2012 Document de référence (English version)

General information about the CompanyInformation about the Company’s capital 5In 2012, the following authorisations were used:■■The authorisation granted to the Board of Directors by theAnnual General Meeting of 19 May 2011 to issue shares and/or securities carrying rights to shares for a nominal amount ofup to €200 million, with pre-emptive subscription rights forexisting shareholders, was used by the Board of Directors on4 June 2012 when it decided to launch a capital increase for anominal amount of €150,056,232 with pre-emptive subscriptionrights for existing shareholders (see page 187).■■The authorisation granted to the Board of Directors by theAnnual General Meeting of 19 May 2011 to trade in theCompany’s shares on the market for a maximum purchase priceof €25 per share was used from 1 January 2012 to 25 June 2012in connection with the liquidity agreement managed by OddoCorporate Finance (see page 191).■■The authorisation granted to the Board of Directors by theAnnual General Meeting of 26 June 2012 to trade in theCompany’s shares on the market for a maximum purchase price(before the 15 November 2012 reverse stock split) of €20 pershare was used from 26 June 2012 to 31 December 2012 inconnection with the liquidity agreement managed by OddoCorporate Finance (see page 191).Since all of the foregoing authorisations are due to expire shortly,shareholders are invited to renew all or some of the authorisationsunder similar conditions at the Annual General Meeting to beheld on 27 June 2013.Potential shareThe only outstanding financial instruments that could lead to thecreation of new shares are the stock options granted to certaincorporate officers and employees of the Company and the freeshares awarded to certain Group executives and employees.Stock options granted by SequanaNo Company stock options were granted in 2012.The Board of Directors of Sequana took the measures necessaryto preserve the rights of beneficiaries in relation to outstandingstock options in light of the capital increase of 9 July 2012 andthe reverse stock split of 15 November 2012, and the exerciseprice and number of options under the plans of 3 May 2005 and10 May 2006 were adjusted accordingly.At 31 December 2012, 244,441 stock options remained outstanding,representing a potential capital increase of a nominal valueof €2,199,969 and a potential dilutive impact of 0.98%. However,as of the filing date of this document, the exercise price of theoptions is considerably higher than the current share price and itis highly unlikely that the options will be exercised.The key features of outstanding stock options at 31 December 2012are detailed below.Date of General Meeting 21/05/2003 03/05/2005 03/05/2005Date of Management Board or Board of Directors’ meeting 18/06/2004 03/05/2005 10/05/2006Number of options granted 55,000 515,000 90,000Corporate officers 55,000 515,000 0Ten employees receiving the greatest number of options 0 0 90,000Exercise periodStart date 18/06/2006 03/05/2009 ,(1) 10/05/2010 ,(1)Expiry date 18/06/2012 03/05/2013 10/05/2014Initial exercise price (in €) v20.47 v23.50 v25.46Adjusted exercise price (in €) (2) v17.53not adjusted in 2012Number of options exercised between01/01/2012 and 31/12/2012Number of options forfeited between01/01/2012 and 31/12/2012(options on shares with a par value of €1.50)Number of options outstanding at 31/12/2012v56.52 v61.200 0 00 0 60,820not adjusted for the changes to share capital in 2012 0 626,556 48,656Number of options outstanding at 31/12/2012adjusted for the changes to share capital in 2012(options on shares with a par value of €9)0 226,813 17,628of which options granted to corporate officers at 31/12/2012 0 226,813 0(1) Based on the vesting period.(2) The adjusted exercise price includes adjustments made following dividend payments deducted from reserves as well as an adjustment carried out following the purchase –or potential purchase – by all of the Company’s shareholders of Sequana shares at a price below the quoted stock market price (November 2006 public buyback offer).The 2005 and 2006 programmes were also adjusted for the aforementioned changes to share capital in 2012.Sequana | 2012 Document de référence (English version) | 193

5General information about the CompanyInformation about the Company’s capitalShare award plansIn early 2010, a share award plan was set up involving the allocationof 1,921,000 Sequana shares to 169 beneficiaries. The planaims at incentivising key Group executives and managerial-gradestaff, and giving them a stake in Sequana’s future earnings andvalue creation.In approving this plan, the Board of Directors’ meeting of9 February 2010 used the authorisation granted to it by theAnnual General Meeting of 11 May 2007.Regardless of the grantee, all shares granted under this plan aresubject to presence conditions and performance criteria related tothe Group’s three-year business plan for the activities concerned.Depending on the grantee’s position within the Group and thebusiness to which he or she is assigned, performance criteria arebased (i) equally on Sequana’s consolidated EBITDA and itsconsolidated net debt, or (ii) on Sequana’s consolidated EBITDA(30%), its consolidated net debt (30%), and EBITDA reported bythe beneficiary’s business (40%).The shares are awarded out of new shares issued by Sequanathrough the capitalisation of reserves, profit or issue premiums.Grantees acquire beneficial ownership of the shares and haveentitlement to any dividends paid by Sequana from the first dayof the period in which the shares are issued.If the performance conditions were met at 31 December 2011, aportion of the shares would vest on 30 April 2012 (first tranche).This portion would represent up to two thirds of the total numberof shares awarded. The remaining shares would vest on30 April 2013 (second tranche), provided that the performanceconditions were met at 31 December 2012.Provided that the specified performance conditions have beenmet, the shares will vest between 30 April 2012 and 30 April 2014inclusive, depending on the tax situation of the grantees. A twoyearlock-up period running from the vesting date may also applydepending on the grantees’ tax situation, during which the sharesare not transferable.The sale of the decor business to the Swedish Munskjö group in2011 significantly altered the Group’s structure. Consequently,pursuant to the terms of the share award plan, the Board ofDirectors’ meeting of 21 July 2011 decided to amend the performanceconditions as well as certain other conditions affected bythe sale.Moreover, the vesting process was accelerated for the portion ofshare awards to be granted to the remaining employees of theIndustrial Solutions division as the aforementioned sale makesit impossible to measure the contribution of these remainingemployees to the performance of the Group as a whole.As the consolidated net debt performance criterion had been metat 31 December 2011, each grantee (aside from those mentionedpreviously for whom the vesting process was accelerated) wasawarded two thirds of their total allocation under the plan, multipliedby the applicable weighting of the consolidated net debtcriterion (between 30% and 50%, depending on the entity).Consequently, on 30 April 2012, 473,742 Sequana shares eachwith a par value of €1.50 were awarded to 73 grantees, residentin France and employees of French entities. The amount correspondingto the increase in share capital was deducted fromthe restricted reserves account set up for this purpose. Shareswill be awarded to grantees residing outside France or workingfor entities outside France on 30 April 2014, provided theyare still employed by the Group on that date (aside from granteeswhose vesting entitlements have been maintained in spite ofthe fact that their entity/division is no longer part of the Group).At 31 December 2012, there were 77 grantees based outsideFrance, representing 32,733 shares each with a par value of€9 (127,437 shares with a par value of €1.50 before the adjustmentsdiscussed below).Following the capital increase (July 2012) and the reverse stocksplit (November 2012), the number of outstanding share awardswas adjusted to preserve grantee entitlements.Among the 31 December 2012 performance conditions applicableto the second tranche of free shares, only the EBITDA criterionfor Arjowiggins’ medical and hospital business was met.Subject to the continuing employment of the three grantees concernedon 30 April 2013, this led to the creation of 1,849 newshares on that date, each with a par value of €9 (7,200 shares witha par value of €1.50 before adjustments). The remaining shares aretherefore forfeited.No free share awards were set up in either 2011 or 2012 and theaforementioned plan is currently the only such plan operated bythe Group.194 | Sequana | 2012 Document de référence (English version)

Chapter 6CORPORATE SOCIAL RESPONSIBILITYOrganisational governance 197Decision-making structure and process 197Promotion of diversity 197Dialogue and relations with stakeholders 197Human rights 199Principles of legality, ethics and transparency 199Labour practices 199Breakdown of employees 199Internal communication 201Working conditions 201Environment 207Overall environmental policy 207Pollution prevention 207Sustainable use of resources 207Climate change mitigation and adaptation 208Protection of biodiversity 208Site certification 210Fair operating practices 210Consumer issues 210Community involvementand development 211Social commitment 211Patronage and sponsorship 211Community involvement 211CSR reporting methodology 212Indicators used 212CSR reporting scope 212Sources and tools used 212Method used to consolidateand validate indicators 212Grenelle II concordance table 213Statement of completenessand limited assurance reportby one of the Statutory Auditors 215~Sequana | 2012 Document de référence (English version) | 195

6Corporate social responsibilityIn 2012, Sequana implemented a groupwide corporate socialresponsibility (CSR) policy aimed at bringing more consistencyto its efforts and stepping up its focus on key CSR challenges.The Group has chosen to base its 2012-2015 CSR policy on internationalstandard ISO 26000, which ensures that policies dulycover all aspects of corporate social responsibility.ISO 26000 was developed through global consensus and publishedby ISO/TMB, a working group on corporate social responsibilityset up by the International Organisation for Standardisation(ISO). ISO 26000 provides guidance on the principles underpinningcorporate social responsibility and provides and defineskey terms. It also covers stakeholder dialogue and the key issuesand areas where action can be taken. ISO 26000 also providesguidance on how businesses and organisations can operate in asocially responsible way. The standard is intended for use by alltypes of company and organisation. Although some sections ofISO 26000 are more relevant to certain companies than others,all core subjects must nevertheless be considered.ISO 26000 is based on 7 core subjects and 37 underlying issues:Organisational governanceHuman rightsLabour practicesEnvironmentFair operating practicesConsumer issuesCommunity involvement and developmentIn referring to ISO 26000, Sequana first considered which of the37 issues represented a key priority for a paper group. It then drewup a comprehensive list of the CSR initiatives in place within theGroup in light of these priorities. As a result of this analysis, eightareas for action were identified providing a focus for the Groupand a concrete guarantee that all relevant CSR issues would beduly taken into account. The following eight issues and the associatedaction plans therefore provide the basis for Sequana’s CSRpolicy over the period 2012-2015:■■Organisational governance: define a groupwide CSR policyencompassing all businesses and subsidiaries. The policy shouldset out commitments and objectives in each field and be basedaround a dedicated network of CSR correspondents and a transparentand reliable reporting system.■■Business ethics: introduce a code of conduct and clear internalpolicies to guarantee compliance with laws and regulations oncorruption and competition.■■Management and use of natural resources – product traceability:improve product traceability in order to reduce supply chainrisks; increase responsibly-sourced raw materials as a proportionof total raw materials used by the Group; and optimisewaste management to develop a circular economy.■■Energy management: review energy consumption processes inorder to improve energy efficiency and help develop renewableenergy sources.■■Water stewardship: manage water better in order to reducewater abstraction and improve wastewater quality.■■Working conditions: maintain a safe working environment toensure the health and safety of employees at work.■■Human resource development: step up the skills and knowledgedevelopment policy and protect diversity across the Group.■■Encourage customers to purchase sustainable products: reportresponsibly on the environmental performance of Group productsin order to advise and encourage customers to use productsand services meeting the highest environmental standards.By focusing on these issues and implementing the associatedaction plans, Sequana can ensure that its CSR policy considersthe impact of its activities – particularly its paper business – andthat CSR concerns are fully embedded in its governance, strategyand actions.The action plans apply to the entire Group, comprising the22 plants operated by Arjowiggins and Antalis’ 108 distributioncentres.To help readers, this chapter presents the Group’s commitments,initiatives and achievements based on the structure of ISO 26000and its seven core subjects. Readers are invited to consult theconcordance table on page 213 at the end of this chapter whichlinks the initiatives undertaken by Sequana to ISO 26000 andthe regulatory disclosures required by the Grenelle II Act. Socialand environmental indicators have been verified by ConstantinAssociés (a member of the Deloitte Touche Tohmatsu Limitednetwork), one of the Group’s statutory auditors, and are indicatedin the following chapter by the ✓ symbol.196 | Sequana | 2012 Document de référence (English version)

Corporate social responsibility6Organisational governanceDecision-making structure and processSequana is continually strengthening its decision-making systemin order to guarantee the utmost transparency when implementingactions and strategies. The Group endeavours to use financialand natural resources and its human capital as effectively as possibleand in a way that better reflects its commitment to socialresponsibility. It also aims to achieve a fair balance between thedegree of power, responsibility and expertise of its decision-makers.It strives to keep track of the implementation of these decisionsin order to ensure that they are implemented in a responsiblemanner and to determine accountability for the positive or negativeoutcomes they may have. The CSR function is representedon the Group’s three main executive committees (Sequana,Arjowiggins and Antalis), either systematically or on an ad hocbasis, ensuring it a voice on the Group’s highest decision-makingbody. After a CSR department was set up in 2011, a networkof CSR correspondents was formally appointed and effective in2012. For Arjowiggins, the CSR department comprises one representativefor each division as well as for the medical/hospitalbusiness. For Antalis, the CSR department comprises one correspondentfor each region, one for the Packaging business, andone for Antalis’ headquarters. The role of these correspondentsis to act as the focal point between their specific entity and theGroup and to promote cross-functional cooperation via workinggroups and other exchanges. For more technical issues, the CSRnetwork was also strengthened and a correspondent systematicallyappointed in every entity for energy/environment, safety andproduct matters. The HR network was already in place and formallydesignated before this reorganisation.The CSR correspondents report to the Group Head of CSR andtheir work is discussed during face-to-face meetings or videoconferences, depending on the subject concerned. Entities mayalso put in place CSR initiatives or organisations at a local level.Promotion of diversitySequana is an international group and its operations span fivecontinents. Although it is chiefly present in Europe, whichaccounts for 77% of its employees, 6% of its staff are based inNorth America, 9% in South America, 4% in Asia and Australiaand 4% in Africa. This international dimension means that theGroup is not inclined to differentiate its policies along the linesof national or ethnic criteria but constantly seeks to capitalise onthe mutually enriching interplay between various cultures. Theexecutive committees of Antalis and Arjowiggins boast a totalof seven different nationalities and all of the nationalities presentin the Group are represented on the various operating committeesand at the regular management meetings, proof of Sequana’smulti-cultural and international profile.Due to the industrial and logistic nature of the Group’s businesses,ensuring a diverse workforce is not always easy, particularly asregards the employment of staff with disabilities. Obtaining statisticsfor staff with disabilities is made more complex by differentlocal laws and regulations, which may prevent such data beingcollected or may be based on a different definition of disability.Disabled staff make up 1.99% of employees at Antalis (basedon 14 entities representing 53% of the workforce) and 2.79% atArjowiggins (based on 12 entities representing 71% of the workforce).This percentage is 2.42% for the Group (based on 61% ofthe workforce).Dialogue and relations with stakeholdersAs a global paper group, Sequana’s responsibility towards its differentstakeholders (listed below) is important and is based onthe principles of transparency, accountability, cooperation andresponsible communication. Constructive dialogue is an integralpart of forging a well-balanced group in terms of economic,social, environmental and responsibility issues, and a means ofguaranteeing Sequana’s existence over the long term.Stakeholder mappingThe Group has to deal on an occasional or regular basis withmany different economic, social and environmental players fromthe private, institutional or not-for-profit sectors. Stakeholderswhose needs and expectations need to be considered include:■■Customers: focused mainly on the business-to-business sector, theGroup’s customers are mainly major paper manufacturers, printers,service companies, paper distributors and government bodies.Their expectations in terms of corporate social responsibilityissues vary widely from one country and business to the next: somerequire guarantees from the Group that it respects core CSR valuesand principles while others look to Sequana for guidance andinspiration in these fields.■■Shareholders/investors: Sequana’s main responsibility towards itsshareholders in terms of CSR is a duty of transparency and disclosureregarding its actions and obligations. Shareholders and investorsshould be provided with all of the information they need toensure that they are dealing with a responsible corporate citizen.■ ■ Suppliers: Sequana works with a large number of suppliers inboth its distribution and production businesses. The expectationsof these suppliers should be met through a process of constructive,ethical dialogue, and assurance sought that they also respectand continually enforce the Group’s CSR values. Clearly statingits principles and values in any dealings it may have with suppliersboth upstream and downstream of its production and distributionactivities is a crucial part of its responsibility. Sequana helpsits suppliers engineer positive changes in their businesses, therebyreinforcing the policies it espouses internally.Sequana | 2012 Document de référence (English version) | 197

6Corporate social responsibility■■Employees: dialogue, safety and the well-being of the Group’s11,000 employees is a challenging priority in a highly decentralisedorganisation.■■Local communities: the Group’s plants and warehouses striveto maintain constructive and transparent relations with thelocal communities in the various rural and urban areas in whichthey are located. Integrating the plants into the fabric of localindustry and community helps forge links between civil societyand employees.■■NGOs: the Group uses natural resources from both renewable(wood fibre, cotton, water) and non-renewable sources (energy).Constructive, transparent dialogue with NGOs on the responsibleuse of these resources and the consideration given to allaspects of CSR in strategic decisions is essential. Through thisprocess, Sequana acknowledges the impacts that its businesseshave on the environment while endeavouring to constantlyimprove performance and lighten its environmental footprint.■■Government bodies: the Group’s plants and warehouses mustcomply with strict local, national and international regulatoryrequirements. Ongoing dialogue with government bodies isnecessary to ensure compliance with these regulations.Membership of CSR-related organisations■■United Nations Global CompactSequana signed up to the United Nations Global Compact inSeptember 2012, underscoring its own commitment, along withthat of Arjowiggins and Antalis, to the ten fundamental principlesin the areas of human rights, labour, the environment andanti-corruption.The ten principles set out in the UN Global Compact requirebusinesses to:■■Support and respect the protection of internationally proclaimedhuman rights.■■Make sure that they are not complicit in human rightsabuses.■■Uphold the freedom of association and the effective recognitionof the right to collective bargaining.■■Uphold elimination of all forms of forced and compulsorylabour.■■Uphold the effective abolition of child labour.■■Uphold the elimination of discrimination in respect ofemployment and occupation.■■Support a precautionary approach to environmentalchallenges.■■Undertake initiatives to promote greater environmentalresponsibility.■■Encourage the development and diffusion of environmentallyfriendly technologies.■ ■ Work against corruption in all its forms, including extortionand bribery.Every year, Sequana will publish a “Communication On Progress”for each of these ten principles (see inset above).A concordance table is provided at the end of this chapter(pages 213-214) linking each Group CSR initiative to GlobalCompact principles. The quantitative information provided foreach of the different principles is systematically benchmarkedagainst the information for the previous year to identify the progressmade.Statement of continued support“By signing up to the UN Global Compact in October 2012,Sequana, Antalis and Arjowiggins agree to support and promotethese principles in 2013.”Pascal Lebard■■EPE (Entreprises Pour l’Environnement)By joining this association of around 40 major French and internationalcompanies committed to CSR issues, Sequana can relayits best practices, develop its existing projects and identify theareas where the Group needs to better consider the environmentalimpacts of its strategy.■■FSC (Forest Stewardship Council)This independent, non-governmental, not-for-profit organisationwas established to promote the responsible management ofthe world’s forests. By preferring FSC-certified pulp and paper,Sequana promotes solutions that encourage responsible managementof natural resources. Arjowiggins Graphic is represented onthe Board of Directors of the FSC in France.■■OréeThis diverse association brings together businesses, local authorities,professional and environmental organisations and academicand institutional bodies to pool ideas on best environmental practicesand implement practical policies to achieve integrated environmentalmanagement at local level. Arjowiggins Graphic isalso a member of Orée.Dialogue and partnerships with stakeholdersSince 2009, Arjowiggins Graphic has been a partner of WWFFrance, the French branch of the international NGO for theprotection of wildlife. This partnership aims to consolidate thedivision’s environmental approach, reduce its environmental andespecially carbon footprint, raise awareness among customersabout responsible paper usage and promote the use of recycledpaper. Since 2011, Arjowiggins Graphic has been a member ofthe select “Climate Savers” club of companies volunteering toimplement exemplary carbon emissions reduction programmes.The ambitious emission reduction target set for 2020 showsArjowiggins Graphic’s determination to reduce its environmentalfootprint.198 | Sequana | 2012 Document de référence (English version)

Corporate social responsibility6Subcontractors and suppliersAware of its responsibility in the supply chain, Sequana endeavoursto consolidate its relationship with its suppliers. As part ofthis strategy and in order to reduce the risks resulting from a lackof information on or control over its suppliers, a comprehensiveCSR questionnaire is sent out to all Arjowiggins suppliers and tothe biggest suppliers of Antalis (representing over 90% in volumeterms). This procedure will be stepped up in 2013 and an onlinedatabase put in place for Antalis allowing suppliers to provide theGroup with comprehensive, transparent information on commitmentstaken in the area of corporate social responsibility.Human rightsPrinciples of legality, ethics and transparencySequana employs a small number of staff in developing countries.In accordance with the Group’s code of conduct – which is basedon respect for individuals – Sequana complies with InternationalLabour Organisation (ILO) standards in all of the countrieswhere the Group operates, particularly relating to child labour,occupational health and safety, employee representation and fundamentalprinciples and rights at work. These principles applyboth to Sequana’s relations with its own employees and to subcontractingagreements.Typically, it is the production business which has more recourseto subcontracting than distribution, for site security in plants andmaintenance.Labour practicesBreakdown of employees6.1 - Average headcount by company2012✓ Year-on-year change 2011 2010Arjowiggins 5,118 (105) 5,223 5,403Antalis 6,043 20 6,023 6,707Sequana and Sequana Ressources & Services (SRS) 55 (8) 63 59TOTAL 11,216 (93) 11,309 12,169There was no significant change in headcount structure between 31 December 2012 and the date on which this registration documentwas filed.6.2 - Average number of employees by business and geographic areaGeographic areaArjowiggins2012✓Arjowiggins2011Antalis2012✓Antalis2011Sequana/ SRS2012✓Sequana/ SRS2011Europe 3,707 3,811 4,843 4,920 55 63 8,605 8,794o/w France 2,283 2,350 618 649 55 63 2,956 3,062North America 714 725 - - - - 714 725South America 500 505 508 376 - - 1,008 881Africa-Middle East 2 2 427 460 - - 429 462Asia-Pacific 195 180 265 267 - - 460 447TOTAL 5,118 5,223 6,043 6,023 55 63 11,216 11,309Total2012✓Total2011Sequana | 2012 Document de référence (English version) | 199

6Corporate social responsibilityAverage number of employees by gender,age and length of service■■In 2011, Sequana implemented a consolidated reporting systemfor all of its legal entities in respect of certain indicatorsthat had previously only been monitored at local level. This newsystem provides the Group with an overview of indicators suchas gender distribution, the number of female managementlevelemployees, absenteeism, training figures, the percentageof employees with disabilities and the breakdown of employeesby length of service. This more consistent form of monitoringenables the Group to implement corrective measures and definepolicy on certain specific subjects.■■The industrial and logistic nature of the paper production anddistribution business means that there is a higher percentageof male than female employees. With women making upbetween 12.7% and 26.9% of the workforce (depending on thecompany) and an average of 17.9%, Arjowiggins nonethelessendeavours to recruit women as far as possible. At Antalis,6.3. - Breakdown by genderwhich is a distribution business, women account for 34.6% ofthe workforce on average. Overall, 27.3% of Group employeesare women. When working conditions and cultural factors arefavourable, Sequana strives to promote diversity in the formof gender equality within its subsidiaries. However, the percentageof women in managerial-grade positions is lower thanthe percentage of women in the workforce (21% versus 27.3%,respectively).2012 indicators:■■Number of women on each of the three managementcommittees• Arjowiggins: 3 out of 9• Antalis: 1 out of 18• Sequana: 1 out of 6• Number of women on the Board of Directors: 1 out of a totalof 10 directors.Arjowiggins2012✓Arjowiggins2011Antalis2012✓Antalis2011Sequana/ SRS2012✓Sequana/ SRS2011% men 82.1% 80.0% 65.4% 69.2% 56.4% 52.5% 72.7% 74.2%% women 17.9% 20.0% 34.6% 30.8% 43.6% 47.5% 27.3% 25.8%6.4 - Breakdown by age groupArjowiggins2012✓Arjowiggins2011Antalis2012✓Antalis2011Sequana/ SRS2012✓Sequana/ SRS2011Under 30 years old 12% 12% 15% 12% 16% 15% 14% 11%30-40 years old 19% 19% 28% 26% 25% 28% 24% 22%40-50 years old 35% 36% 32% 34% 31% 33% 33% 35%50-60 years old 30% 29% 21% 23% 24% 23% 25% 26%Over 60 years old 4% 4% 4% 5% 4% 1% 4% 5%6.5 - Breakdown by length of serviceArjowiggins2012✓Arjowiggins2011Antalis2012✓Antalis2011Sequana/ SRS2012✓Sequana/ SRS2011Less than 1 year 5% 6% 8% 8% 9% 7% 7% 6%1-5 years 19% 20% 29% 25% 36% 39% 24% 23%5-10 years 13% 11% 23% 21% 24% 28% 19% 16%10-20 years 24% 25% 26% 27% 20% 16% 25% 26%Over 20 years 39% 38% 14% 19% 11% 10% 25% 29%Total2012✓Total2012✓Total2012✓Total2011Total2011Total2011200 | Sequana | 2012 Document de référence (English version)

Corporate social responsibility6Internal communicationAs in 2011, internal communication at Antalis in 2012 focusedon the strategic RACE 2012 programme, which was rolled outto new countries such as South Africa and all countries in LatinAmerica where the company is present.Both within and outside Europe, local managers and projectheads were extremely active in implementing and explainingthe programme, and initiatives included face-to-face interviews,meetings and newsletters designed to help all staff understandthe importance of the programme for the future of the company.The two international management meetings organised inMarch and October 2012 attended by over 130 people also providedthe perfect opportunity to step up internal communicationefforts about RACE 2012. Workshops were held to allow everyparticipant to discuss issues such as innovation as a key factorfor Antalis’ development going forward. As in 2011, the videoaddress given by the Chief Operating Officer, Antalis’ in-housemagazine Keynotes, and the intranet platform Between Us, actedas efficient communication channels for RACE 2012, highlightingthe achievements to date.RACE 2012 ended in December and is now part of the day-todaylife of the Group’s employees working to maintain and bolsterAntalis’ position on each of its markets.At Arjowiggins, internal communication is formulated at divisionallevel in order to foster greater cohesion and to rally supportfor common objectives.A yearly seminar is organised for managerial-level staff atArjowiggins Graphic to inform managers of recent performance,strategy and key challenges. The Creative Papers division organisesregular telephone and online conferences and holds a healthand safety seminar every year to discuss best practices at its differentsites. Arjowiggins Security held its first induction seminarfor its newly recruited managerial-level staff which involvedmembers of its Executive Committee as well as marketing teamsfrom its different businesses.The divisions also hold one-off meetings or use the intranet tokeep employees regularly informed of business news and keyevents. Arjowiggins Security has enriched its intranet site, whichnow provides its employees with a broad range of information,particularly regarding HR issues.The group’s intranet also features various documents (corporatepresentations, information on safety within the group, etc.) aswell as press releases published by Arjowiggins.Working conditionsCompensation policy and social protectionThe Group’s employees – in production or distribution or at theregistered office – are paid a fixed salary which, for most managerial-levelstaff, comes on top of a variable salary generally based onthe performance of the Group and/or the businesses to which theemployee belongs, as well as on whether individual performancetargets have been met. The variable compensation policy applicableto key executives has been harmonised across the Group. Aportion of the variable compensation payable to these executivesis now based on the objectives set for the Group, thereby encouragingexecutives to work actively towards these goals.The Group’s employees are also eligible for statutory healthcare,welfare and disability benefits. Certain senior executives or highperformingmanagers may be awarded fringe benefits on top oftheir salary depending on their position within the Group. Theymay also be granted long-term rights on Sequana shares, such asthose described below.In 2012, the statutory round of collective bargaining took place asplanned at the beginning of the year. The negotiations often ledto a two-phase increase in salary: at the start and in the secondhalf of the year. As no dividends were paid in 2012, Sequana isnot liable for the profit-sharing bonus introduced in 2011.Organisation of working timeIn every country in which it operates, the Group and its subsidiariesrigorously comply with the working time stipulated inlocal laws and regulations and collective bargaining agreements,regulations concerning the recovery of hours worked and annualleave.Succession plans for managersAs is the case each year, succession plans and organisational structureswere reviewed in 2012 by special committees. These reviewshelp identify any potential risks and evaluate how the organisationcould be optimised. They also identify any development requirementsand skills gaps. To make it easier to conduct these reviewsand monitor the findings, the Group has invested in eXcellence,a tool which manages succession plans as well as training requirementsand staff performance. This system will be gradually rolledout across the Group, starting with Antalis in 2013.Employee savingsThe French companies of the Sequana Group have progressivelyadopted a collective reward scheme, in the form of either anincentive scheme or a statutory profit-sharing arrangement.Company savings plans, widely implemented within the Groupin France, are not or are rarely implemented in other countrieseven if some of them have adopted a similar collective rewardscheme (Antalis in the UK and Belgium).Sequana | 2012 Document de référence (English version) | 201

6Corporate social responsibilityProfit-sharing and incentive arrangementsFrench holding companies of the GroupEmployees of Sequana and Sequana Ressources & Servicesfall within the scope of a profit-sharing agreement set up atthe Group’s own initiative. Under this voluntary profit-sharingscheme, a special profit-sharing reserve is calculated every yearbased on the higher of consolidated recurring net income attributableto owners and consolidated net income for the periodattributable to owners. The amount allocated to the reserve isdetermined using a ratio of 1.5:1,000 by reference to this calculationbase.This aggregate amount is then allocated among employees in proportionto their gross annual salary and within the limits authorisedby law. The amounts allocated to beneficiaries under thisscheme may, at the employee’s request, be invested in part or infull in the employee savings plan and/or the collective retirementsavings plan described below.Amounts owed to employees under the profit-sharing scheme areinvested in corporate mutual funds managed by CIC-ÉpargneSalariale, for which the employees concerned can select froma number of different investment profiles. In accordance withFrench law, the beneficiaries may either request immediate paymentof all or part of these sums, or else block the amounts fora five-year period and qualify for special tax and social securitytreatment.The total gross profit-sharing amount paid to employees eligiblefor the scheme in 2012 was €42,262. No profit-sharing bonus waspaid in 2013 in connection with this agreement.The incentive bonus agreement signed by Sequana employees inJune 2009 (with retroactive effect from 1 January 2009) in accordancewith Articles L. 3312-2 et.seq. of the French Labour Code(Code du travail) expired on 31 December 2011. A new three-yearincentive agreement was signed on 25 June 2012. As in the 2009agreement, the incentive bonuses payable are calculated based onthe Group’s consolidated recurring operating income.Employees of Sequana Ressources & Services are eligible forincentive bonuses under an agreement signed in 2010 (with retroactiveeffect from 1 January 2010) for a three-year period. Theincentive bonuses payable under this agreement are also basedon Sequana’s consolidated recurring operating income. As thisagreement expired on 31 December 2012, a new incentive agreementwill be signed before the end of first-half 2013.The amounts allocated to employees under this scheme may,at the employee’s request, be invested in part or in full in theemployee savings plan and/or the collective retirement savingsplan discussed below.The total gross amount of incentive bonuses paid to eligibleemployees (Sequana and Sequana Ressources & Services) in 2012in respect of 2011 was €223,200. A gross amount of approximately€267,840 may be paid to Sequana and Sequana Ressources& Services employees in 2013 in respect of 2012.ArjowigginsBesides its mandatory profit-sharing scheme, Arjowiggins choseto set up a variety of incentive arrangements to enhance its collectivereward policy. Mandatory profit-sharing and discretionaryincentive arrangements are renewed every three years.Such arrangements exist at the level of each French subsidiary ofArjowiggins and not at the level of the group, since the relatedperformance criteria are assessed in light of the economic andfinancial performance of each company. This is because eachcompany operates on markets with very different economic characteristicsand earnings can therefore vary widely. The collectivecompensation policy has therefore been designed to rewardthe performance of employees in the country in which they arebased. This policy chimes with the group’s new-look organisationintroduced in June 2008. All profit-sharing agreements complywith statutory profit-sharing provisions, whereas incentive bonusschemes are based on criteria that can vary from one companyto the next. As well as criteria based on operating income whichmeasure only economic performance, incentive schemes alsolook to assess the company’s performance in terms of customers(service rate), HR issues (absenteeism, commitment) and safetyrecord (occupational accident rate). The achievement of objectivesin these areas is directly related to how well teams understandand manage industrial processes as a whole, and these results aretherefore taken into account when calculating incentive bonuses.Incentives are generally paid on a six-monthly basis so that teamscan work towards visible targets. Employees usually receive equalamounts to reinforce the concept of a collective achievement.AntalisLike Arjowiggins, Antalis has also chosen to adopt a collectivereward scheme, introducing a discretionary incentive scheme ontop of its statutory profit-sharing arrangement.When it was created in 1999, Antalis International set up a profitsharingagreement based on statutory profit-sharing provisions,and entered into an incentive arrangement concerning all teamsat the company’s registered office, renewed every three years.Employees of Antalis International primarily provide services toAntalis’ subsidiaries across the globe. Incentive arrangements aretherefore based on the group’s consolidated performance determinedusing two criteria: (i) return on sales and (ii) return on capitalemployed (ROCE). Performance is measured by comparingactual figures against budget. Antalis SNC (distribution businessin France) set up similar compensation arrangements when it wascreated in 1999. The criteria used for incentive bonuses (operatingincome and working capital requirement) are directly relatedto the economic conditions of Antalis SNC (actual figures measuredagainst budget). Sound management of working capital andoperations is essential in a distribution company.Arjowiggins Creative Papers, which acts as the registered officefor the Creative Papers division, was created on 1 January 2010and is wholly owned by Antalis International. Creative Papershas fewer than 50 employees and has set up an incentive bonusscheme with performance conditions based on the ratio ofEBIDTA to sales and the ratio of working capital (net of provisions)to Creative Papers sales, measured against budget.202 | Sequana | 2012 Document de référence (English version)

Corporate social responsibility6Employee savings plansSequana and Sequana Ressources & Services, the French holdingcompanies for the Group, set up an employee savings plan withinthe meaning of Article L. 3322-7 of the French Labour Codeand French Law No. 2001-152 of 19 February 2001 on employeesavings. The amounts paid into this plan by beneficiaries may beused to acquire units in mutual funds, including a fund investedexclusively in Sequana shares and/or other listed securities issuedby Sequana. These mutual funds are managed by CIC-ÉpargneSalariale. Only amounts invested in the mutual fund dedicatedto Sequana shares (“Sequana Épargne”) are eligible for top-upcash payments made by the participating companies. The grossamounts paid in by the beneficiaries, plus the top-up paymentsinvested in this fund by the two companies for 2012, came to€163,860, of which a gross amount of €33,832 was invested inSequana’s mutual fund.ArjowigginsTo round out the local employee savings plans offered by subsidiaries,Arjowiggins has set up two group savings plans (“PEG”).The first plan was set up at the level of Arjowiggins SAS followinga collective agreement dated 31 January 2002. The separateentities covered by this plan were spun off in June 2008, therebymaintaining their eligibility for the group savings plan. This planwas designed with the aim of encouraging employee share ownership.The amounts paid into the plan by employees may be usedto acquire units in mutual funds, including a fund invested exclusivelyin Sequana shares and are eligible for top-up payments bythe company of up to €500 per year. These mutual funds are managedby BNP Paribas. Only amounts invested in the mutual funddedicated to Sequana shares (“Arjowiggins Croissance”) are eligiblefor top-up cash payments by the company. This initial groupsavings plan was supplemented by a second plan set up unilaterallyon 28 February 2003 for the same population as the initialplan. The second plan was designed with the aim of boostingemployee share ownership. The amounts paid into this plan byemployees may be used to acquire units in the Horizon Plus AWmutual fund managed by Étoile Gestion du Crédit du Nord.AntalisAntalis International launched an employee savings plan onsetting up its profit-sharing and incentive bonus schemes. Theamounts paid into this plan by employees may be used to acquireunits in the mutual fund managed by Natixis. In 2010, thisemployee savings plan was amended to incorporate a mutual fundinvested exclusively in Sequana shares and eligible for top-up cashpayments made by the company. On 15 April 2011, ArjowigginsCreative Papers set up an employee savings plan eligible for thesame top-up payments as Sequana.In 2011, Antalis SNC signed an agreement with employee representativebodies setting up an employee savings plan. On12 December 2012, the company signed an amendment to itsprofit-sharing agreement providing for the possibility of payingthe profit-sharing bonus into the employee savings plan withinthe limits allowed by law.Collective retirement savings plan (“PERCO”)Sequana and Sequana Ressources & Services also operate a collectiveretirement savings plan (“PERCO”), set up in accordancewith the French Pension Reform Act of 21 August 2003 (the“Fillon Act”). Under this plan, employees can build up retirementsavings over the long term. The amounts collected are invested inmutual funds and may be topped up by the member companies.The gross amounts paid in by the beneficiaries, plus the top-uppayments invested in this fund by the two companies for 2012,came to €168,985.The Group therefore offers a large number of different employeesavings arrangements. These arrangements will soon be simplifiedand reorganised, particularly at Arjowiggins where talks arealready underway with trade union organisations. These talksshould lead to a collective retirement savings plan being introducedinto entities that do not as yet offer one.Plans granting rights to Sequana shares –Employee share ownershipThe Group set up stock option plans which grant beneficiariesrights to Sequana shares at certain times and at prices set bythe law in accordance with the resolutions of the Shareholders’Meeting authorising the plans. These plans are described in thesection on potential share capital on pages 67 and 193. In mostcases, the conditions applicable to these (now old) plans make itunlikely that the related stock options will be exercised.More recently, the Group set up share award plans for (i) seniorexecutives of Sequana, or (ii) more generally in 2010, high-performingGroup employees considered to play an instrumental rolein the Group’s development. However, these awards are subject tocontinuing employment with the Group and performance criteriaunder which beneficiaries are only entitled to receive the Sequanashares if certain specified conditions relating to the Group’sthree-year business plan are met. This gives beneficiaries a directstake in the Group’s future earnings and the performance of thebusinesses for which they work or which they manage.Under the share award plan of 9 February 2010 (see pages 67 and194), the only current such plan, 473,742 Sequana shares witha par value of €1.50 each were awarded to Group employees on30 April 2012.The Group’s employees are also indirect owners of Sequanashares through the units they own in mutual funds under incentivebonus and employee savings schemes. At 31 December 2012,80,115 Sequana shares were held by Group employees undermutual funds invested in Sequana shares.Sequana | 2012 Document de référence (English version) | 203

6Corporate social responsibilitySocial dialogueSequana strives to organise this process within the Group based onthe subsidiarity principle according to which dialogue must occurat the level capable of addressing the relevant matter effectivelyin accordance with national laws and regulations. Social dialoguemust therefore be primarily initiated at local level in view of thefact that economic and human dimensions can be better assessedat that level. All Group companies must have an employee representativebody or initiate talks, which provide an opportunity forexchange. Particularly in France, this is the level at which discussionsare held between management, employee representativesand trade union bodies about the various agreements on genderequality, the employment of older workers, arduous work and,most recently, generation agreements.At Arjowiggins’ level, a series of meetings with all trade unionswas held as from 2010 to supplement the existing corporateexchanges, European Works Council and Group Works Councilmeetings. In 2010, Arjowiggins negotiated with trade unionorganisations and entered into an agreement creating a divisionlevelWorks Council with the same prerogatives as those of aGroup Works Council and the same scope as that of a EuropeanWorks Council (since each division has a pan-European dimension).The aim of this agreement was to enhance dialogue withineach division. The division-level Works Council is a forum wherethe division’s economic, financial and labour strategies can be bestdiscussed (the company was found to be too narrow and the grouptoo broad to handle these issues effectively). In 2012, a WorksCouncil met within each division, enhancing dialogue, improvingunderstanding of the economic situation and allowing discussionsto take place freely.The 2002 agreement constituting the Group Works Council providesfor two annual meetings instead of one. At these meetings,employee representatives assisted by a certified accountantare informed of the situation of each division, allowing them tobenchmark the performance and outlook for their division againstother entities. These meetings validated the new composition ofunion representative bodies in light of revised legal requirementson union representation and contributed to employee-employerrelations within each division with the creation of a division-levelWorks Council. At European level, a plenary meeting was heldin 2012 and a meeting of the select committee took place on theannouncement of the restructuring plans launched in September2012 in the UK and Denmark.Antalis only has three legal entities in France. Following thecreation of a Works Council, social dialogue at Antalis SNCcontinued at this level between management and employee representativesand covered a broad spectrum of issues. An in-depth6.6 - Employee safetyanalysis was carried out with trade union organisations on themeans to make this dialogue more effective and ensure a form ofgovernance conducive to creating a positive labour environment.Antalis’ European Works Council met once in 2012 as planned.At the level of company registered offices, social partners continuedto actively and collectively manage their social and culturalagenda within the scope of an intercompany Works Councilcomprising Antalis International, Arjowiggins SAS, ArjowigginsCreative Papers and Sequana Ressources & Services.Sequana considers that implementing and maintaining healthyworking conditions for its employees is among its most importantresponsibilities. Each entity exercises these responsibilities withinthe local legal and social framework. Sequana ensures that eachentity complies strictly with local regulations but also promotes itsown values, providing equal opportunities for employees, ensuringfair treatment and zero discrimination and encouraging socialdialogue. In a morose economic environment, ensuring healthysocial dialogue is crucial, particularly in the context of redundancyprocedures. Sequana rigorously verifies that all employees affectedby such procedures are given the assistance provided for by law.Collective bargainingEvery year, the Group negotiates a number of collective bargainingagreements with employee representative bodies on an individualentity level. Amendments to these agreements are also negotiated.In 2012, the Group’s French entities signed 29 such agreementswith social partners (10 for Antalis and 19 for Arjowiggins).Besides the statutory annual bargaining round, these agreementsconcerned diversity, incentive arrangements, equality at work andprofit sharing.Employee protection – health and safetyAs Sequana’s businesses involve risks that can cause personal injuryor illness, the Group places great emphasis on the health, mentalwell-being and physical safety of the men and women working todevelop its businesses. It has appointed a team in charge of personalsafety and product security which audits, supports and coordinatesthe practices and action plans implemented in each of itsbusinesses. This team comprises three or four people managed by ahealth and safety officer who reports to the Group’s HR Director.Sequana aims to make safety and security issues a force for cohesionwithin the Group and a driver of ongoing improvement in all businessprocesses. Progress meetings are held four times a year withinthe scope of Antalis and Arjowiggins European Works Councilmeetings and the Arjowiggins France Group Works Council.Employee safety Antalis Arjowiggins Sequana/SRSLost-time accidents in 2012 ✓ 95 73 –Incident rate 2012 ✓ 15.9 14.4 –Incident rate 2011 19.5 13.0 –Incident rate = number of lost-time accidents/number of full-time employees and temporary personnel x 1,000.Data calculated based on a scope of 108 distribution centres for Antalis and 22 plants for Arjowiggins (excluding headquarters).204 | Sequana | 2012 Document de référence (English version)

Corporate social responsibility6Health and safety topics covered in formal agreements with tradeunionsAs part of its efforts to prevent risks and improve health andsafety conditions at work, the company maintains a regular dialoguewith trade unions and Occupational Health and SafetyCommittee representatives. Two agreements regarding healthand safety at work were signed for the French entities in 2012.ArjowigginsAs the paper business gives rise to specific risks that can causeserious personal injury, analysing and managing the risks towhich its employees are exposed is critical for Arjowiggins. Eachline of management is responsible for managing safety and securityrisks, backed by a specific organisation within each divisionand site.The Occupational Health and Safety Committee is consultedmore often than required under law and one-off meetings maybe held as and when necessary. Harder working conditions thanthose for the distribution business or the registered office alongwith the focus on safety call for more stringent work safety measuresthan in the Group’s other entities.The main health and safety initiatives implemented in 2012 followedon from those rolled out over previous years:■■continuing to improve processes and practices:• upgrading and enhancing risk analyses,• regularly reviewing processes, risk management tools, operatingpractices, organisational structure and training materials,with particular attention paid to chemicals, segregation ofpedestrians from vehicles, mechanical handling and fire risk,• protecting paper machines and finishing equipment underthe highest industry standards,• continuing to enhance workplace organisation based on the“5S” method,• monitoring action plans per site and business activity,• encouraging the use of lean management techniques;■ ■ feedback and experience sharing:• intensifying and diversifying intra- and inter-site safetyaudits and inspections,• encouraging the reporting and handling of incidents by allplayers,• ensuring that high-quality analyses are performed of allaccidents,• identifying and sharing best practices;■■a health and safety system based on:• having an individual safety and security policy for each division,• formalising Arjowiggins’ safety and security policy based ona health and safety management system (OHSAS 18001)that is compatible with environmental and quality standards;■■continuing to develop a safety-oriented culture, requiring thecommitment of all members of staff and their representatives,with particular importance placed on management:• specific training for middle management,• training and awareness-raising initiatives on behaviour,• implementation of behavioural audits.AntalisAntalis employees are exposed to various risks, chiefly those inherentin commercial, storage, transport and road travel activities. Several processingsites are nevertheless exposed to risks similar to those arising inthe production business. Safety and security rules form an integral partof the organisation of working practices at Antalis and the companyensures that these rules are strictly respected at all of its sites. Antalis isworking to develop a consistent safety management framework for eachof its businesses across major distribution centres that complies with theinternationally recognised standard OHSAS 18001.Antalis now has:■■a benchmark that gives it a breakdown of all lost-time accidentsand major incidents occurring at each site, as well as indicatorsthat measure the frequency and severity thereof;■■a system of safety audits based on a combination of self-assessmentbenchmarks and field audits led by the group’s safetycorrespondents, giving rise to action plans monitored by thegroup’s prevention team;■■risk awareness-raising modules on fire prevention, lift handling,manual handling techniques and elevated storage. Thesemodules are presented by the group’s prevention team during asafety day organised in each region or country.In 2012, the Sequana Group also:■■encouraged audits of high-risk situations or behaviour alongwith awareness-raising and training initiatives for senior executivesand security managers of each Arjowiggins division;■■launched its first international campaign to raise awareness ofsafety issues concerning all Arjowiggins plants and Antalisregions.Human resources development and vocational trainingThe Group pursues an active training policy so that employees canboost their skills and perform their duties in the best possible conditions.These training initiatives are also run in the departmentsresponsible for the Group’s corporate functions (Sequana and SequanaRessources & Services).At Arjowiggins, despite tough economic conditions and strict controlover operating costs, the company pressed ahead with its trainingefforts – focusing chiefly on personal and material safety and securityissues. Efforts to consolidate the experience acquired continued apacein France during the year. More than 50 work-study and vocationaltraining contracts were signed in 2012 covering all types of qualifications(Master’s, BTS technical diploma, engineering degree, technologyuniversity diploma, professional baccalaureate).Sequana | 2012 Document de référence (English version) | 205

6Corporate social responsibilityAs part of the RACE 2012 business transformation programmewhich ended in late 2012, Antalis set up a Sales Academy to bolsterthe skills of its sales teams. This initiative allowed a seamless transitionto an effective new-look sales organisation for Antalis in Europe,Asia, Latin America and South Africa, by preparing all sales staff fordevelopments in their particular function.In view of this success, Antalis extended its training programmeand set up an integrated skills development and management systemknown as eXcellence. This system, based on bespoke softwareinfrastructure created by a market leader, will allow all employeesto attend personalised online or classroom training courses inphase with the Group’s changing objectives. eXcellence also helpsevaluate performance and staff development needs, and analysessuccession plans. The system went live in January 2013 in AntalisFrance, UK and Poland, and will be rolled out gradually to theSequana Group and Arjowiggins. As part of ongoing efforts toimprove team commitment, Antalis launched a leadership trainingprogramme for all management during the first quarter of2013. This programme will look at change management as wellas people and business management.The percentage of payroll dedicated to training is higher in productionthan distribution or at the registered office because of theimportance of safety awareness.The Sequana Group wishes to pay more rigorous attention to thenumerous questions surrounding the issue of HR management.Several HR indicators are now available at Group level that willallow Sequana to have a clearer overview of certain developmentsand make the necessary adjustments in these areas.6.7 - TrainingAntalis Arjowiggins Sequana/SRS TotalNumber of training days per employee in 2012 2.09 (1) 2.90 (2) 1.00 1.84 (3)Number of training days per employee in 2011 2.78 2.06 2.14 2.45(1) Calculated on the basis of 29 entities representing 72% of Antalis employees.(2) Calculated on the basis of 16 entities representing 84% of Arjowiggins employees.(3) Calculated on the basis of 47 entities representing 77% of Group employees.6.8 - Hires and dismissals (1) Antalis Arjowiggins Sequana/SRS TotalNumber of employees hired in 2012 412 244 4 656Number of employees hired in 2011 731 297 2 1,028Number of departures in 2012Voluntary departures and contractual terminationsLay-offs and dismissals(1) Data calculated based on all Group entities.274229266329295425636.9 - Diversity (1) Antalis Arjowiggins Sequana/SRS TotalPercentage of women in management in 2012 23.7% 23% 20% 23.4%Percentage of women in management in 2011 22.6% 25.5% 19% 23.9%(1) Data calculated based on all Group entities.Antalis Arjowiggins Sequana/SRS TotalPercentage of employees with disabilities in 2012 1.99% (1) 2.79% (2) 0% 2.42% (3)Percentage of employees with disabilities in 2011 0.83% 1.88% 1.58% 1.51%(1) Calculated on the basis of 14 entities representing 53% of Antalis employees.(2) Calculated on the basis of 12 entities representing 71% of Arjowiggins employees.(3) Calculated on the basis of 28 entities representing 61% of Group employees.206 | Sequana | 2012 Document de référence (English version)

Corporate social responsibility65.10 - AbsenteeismAntalis Arjowiggins Sequana/SRS TotalPercentage of absenteeism in 2012 3.53% (1) 3.83% (2) – (4) 3.64% (3)Percentage of absenteeism in 2011 3.76% 3.09% – (4) 3.4%(1) Calculated on the basis of 31 entities representing 96% of Antalis employees.(2) Calculated on the basis of 18 entities representing 92% of Arjowiggins employees.(3) Calculated on the basis of 49 entities representing 94% of Group employees.(4) Not material.EnvironmentIn 2012, Sequana strengthened its information compilation processand formally designated a network of CSR correspondents.These moves follow on from the earlier creation of a new CorporateSocial Responsibility (CSR) department. Each Arjowiggins divisionand Antalis region now has a member of staff responsiblefor coordinating local initiatives and for reporting consolidatedinformation to the Group. The CSR correspondent’s role is also tostep up cross-company exchanges in order to promote best practices.However, training employees in environmental matters alsoremains important to ensure that CSR concerns are duly integratedinto each area of the business. CSR training modules are tobe introduced in 2013 as part of the eXcellence project developedby Antalis.Overall environmental policyFollowing the ISO 26000-based audits launched in 2011 andfinalised in January 2012, Sequana, Arjowiggins and Antalis haveidentified three key environmental issues based on the traceabilityof wood, energy consumption, and water management. Thenature of the Group’s activities directly impacts these three naturalresources and therefore requires entities to act responsibly.Major initiatives undertaken in these areas include optimising thevolume of materials used at source (virgin fibres, energy, water),choosing responsibly-sourced supplies (recycled fibres, renewableenergy, closed-loop water treatment), and ensuring that any effluentor waste resulting from these materials is managed appropriately(recycling, air and water emissions).Pollution preventionImplementing all of the measures necessary to prevent, anticipateand manage all pollution risks related to the Group’s activities is atthe top of Sequana’s environmental priorities. The main pollutionrisks concern recycling and waste disposal, odour and noise pollution,and especially air and water emissions.Water is the subject of a dual challenge for the production business:reducing water consumption and managing the quality ofwater discharge. Reducing the water needed for the paper manufacturingprocess brings a three-fold benefit: mitigating the riskassociated with water restrictions imposed by local authoritiesaccording to authorised procedures during droughts, protectingan increasingly scarce resource, and lowering the Group’s energyrequirements in terms of heating the water it uses. A workinggroup involving all Arjowiggins divisions was set up to look atthese issues and identify the actions to be put in place in order toreduce water requirements. The other key issue identified regardingwater and pollution control is the quality of water discharge.The strict control of water discharge by means of the stringentmanagement of treatment centres is one of the main componentsof its approach in managing water pollution risks. This issue is alsocovered by the working group.The quality of wastewater discharged by the group is subject tostrict quality tests on a daily basis (see table of indicators below),performed in close cooperation with local government authorities.In 2013, Sequana intends to consolidate data on this issue andformally document its commitments to improving the quality ofwater discharge above and beyond that required by applicable lawsand regulations.This is also the case for emissions into the atmosphere. Governmentauthorities or independent bodies measure and monitor the Group’sgas emissions, particularly all greenhouse gases. As part of WWF’sClimate Savers programme, the emissions from ArjowigginsGraphics’ seven plants are regularly analysed in depth and progressverified in terms of emissions reduction.Under the Climate Savers programme, Arjowiggins Graphichas committed to a 23% reduction in its overall emissions and a10% reduction in its CO 2emissions for each tonne of paper produced(benchmark year: 2007 ).Sustainable use of resourcesThe nature of the businesses and the products made and distributedby Sequana mean that efforts to cut consumption of naturalresources are focused first and foremost on wood fibres. Nowthat supply is a globalised, highly diversified process, the Groupmust ensure that its system of traceability is water-tight in order toguarantee complete transparency as to the origin of the fibres used.The risks associated with raw materials from unsustainable sources(i.e., direct or indirect products of deforestation) are small but real.As part of its CSR strategy, Sequana has committed to sourcing allof its supplies from sustainable (i.e., legal and traceable) sources by2015. In 2012, the Group already reduced and eliminated certainhigh-risk suppliers, particularly in south-east Asia.Sequana | 2012 Document de référence (English version) | 207

6Corporate social responsibilityAt both Arjowiggins and Antalis, questionnaires were introducedto assess suppliers’ CSR and supply chain practices. ForAntalis, these questionnaires were sent out to suppliers togetherrepresenting 95% of the company’s paper and cardboard purchases.For Arjowiggins, the questionnaires were sent out to supplierstogether accounting for all central purchases.Identifying high-risk sources of supply must however be accompaniedby better management of traceability and procurementacross the Group. A system for managing data on the origin ofproducts, their regulatory compliance and supplier transparencyis in process and should be introduced at Antalis in 2013.6.11 - Raw material consumptionWater supply in accordance with local requirementsSignificant quantities of water are needed to make paper – mainlyfor the drying process. Depending on the plants concerned andtypes of papers manufactured, between 80% and 98% of the waterused is returned downstream to the source (river, groundwater orpublic network). However, reducing the volume of water used is aconstant concern for the Group. In summer, local authorities mayrestrict the volume of water drawn due to water stress. In closecooperation with these authorities (French Regional Directoratefor Environment, Urban Planning and Housing – DREAL),the plants must in such cases scale back their paper production.Identifying where water consumption can be reduced in the manufacturingprocess is therefore critical and will be one of the prioritiesof the working group specifically set up to look at waterissues in the coming year.Total 2012✓ (kilotonnes) Total 2011 (kilotonnes) (2)Total fibrous materials (pulp, waste paper, cotton) 1,136.4 1,064.4Total binders (latex, starch, polyvinyl acetate) 73.5 76.5Dyes/pigments/optical brighteners 4.8 4Organic loads 348.9 393.3Banknote security features 1.7 1.1Other chemical products (1) 41.4 43.9(1) PP (polypropylene), H 2O 2(hydrogen peroxide), AKD (alkyl ketene dimer), NaOH (sodium hydroxide), TiO 2(titanium dioxide), PAC (polyaluminium chloride).(2) Due to an error in the reporting procedure, the information for 2011 has been rectified for the purpose of this report.Climate change mitigation and adaptationIncreasing its use of renewable sources of energy and improvingits own energy performance are the two lynchpins of the Group’senergy policy. With its project to generate heat from biomass(wood chips) at its Palalda plant in France in 2012, the Grouphas shown clear proof of its determination to reduce its dependenceon fossil fuels and lighten its environmental footprint.Arjowiggins Graphic has been chosen to pilot the energy efficiencyproject and the main areas for improvement are currentlybeing assessed. These initiatives will subsequently be rolled out toArjowiggins’ other divisions.Although production activities account for the bulk of energyconsumed by the Group, Antalis’ distribution centres across theglobe also have a part to play. To identify the energy requirementsof its distribution business along with any potential areasfor improvement, a centralised reporting system based on theenergy consumed by major warehouses was introduced in 2012. Itfound that the Group’s distribution business accounts for 1.8% ofthe total energy consumed by the Group.Protection of biodiversityThe Group’s concern for protecting biodiversity is an integral partof its policy and is underscored by two different projects that seekto (i) improve the quality of water discharged from productionsites and (ii) ensure the traceability of its pulp and paper supplies.The large majority of the Group’s paper production plants drawthe water they need in the manufacturing process (cooling, drying,etc.) from nearby rivers and streams. The Group must takeinto consideration the ecosystems existing in these rivers.By strictly respecting regulatory effluent thresholds (suspendedsolids, chemical oxygen demand, biochemical oxygen demand,nitrogen, phosphorus, nitrogen oxide), the paper productionplants ensure that the quality of water discharged downstreaminto rivers is at least equivalent to the quality of the waterupstream. This ensures that production activities have a minimalimpact on river fauna and flora and on the associated ecosystems.Each plant measures water quality twice daily and these measurementsare regularly verified by the local authorities. To supportits ongoing efforts to reduce Sequana’s carbon footprint, aworking group will be set up in 2013 to consider the issue ofwastewater quality.Selecting responsibly-sourced supplies can also contribute to protectingbiodiversity. By chiefly purchasing pulp (Arjowiggins)and paper (Antalis) certified by the Forest Stewardship Council(FSC) or the Pan European Forest Certification (PEFC) council,the Group also reduces its impact on the natural environment.FSC and PEFC certification provide tangible guaranteesalong the entire value chain that forests were managed responsiblyat the outset. Responsible management respects environmental,social and governance criteria. To obtain these accreditations,entities must therefore respect biodiversity and ecosystems.208 | Sequana | 2012 Document de référence (English version)

Corporate social responsibility66.12 - Key environmental performance dataWater consumptionWater abstraction/Net productionIndicatorLiquid effluentWater discharge/Net sellable productionSuspended Solids (SS)SS effluent/Net sellable productionChemical Oxygen Demand (COD)COD/Net sellable production5-day Biochemical Oxygen Demand(BOD 5)BOD 5/Net sellable productionNitrogen(N: Nitrogen)N/Net sellable productionPhosphorus(P: Phosphorus)P/Net sellable productionNitrogen oxide(NOx: Nitrogen oxide)NOx/Net sellable productionSulphur oxide (SOx: Sulphur oxide)SOx/Net sellable productionCO 2CO 2emissions/Net sellable productionGas consumption (Energy)Gas consumption/Net sellableproduction PCISteam purchased externally (Energy)Steam purchased/Net sellable productionElectricity consumption (Energy)Electricity consumption/Net sellable productionEnergy consumptionEnergy consumption/Net sellable productionEnergy consumptionFossil fuel consumption/Net sellable productionBiomass consumption (Energy)Biomass consumption/Net sellable production PCIBiomass consumption/Net sellable production GJUnitm 3 /tonneof paperm 3 /tonneof paperKg/tonneof paperKg/tonneof paperKg/tonneof paperKg/tonneof paperKg/tonneof paperKg/tonneof paperKg/tonneof paperKg/tonneof paperKWh/tonneof paperKWh/tonneof paperKWh/tonneof paperKWh/tonneof paperKWh/tonneof paperKWh/tonneof paperGJ/tonneof paperGraphic Coated Creative Papers Healthcare Security TOTAL2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012✓11.9 11.5 49.1 50.3 70.0 59.8 56.9 44.7 106.6 89.9 28.5 25.9✓10.4 10.0 48.7 49.4 68.0 65.6 38.4 35.3 103.6 86.6 26.5 24.41.10 1.05 0.59 0.68 1.40 1.29 0.11 0.12 0.74 0.40 1.00 0.961.23 1.35 4.86 4.20 6.29 6.79 4.52 4.28 6.68 5.60 2.71 2.560.09 0.10 0.24 0.28 0.94 1.06 1.06 1.00 2.26 2.69 0.32 0.340.07 0.07 – 0.10 0.16 0.05 – – 0.18 0.30 0.09 0.080.004 0.003 – 0.022 0.05 0.060 – – 0.06 0.08 0.01 0.0110.04 0.03 – – 1.45 4.95 – – 0.36 0.34 0.46 0.500.001 0.001 2.10 2.1151 168 1,914 1,208 1,177 1,303 551 543 559 694 529 442✓685 768 1,232 1,777 6,751 5,666 2,496 2,458 2,388 2,090 1,294 1,3861,021 920 59 21 2,145 2,043 – 2,458 – – 788 703688 682 1,659 1,559 1,538 1,555 1,104 1,032 2,783 2,974 1,025 9942,142 2,082 6,702 6,019 7,231 7,352 3,514 3,420 5,453 6,108 3,456 3,299✓1,340 1,349 3,476 3,053 3,866 5,230 2,498 2,463 2,670 2,551 2,120 2,0353,005 3,399 1,568 1,407 – – – – – – 2,132 2,14311 12 6 5 – – – – – – 8 8District heating MWh 225,663 281,208 – – – – – – – – 225,663 281,208Fuel oil consumption (Energy)Fuel oil consumption/Net sellable productionCoal consumption (Energy)Coal consumption/Net sellable productionKWh/tonneof paperKWh/tonneof paper9 7 – – 586 409 2 6 652 2,129 193 203– – 2,184 1,256 – – – – – – 2,184 1,256NB: these data, which are given per tonne of sellable paper, correspond to average values for the whole Group. They are in line with those disclosed by other high-performingpaper manufacturing groups that produce comparable paper ranges. Significant differences may exist between different plants due to the type of products manufactured.Sequana | 2012 Document de référence (English version) | 209

6Corporate social responsibilitySite certificationIn 2010, Antalis was the first and only distributor on its marketto have set up a multi-site system of FSC and PEFC certificationto guarantee its customers traceability (chain of custody) atevery stage of the production and distribution process, regardlessof the country.This system has enabled Antalis to standardise the informationto be audited for transparency purposes. The audits cover aspectsrelating both to the supply chain (labelling, separate product storage,delivery) and information systems (product listing, productcategories), as well as marketing and sales issues (use of logos,training, etc.).By applying identical standards, every country in which Antalisis based must meet the same strict environmental requirements.In 2012, the certification programme was extended to the twoenvelope production plants in Belgium and Spain, as well asAntalis’ Russian operations. This multi-site certification drive nowcovers all European entities except Poland, who will join in 2013.Other countries in Asia are also part of the programme, such asAntalis’ entities in China, Singapore, Thailand and Hong Kong.6.13 - Certification of Arjowiggins Graphic and Antalis sites (%) (1)ISO 9001 ISO 14001 OHSAS 18001 FSC PEFCArjowiggins 19/22 20/22 12/22 8/22(%) 86% 91% 55% 36%Antalis 49/108 28/108 5/108 100/108 88/108(%) 45% 26% 5% 93% 81%(1) Data calculated based on a scope of 108 distribution centres for Antalis and 22 plants for Arjowiggins.Fair operating practicesEthics and good business practices are an integral part of Sequana’score values. However, the Group reaffirms and improves procedureseach year to ensure that it acts in compliance with the lawsin force in the countries in which it operates and that the values itupholds are respected.Sequana is responsible for ensuring that rules of business conduct– particularly regarding corruption and unfair competition – arerespected, implemented and monitored in more than 45 countriesaround the globe in which it is present via its different entities.Sequana also makes sure that relations between its different entitiesand public bodies, other companies, suppliers, subcontractors,customers and competitors are managed in a fair and responsiblemanner, to prevent the possibility of corruption or illegal practice.To minimise the risks associated with unfair practices, Sequanahas developed a training programme based on the Group’s code ofgood conduct, which was recast in 2012. This new code of goodconduct was rolled out to all employees at the start of 2013. Atraining programme has also been specifically designed for Groupemployees whose job requires regular contact with people outsideSequana. The training and risk prevention initiatives launched in2012 on the basis of management-level meetings were accompaniedby random controls in certain entities across the globe, due tobe repeated in 2013.Consumer issuesThe responsibility of Sequana and its subsidiaries Arjowiggins andAntalis towards consumers chiefly concerns health and safety andresponsible consumption issues, along with education and awarenessinitiatives. Sequana is responsible both towards its businessto-businessclients and to the end customers for its products.Although the manufacturing processes used have an environmentalimpact and are taken into account when defining the Group’s overallstrategy, the nature of the products sold present minimal dangerfor the health and safety of customers. However, the REACHregulation (Registration, Evaluation, Authorisation and Restrictionof Chemical substances) issued by the European Union in 2007requires industrial and commercial companies to prove that theirproducts or manufacturing processes are free of any harmful chemicalsubstances. Arjowiggins has set up a common procedure for allof its plants guaranteeing compliance with REACH and providingassurance that the regulation is respected upstream of the supplychain. This procedure is designed to standardise and expand theinformation required from suppliers. It provides each plant with arigorous method of verification, offering clients the strictest guaranteesthat no hazardous chemical substances as defined by REACHhave been used in the manufacturing process.210 | Sequana | 2012 Document de référence (English version)

Corporate social responsibility6The concern for informing and raising the awareness of consumersabout CSR issues is embedded within the Group’s differentactivities. The joint pilot environmental labelling project (initiativelinked to the Grenelle II Act in France) was launched byArjowiggins Graphic and Antalis. This project makes it easier tounderstand and anticipate regulatory changes as well as customers’expectations in this field.The large majority of products sold by the Group are manufacturedusing recycled fibres and/or are certified by an environmentalorganisation guaranteeing that environmental concerns havebeen duly taken into account in the manufacturing process. TheGroup’s brands are mostly certified by the Forest StewardshipCouncil (FSC) or by the Pan European Forest Certification(PEFC) council, which both offer a strong guarantee that thewood used to produce pulp is sourced from sustainably managedforests. The Group also looks to have its products certified totallychlorine free (TCF) and processed chlorine free (PCF), a guaranteethat no chlorine was used in the manufacturing process.To help its customers choose environmentally-friendly products,environmental impact calculators are available on Antalis andArjowiggins Graphic websites.A tool comparing the carbon footprint of different products iscurrently being developed and will be rolled out at Antalis duringthe first half of 2013.Community involvement and developmentSocial commitmentFor several years now, Sequana’s corporate philanthropy programmehas focused essentially on culture and children. It isunderpinned by principles of solidarity and commitment and comprisesmultiple initiatives in the field of education and health in allcountries where the Group is present.Patronage and sponsorshipSequana is recognised for the high quality of its papers and communicationmedia and has forged long-term partnerships withworld-famous institutions such as the Louvre Museum and theParis International Contemporary Art Fair (FIAC).As part of its ongoing support for the Louvre Museum, for theninth consecutive year the Group helped supply the catalogues forthe museum’s major exhibitions in 2012 (Leonardo da Vinci’s SaintAnne, Islamic Art, Late Raphaël, etc.). These catalogues wereprinted on leading-edge premium papers produced by Arjowigginsand meeting the museum’s high standards, particularly in terms ofenvironmental performance.Sequana once again sponsored the prestigious contemporary artfair in Paris (FIAC) in 2012 and this year the catalogue, bookmark,VIP guide and guide for the “Hors les Murs” (“Outside theWalls”) programme were all printed on Arjowiggins’ graphic andcreative papers.The Group’s distribution and production businesses are alsoinvolved in a host of initiatives promoting culture. Antalis sponsoredexhibitions curated by the Bangkok Art and Culture Centreand donated fine papers for brochures and flyers to a theatre andart gallery in Hungary.Community involvementAntalis and Arjowiggins are extremely active in outreach programmesand are involved in numerous initiatives concerning childwelfare and disease prevention.In 2012, Antalis Romania launched a book collection initiative aspart of International Children’s Day. A total of 800 new and oldbooks collected from customers were donated to Concordia, theassociation managing the project, and will be used to set up a newchildren’s library. In Poland for the tenth successive year, Antalissupported the “All of Poland Reads to Kids” campaign organised bythe ABCXXI Foundation. This initiative seeks to raise the generalpublic’s awareness of the importance of reading in child developmentand each year attracts 2,000 volunteers (teachers, librarians,educators, etc.) across the country. In Finland, Antalis teamed upwith communication agencies to recover papers, exercise books andenvelopes that could be used in nurseries and infant schools.In South Africa, one of the Group’s biggest markets outside Europe,Antalis works relentlessly with underprivileged communities andsupports various children’s associations. The Group is aiding the“Friends of Siyakhula” initiative by donating Conqueror paperto two schools in the Uqweqwe region. Over 170 children agedbetween five and seven attended workshops designed to bring outtheir creative potential. Working on the concept of co-creation, twoartists brought the children’s imagination to life in paintings. Thesejoint works were showcased at an exhibition in Paris to help raisefunds for schools. The initiative will find a further outlet for thechild artists since the joint works are to be printed on Antalis paper.Each child will then see how his or her drawing inspired the artist.For the third year running, Arjowiggins Creative Papers sponsoredthe One Young World forum run by the Blank Sheet Project (1) ,this time in Pittsburg in the US. Students and an employee fromthe division were just some of the participants in this “Davos”event for young opinion leaders aged under 25. For several years,Arjowiggins Graphic has been investing in supplying the paperfor programmes handed out at gala evenings held to raise fundsfor various associations including Enfance Majuscule, AmnestyInternational, Aide à l’Enfant Réfugié and Ligue contre le Cancer.(1) The Blank Sheet Project is the platform for creative excellence set upby Arjowiggins Creative Papers in order to drive creativity and responsibilityin the graphic design industry. This project also includes an internal sectionwhich encourages all employees to behave responsibly in matters relatingto organisation, products and processes.Sequana | 2012 Document de référence (English version) | 211

6Corporate social responsibilityIn 2012, Arjowiggins Graphic teamed up with SOS Children’sVillages Denmark, an association supporting four schools inRwanda providing primary education to more than 1,600 children.This partnership is celebrated in the new advertising campaignfor Cyclus 100% recycled paper, shown in 32 countries andin 22 languages. Arjowiggins Graphic donates an exercise bookfor every sample requested from the Cyclus website. Employees ofthe UK division took part in a canoe challenge to raise money forchildren and young people living in care.Lastly, in the field of healthcare, Antalis donated paper to associationsassisting sick children in Hungary and those assistingchildren and adults affected by AIDS in Hong Kong. Employeesacross many countries (Denmark, Hungary, Spain, etc.) rallyaround certain causes such as cancer. In the UK, this cause istaken up during the well-known “Wear it Pink” day and mostrecently, “Movember”.CSR reporting methodologyIndicators usedPursuant to the provisions and guiding principles of the FrenchGrenelle II Act, Sequana has tried to report on CSR matters astransparently as possible. However, in accordance with the “complyor explain” rule provided for in the Act, Sequana acknowledgesthat certain minimal information has not been disclosed.The main reasons for non-disclosure may be that (i) no reliableindicators exist for the issues concerned; (ii) as a paper group, certainmatters do not concern Sequana and are not therefore considered;and (iii) the information is deemed confidential (see theGrenelle II concordance table).CSR reporting scopeThe CSR information provided belongs to different categorieswhich each have their own reporting and consolidation procedures.This is due to the nature of the information compiled, thescope applied and the maturity of the entities included.Reporting on labour practices includes all of the Group’s legalentities, and therefore covers all Group employees.However, discrepancies may arise between some reported datadue to differences in how employees are accounted for.Health and safety reporting only includes purely production andlogistics activities, i.e., all Arjowiggins plants and Antalis distributioncentres. Health and safety reporting excludes offices andlocal or central headquarters.Environmental reporting is different for the production and forthe distribution business. Detailed reporting on plants (see section6.12, Key environmental performance data) covers issuesrelating to the use of natural resources and management of waste.More summary reporting on energy consumption and transportcovers warehouses used in the distribution business. In bothcases, reporting excludes offices and local headquarters.Reporting on raw material consumption covers all Arjowigginsplants.Sources and tools usedData on labour practices are incorporated with the internalfinancial reporting software (Magnitude). HR reporting packagesare completed by the Group’s legal entities at June 30 andDecember 31 each year. The management accountant of these entitiesis responsible for relaying the request to the competent memberof staff and verifying that all information has been supplied.Health and safety data are compiled using an Excel spreadsheetsent each year to all sites by the Group Head of Security.Environmental data concerning plants are compiled using aquestionnaire in Excel which is sent every year to the networkof QHE (Quality, Health, Environment) officers in the Group’s22 plants. For the distribution centres, a questionnaire is sent on15 December to the centres’ managers.Raw material purchases are made by a central pooling structure(Arjowiggins Sourcing Limited).Method used to consolidate and validate indicatorsA procedural guide to reporting on labour practices setting outdefinitions of social indicators is available in the internal financialreporting software. Information on labour practices is compiledby the Group’s management accounting department and sent tothe Head of CSR responsible for analysing the data along withthe HR department.The Excel health and safety questionnaire featuring a data inputguide is completed by local QHE officers at each site. This informationis then pooled and consolidated by the Group Head ofSecurity before being sent to the HR and CSR departments to beanalysed and incorporated into the management report.The environmental questionnaire includes explanatory commentsfor each indicator. The Head of the CSR department uses thequestionnaire to consolidate information at Group level for publicationin the management report.Purchases of raw materials are pooled and reported monthly tothe Arjowiggins Executive Committee. These data are only consolidatedonce a year for publication in the management report.For confidentiality reasons affecting certain data, publishedinformation is grouped by type of raw material.212 | Sequana | 2012 Document de référence (English version)

Corporate social responsibility6Grenelle II concordance tableGrenelle II – Article 225 of Act no. 2010-778 of 12 July 2010 –Decree of 24 April 2012INFORMATION ON LABOUR PRACTICESEmployment1) Total employees and breakdown of employees by gender, age groupand geographic region✓Total employeesBreakdown of employees by genderBreakdown of employees by age groupBreakdown of employees by length of serviceBreakdown of employees by geographic regionRegistrationdocument(page) ISO 26000 UN Global Compact1992002002001992) Hires and dismissals 2063) Compensation and trends 201Organisation of work4) Organisation of working time 201Reportingscope6.4.4 Entire Group5) Absenteeism 207 6.4.4 Entire GroupLabour relations6) Organisation of social dialogue, particularly employee informationand consultation procedures and negotiations7) Collective bargaining 204Health and safety8) Occupational health and safety 204-2059) Health and safety topics covered in formal agreementswith trade unions10) Occupational accidents, particularly frequency and severity,and occupational illness✓Training11) Policies implemented regarding training 205-206 6.4.712) Total number of training hours (days) 206Equal treatment13) Measures promoting gender equality 197, 20614) Measures promoting the employment and integration of peoplewith disabilities204 6.4.3. & 6.4.5 ≠ 3 Entire Group205197, 20615) Policy against discrimination 197204 6.4.6 ≠ 4-5Promotion of and compliance with ILO conventions ≠ 1 to 616) Compliance with the freedom of associationand right to collective bargaining198 ≠ 3Distribution centres and plants(excluding registered offices)Distribution centres and plants(excluding registered offices)Representativeness of statisticsin indicator tables (%)Representativeness of statisticsin indicator tables (%)17) Elimination of discrimination in respect of employment and occupation 198 ≠ 6 Entire Group18) Elimination of forced and compulsory labour 19819) Effective abolition of child labour 198ENVIRONMENTAL INFORMATIONOverall environmental policy20) Organisation of the Company to take into account environmentalconcerns. If applicable, environmental assessmentand certification approach used21) Employee training and information on environmental protection 207 6.5.1 & 6.5.2 ≠ 7-8-922) Resources used in environmental and pollution risk prevention 7523) Provisions and guarantees in respect of environmental risks(excluding risk of harm)20784≠ 4-5Distribution centres and plants(excluding registered offices)Sequana | 2012 Document de référence (English version) | 213

6Corporate social responsibilityGrenelle II – Article 225 of Act no. 2010-778 of 12 July 2010 –Decree of 24 April 2012Pollution and waste management24) Measures taken to prevent, reduce and offset air,water and land effluents seriously impacting the environmentRegistrationdocument(page) ISO 26000 UN Global CompactReportingscope75 Plants25) Measures taken to prevent, recycle and eliminate waste 76 6.5.3 ≠ 7-8-926) Noise pollution and other types of specific business-related pollution 75Sustainable use of resources27) Water abstraction✓Water supply in accordance with local requirements28) Raw material consumption✓Measures taken to make more efficient use of raw materials29) Energy consumption✓Measures taken to improve energy efficiency and use of renewableenergy sources30) Land useClimate change2092082082096.5.4 ≠ 7-8-9Distribution centres and plants(excluding registered offices)Distribution centres and plants(excluding registered offices)PlantsRaw materials usedto manufacture productsat Group plants31) Greenhouse gas emissions 209 6.5.5 ≠ 7-8-9 Plants32) Adapting to the consequences of climate change 208Protection of biodiversity33) Measures taken to protect and increase biodiversity 208 6.5.6 ≠ 7-8-9INFORMATION ON COMMUNITY INVOLVEMENT AND DEVELOPMENTRegional, economic and social impact of the Company’s business34) Employment and regional development 6.8.535) Local and neighbouring communities 198-211 6.8Relations with stakeholders36) Stakeholder dialogue 197-198 5.3.337) Patronage and sponsorship 211 6.8.9Subcontractors and suppliers38) Consideration of social and environmental issuesin the purchasing policy39) Subcontracting and consideration of CSR issuesin relations with suppliers and subcontractorsFair operating practices197199 6.6 ≠ 1-240) Action taken to prevent any kinds of corruption 210 6.6.3 ≠ 1041) Measures taken to promote consumer health and safety 210-211 6.7.4Other action taken to promote human rights 6.3 ≠ 1-242) Other action taken to promote human rights 198Entire GroupGroupThe information featured in chapter 6 marked with a ✓ has been reviewed by the Statutory Auditors in a limited assurance report.214 | Sequana | 2012 Document de référence (English version)

Corporate social responsibilityStatement of completeness and limited assurance reportby one of the Statutory Auditors on selected informationon labour, environmental and social practices appearingin the management reportYear ended 31 December 20126For the attention of the Senior Management,Further to your request and in our capacity as Statutory Auditorsof Sequana, we have prepared this statement of completenesson the consolidated information on labour, environmental andsocial practices presented in the management report set out inthe registration document for the year ended 31 December 2012in accordance with the provisions of Article L.225-102-1 of theFrench Commercial Code (Code du commerce), as well as our limitedassurance report on selected information identified by the(✓) symbol in the management report and presented in Chapter 6of the 2012 registration document.Responsibility of the CompanyIt is the responsibility of the Board of Directors of the Company toprepare a management report which includes consolidated informationon labour, environmental and social practices providedfor by Article R. 225-105-1 of the French Commercial Code(hereinafter “the Information”), compiled in accordance with theguidelines used by the Company (“the Guidelines”) and madeavailable on request from the Corporate Social Responsibility(CSR) department.Independence and quality controlOur independence is defined by regulatory texts, the Frenchcode of ethics for chartered accountants, and the provisions ofArticle L. 822-11 of the French Commercial Code. We have alsoimplemented a quality control system comprising documentedpolicies and procedures for ensuring compliance with the codesof ethics, professional standards and applicable legal and regulatorytexts.Responsibility of the Statutory AuditorsOn the basis of our work, it is our responsibility to:■■certify that the required Information is presented in the registrationdocument or, in the event that any Information isnot presented, that an explanation is provided in accordancewith the third paragraph of Article R. 225-105 of theFrench Commercial Code and French Decree no. 2012-557 of24 April 2012 (the “Statement of completeness”);■■form a limited assurance conclusion on the fact that certaininformation selected by the Company and identified by the (✓)symbol in Chapter 6 of the 2012 registration document (hereinafter“the Data”) was prepared, in all material respects, inaccordance with the applicable Guidelines (the “Limited assurancereport”).We were assisted in our work by our specialists in corporate socialresponsibility.(1) Workforce data: figures for average headcount and breakdown by activity, geographic region, gender, age and length of service, and incident rates.Environmental data: use of raw materials and water; total energy consumption and CO 2emissions.Sequana | 2012 Document de référence (English version) | 215

6Corporate social responsibility1. Statement of completenessWe performed our work in accordance with the professionalstandards applicable in France. This work included:■■comparing the Information presented in the registration documentwith the list provided for by Article R. 225-105-1 of theFrench Commercial Code;■■verifying that the Information covers the scope of consolidation,i.e., the Company, its subsidiaries as defined by Article L. 233-1and the companies it controls as defined by Article L. 233-3 ofthe French Commercial Code within the limits described inthe note on methodology featured in Chapter 6 of the 2012registration document;■■for any consolidated Information that was not disclosed, verifyingthat the explanations provided complied with the provisionsof French Decree no. 2012-557 of 24 April 2012.Based on our work, we certify that the required Information ispresented in the registration document.2. 2. Limited assurance report on selectedconsolidated information on labourand environmental practices, identifiedby the (✓) symbolNature and scope of our workWe performed our procedures in accordance with ISAE 3000(International Standard on Assurance Engagements) and inaccordance with the professional standards applicable in France.We performed the procedures described below to obtain limitedassurance that the Data selected by the Company and identifiedby the (✓) symbol are free of material irregularities that are likelyto call into question the fact that they were prepared, in all materialrespects, in accordance with the Guidelines. A higher level ofassurance would have required us to carry out a more extensiveverification.We carried out the following procedures:■■we assessed the appropriateness of the Guidelines with respectto their relevance, completeness, neutrality, comprehensibilityand reliability with due consideration, when appropriate, ofindustry best practices;■■we verified the implementation within the Sequana Group ofcollection, compilation, processing and control processes tocomplete and harmonise the Data selected. We familiarisedourselves with the internal control and risk management proceduresrelating to the preparation of the Data. We conductedinterviews with the personnel responsible for reporting onlabour and environmental practices.■■with regard to the quantitative Data selected by the Company:• at the level of the consolidating entity and the controlledentities, we applied analytical procedures and verified, usingsampling techniques, the calculation and the consolidationof the Data;• with regard to the entities selected based on their business,contribution to the consolidated indicators, location and riskprofile:––we conducted interviews to verify that the procedureshave been correctly applied and obtain the information weneeded to perform these verifications;––we performed tests of details, using sampling techniques,in order to verify the calculations made and reconcile thedata with the corresponding supporting documents.The sample selected represents 17% of the workforce and an averageof 25% of the quantitative environmental information tested.ConclusionBased on our work, no material irregularities came to light thatare likely to call into question the fact that the Data selected bythe Group and identified by the (✓) symbol in Chapter 6 of the2012 registration document were prepared transparently and inall material respects, in accordance with the Guidelines.(2) For workforce data: Antalis SNC, Arjo Wiggins Fine Papers Ltd,Arjowiggins Papiers Couchés SAS.For the consumption of raw materials: the Group’s Purchasing Division,which covers the entire scope of consolidation.For the other environmental data: the Stoneywood site of the entity Arjo WigginsFine Papers Ltd and the Bessé site of the entity Arjowiggins Papiers Couchés SAS.Neuilly-sur-Seine, 23 April 2013One of the Statutory AuditorsConstantin AssociésMember of Deloitte Touche Tohmatsu LimitedJean-Paul Séguret216 | Sequana | 2012 Document de référence (English version)

Chapter 7PERSON RESPONSIBLEFOR THE REGISTRATION DOCUMENTPerson responsiblefor the registration document 218Statement by the person responsiblefor the registration documentand annual financial report 218Auditors 219Tables of concordance 220Information required under Annex Iof European Commission RegulationNo. 809/2004 220Annual financial report 222~Sequana | Document de référence 2012 | 217

7Person responsible for the registration documentPerson responsible for the registration documentPerson responsible for the registration documentPascal Lebard,Chief Executive OfficerStatement by the person responsible for the registrationdocument and annual financial reportAfter taking all reasonable measures for this purpose, I hereby attest that to the best of my knowledge, the information provided in thisregistration document fairly reflects the current situation and that no material omissions have been made.I further declare that, to the best of my knowledge, the financial statements for 2012 have been prepared in accordance with the applicableaccounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Companyand the undertakings in the consolidation taken as a whole, and that the management report presented in this registration documentincludes a fair review of the operations, profit or loss and financial position of the Company and the undertakings in the consolidationtaken as a whole, together with a description of the principal risks and uncertainties that they face.I obtained a statement from the Statutory Auditors at the end of their engagement affirming that they have read the entire registrationdocument and verified the information in respect of the financial position and the financial statements contained therein.The parent company and consolidated financial statements for the year ended 31 December 2012 were reviewed by the StatutoryAuditors and are presented on pages 163 and 178, respectively. The Statutory Auditors’ reports contain an observation drawing attentionto Notes 1, 15 and 17 to the parent company financial statements and Notes 1, 17 and 33 to the consolidated financial statements,which set out the terms and conditions of Arjowiggins’ and Sequana’s refinancing, finalised for legal purposes on 30 April 2013.The Statutory Auditors’ report on the consolidated financial statements for the year ended 31 December 2011, set out on page 157 of the2011 registration document filed with the AMF on 30 April 2012 under No. D.12‐0473, contained an observation drawing attentionto Note 1 to the financial statements, which sets out the terms and conditions of the Group’s refinancing which was legally finalised on30 April 2012.Boulogne‐Billancourt, 30 April 2013Pascal Lebard,Chief Executive Officer218 | Sequana | 2012 Document de référence (English version)

AuditorsStatutory AuditorsPricewaterhouseCoopers Audit63, rue de Villiers, 92208 Neuilly-sur-Seine Cedex, FranceConstantin Associés(member of Deloitte Touche Tohmatsu Limited)185, avenue Charles de Gaulle, 92200 Neuilly-sur-Seine, FrancePerson responsible for the registration documentAuditors7Deputy Statutory AuditorsYves Nicolas63, rue de Villiers, 92208 Neuilly-sur-Seine Cedex, FranceFrançois-Xavier Ameye185, avenue Charles de Gaulle, 92200 Neuilly-sur-Seine, FrancePricewaterhouseCoopers Audit and Constantin Associés (member of Deloitte Touche Tohmatsu Limited) are registered as StatutoryAuditors with the Versailles Compagnie régionale des commissaires aux comptes and fall under the authority of the Haut Conseil du commissariataux comptes.Information relating to the Statutory Auditors and their terms of office is provided on page 72.The original French version of this registration documentwas filed with the French financial markets authority (Autorité des marchés financiers – AMF)on 30 April 2013 under No. D.13-0491in accordance with Article 212-13 of the AMF’s General Regulation.It may not be used in support of a financial transaction unless it is accompaniedby an information memorandum approved by the AMF.This registration document was prepared by the issuer and is legally binding for its signatories.Copies of this registration document may be obtained from the Company’s registered office:8, rue de Seine – 92100 Boulogne-Billancourt, Franceor may be downloaded from the website of the issuer (www.sequana.com)or the AMF (www.amf-france.org)Sequana | 2012 Document de référence (English version) | 219

7Person responsible for the registration documentTables of concordanceTables of concordanceInformation required under Annex I of European CommissionRegulation No. 809/20041 PERSONS RESPONSIBLE 2182 STATUTORY AUDITORS 72 – 2193 SELECTED FINANCIAL INFORMATIONPages11 to 13 – 17 – 1822 to 40 – 92 – 934 RISK FACTORS 74 to 845 INFORMATION RELATING TO THE ISSUER5.1 History and development of the issuer 4 to 10 – 14 to 16 – 1845.2 Capital expenditure 10 – 16 – 286 BUSINESS OVERVIEW6.1 Principal activities 2 to 10 – 22 to 406.2 Principal markets 4 to 10 – 22 to 406.3 Exceptional factors 10 – 776.4 Dependence of the issuer on patents or licences, industrial, commercial or financial contracts or new manufacturing processes 826.5 The basis for any statements made by the issuer regarding its competitive position 47 ORGANISATIONAL STRUCTURE 2 – 47.1 Brief description of the Group 2 to 10 – 22 to 407.2 List of significant subsidiaries 159 to 162 – 1768 PROPERTY, PLANT AND EQUIPMENT8.1 Existing or planned material tangible fixed assets 31 – 32 – 103 – 115 – 1168.2 Environmental issues that may affect the utilisation of tangible fixed assets 74 to 76 – 207 to 2109 OPERATING AND FINANCIAL REVIEW9.1 Financial position 11 to 13 – 92 to 1789.2 Operating results10 CAPITAL RESOURCES11 to 13 – 17 – 92 – 9395 – 165 – 17010.1 Information concerning the issuer’s capital resources 97 – 134 to 143 – 165 – 17010.2 Sources and amounts of the issuer’s cash flows12 – 13 – 74 – 97134 to 143 – 151 – 172 – 17510.3 Information on the borrowing requirements and funding structure of the issuer 79 to 81 – 131 to 143 – 17510.4Information regarding any restrictions on the use of capital resources that have materially affected, or could materially affect theissuer’s operations10.5 Information regarding the anticipated sources of funds needed to fulfil the commitments referred to in items 5.2 and 8.1 –11 RESEARCH AND DEVELOPMENT, PATENTS AND LICENCES 34 – 39 – 40 – 11412 TREND INFORMATION 10 – 17 – 18 – 22 to 4013 PROFIT FORECASTS OR ESTIMATES –14 ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES AND SENIOR MANAGEMENT14.1 Administrative and management bodies 42 to 6514.2 Administrative, management and supervisory bodies and senior management conflicts of interest 58 – 5915 REMUNERATION AND BENEFITS79 to 81220 | Sequana | 2012 Document de référence (English version)2012

Person responsible for the registration documentTables of concordance7Pages15.1 Amount of remuneration paid and benefits in kind granted 65 to 70 – 147 – 17315.2 Total amounts set aside or accrued by the issuer or its subsidiaries to provide pension, retirement or similar benefits 125 – 126 – 14716 BOARD PRACTICES16.1 Date of expiry of current terms of office 43 – 45 to 5416.2 Service contracts with members of the administrative, management or supervisory bodies 5916.3 Information about the issuer’s audit committee and remuneration committee 43 – 61 – 62 – 6416.4 A statement as to whether or not the issuer complies with its country of incorporation’s corporate governance regimes 42 – 43 – 44 – 6517 EMPLOYEES17.1 Number of employees 2 – 4 – 22 – 30 – 157 – 19917.2 Directors’ shareholdings and stock options 45 to 56 – 67 – 69 – 189 to 19117.3 Arrangements for involving the employees in the capital of the issuer 120 to 123 – 193 – 194 – 20318 MAJOR SHAREHOLDERS18.1 Shareholders holding over 5% of the Company’s capital and/or voting rights 2 – 4 – 19 – 18918.2 Whether the issuer’s major shareholders have different voting rights 188 – 18918.3 Control of the issuer 42 – 19018.4 Any arrangements known to the issuer, the operation of which may at a subsequent date result in a change in control of the issuer –19 RELATED-PARTY TRANSACTIONS 70 – 71 – 154 – 173 – 179 – 18020 FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFITS AND LOSSES20.1 Historical financial information 92 to 17820.2 Proforma financial information –20.3 Financial statements 92 to 17820.4 Auditing of historical annual financial information 218 – 21920.5 Age of latest financial information 9320.6 Interim and other financial information 17 – 1820.7 Dividend policy 2120.8 Legal and arbitration proceedings 8320.9 Significant change in the issuer’s financial or trading position 17 – 18 – 93 – 15821 ADDITIONAL INFORMATION21.1 Share capital 120 to 123 – 187 to 19421.2 Memorandum and Articles of Association 57 to 62 – 184 to 18622 MATERIAL CONTRACTS –23 THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATIONS OF ANY INTEREST –24 DOCUMENTS ON DISPLAY 21 – 18425 INFORMATION ON HOLDINGS 159 to 162 – 176In accordance with Article 28 of European CommissionRegulation No. 809/2004 dated 29 April 2004, the followinginformation has been incorporated by reference into this registrationdocument:■■the consolidated financial statements for the year ended31 December 2011 and the related Statutory Auditors’ report,set out on pages 86 to 157 of the registration document filedwith the AMF on 30 April 2012 under No. D.12-0473;■■the consolidated financial statements for the year ended31 December 2010 and the related Statutory Auditors’ report,set out on pages 71 to 141 of the registration document filedwith the AMF on 8 April 2011 under No. D.11-0262;■ ■ the review of the financial position and results for the yearended 31 December 2011, set out on page 84 of the registrationdocument filed with the AMF on 30 April 2012 underNo. D.12-0473.The chapters of registration documents D.12-0473 and D.11‐0262which are not mentioned above are either not pertinent for investorsor are covered in another section of the 2012 registrationdocument.Sequana | 2012 Document de référence (English version) | 221

7Person responsible for the registration documentTables of concordanceAnnual financial reportInformation required under article L.451-1-2 of the French monetary and financial code (Code monétaire et financier)and article 222-3 of the AMF’s General RegulationParent company financial statements for the year ended 31 December 2012 164 to 177Consolidated financial statements for the year ended 31 December 2012 94 to 162Board of directors’ management report for 2012Pages4 to 40 – 42 to 7292 – 93 – 177184 to 212Statement by the person responsible for the annual financial report for 2012 218Statutory auditors’ report on the financial statements for the year ended 31 December 2012 178Statutory auditors’ report on the consolidated financial statements for the year ended 31 December 2012 163222 | Sequana | 2012 Document de référence (English version)2012

Notes

Notes

Registration document designed byPhoto CreditNoël HautemanièreThis document is printed on eco-friendly paper:Olin Regular Absolute White 300g (cover) and 100g(inside pages). This FSC ® -certified, high-quality,premium offset paper is an Antalis product and brand.PrinterAMI, certified Imprim’Vert ® , FSC ® and PEFCPrinted in France, June 2013 © Sequana ® all rights reserved

8, rue de Seine92100 Boulogne-Billancourt – FranceTel.: +33 1 58 04 22 00Email: contact@sequana.comwww.sequana.comAntalis8, rue de Seine92100 Boulogne-Billancourt – Francewww.antalis.comArjowiggins32, avenue Pierre Grenier92100 Boulogne-Billancourt – Francewww.arjowiggins.com